The Washington critic., 1886-04-28
WASHINGTON, APRIL 90, 1886.
THE PACIFIC RAILROAD DEBT.

THE PASIIIC HAtLttOAD bEb''
The Overland railroad companies
are making their periodical attempt to
shirk the terms of their Indebtedness to
The Government. They were loaned
United States bonds enough to build
their roads; then they were allowed to
put first mortgage on the roads so
built for an equal amount of their own
bonds then they were given about
$4,000, 600 acres Of land to aid in the
construction of the road, with the con
dition that If not disposed of within
three years It should be sold by the
Government for the benefit of the com
panies at a dollar and u quarter an acre.
They did not sell their lands within the
time required, but in order to defeat
the condition referred to they mort
gagged them to secure loan or pre-
tended loan, and held them for a rise.
The courts decided that they could
thus hold on to them and dispose of
them by mortgage at one and the same
time.
The two companies would have been
very rich had they retained all of these
assets not required for the construction
of the roads. But this they did not do.
The Union Pacific Company contracted
with the infamous Credit Mobilier Com
pany to give it all its bonds and stock
for building the road. The stock of
the Credit Mobilier Company belonged
TO the Union Pacific managers. That
is to say the Union Pacific directors
bargained with themselves to build
their own road at three times what 1t
was worth.
The managers Of the Central Pacific
Company did the same; the fence for
its gigantic robbories being known as
the Contract and Finance Company.
These men never made any consider.
able Investment, but have industriously
absorbed the millions lavished upon
them, and, wearied with its possession,
have used much of it TO build extern
sions and branches upon which they
say the Government has no lien. The
portions of road so built with the over
plus of Government aid, and with the
surplus earnings of the original roads,
they call "unaided portions of the Pa
cific railroads" The Central Pacific
has built and is operating an entire new
line from Sacramento to San Francisco,
carrying the whole through traffic and
leaving the "aided road between those
cities q mere side track or local road.
Thus the roads have been blcd of the
resources which should have been
made to provide the requisite sinking
fund for the redemption of the Gov
ernment bonds loaned them, and to be-
come due about eleven years hence.
Would any private creditor stand by
and see his security thus wasted with
out appealing to court of equity to
prevent 1t? Are the creditors under
second mortgage to be robbed by a
wealthy debtor who chooses to squander
in other ventures the earnings of the
mortgaged property out of which com
mon honesty requires him to provide
for the debts for which it is pledged?
This is the question presented to
Congress at this time The railway
companies coolly give notice that they
do not want to pay their debt at ma
turity, and that TIE aided portions OF
the roads are not worth enough to pay
it. But they have juggling contri.
1svance 10 offer, which seems to secure
final payment in seventy years, by {
mortgage on all their roads. Wha
loophole their astute solicitors have lef
in this precious scheme for again keep
ing the Government from its own
would be well to ascertain.
The people fear that these corpora
tions have too many friends in tn,
Senate. The truth will be shown u
this session. BY their fruits ye shnl
know them.
g THE New York Chamber of Com
marpa vpstprdov mot and after n nuni