Los Angeles daily herald., 1888-02-25
PACIFIC RAILROADS.
Investigation by the House
Committee.
A LETTER FROM HUNTINGTON
Littler Speaks About the UniOI
Pacific-Its Present Finan-
cial Standing.
Associated Press Dispatches to the HERALD

WAsHINGToN, February 24.-The
Committee on Pacific Railways re-
ceived a letter from @. P. Huntington
this morning, giving a statement as to
what the Central Pacific Railroad has
done towards paying its debt at
maturity. He tells how the directors
of the company in 1873 resolved to
create a sinking fund to meet the
debt. 1t is now apparent, he says,
that money could not be made to earn
I8 per cent, as was anticipated.
Nevertheless, considerable OF fund
would have been accumulated by
1897-more than half the entire debt
would be paid, and the whole would
have been settled in the early part of
the twentieth century, after which the
whole net earnings would have gone
to the stockholders. $50 that whether
my assertion was right or not would
have made but little difference"
Continuing, he says that the passage
OF
THE THURMAN ACT
Followed, and this of course put an
end to the company's own voluntary
efforts, cas- we could not pay money
into the United States Treasury and
also invest it elsewhere. When it be-
came clear that other competing roads
to the Pacific, more liberally aided
than the first road, would soon be
completed, it was evident that both
the first mortgage and subordinate
liens must be postponed for a very
long time. For reasons which were
no doubt satisfactory, the Govern
ment impaired the earning capacity
of the road and thereby its security
for the debt"
THE UNION PACIFIC.
Littler, member of the Pacific
Railway Commission, took the witness
stand in the case of the Union Pacific.
He called attention to the fact that
the bonded portion of the road did not
embrace the terminal facilities and
property at Omaha, Kansas City and
Denver, which was worth million
dollars. The promoters of the scheme
must have foreseen that it would
be unable to pay the Government
lien and had concluded that the valu-
able terminal property should not be
covered by the lien. The Govern
ment would not have much trouble in
dealing with the Union Pacific. The
country through which it and the
branch lines run was wonder
fully fertile and capable of sus-
tanning great system of roads.
The entire country from Omaha to
the base of the Rocky Mountains
would produce very large traffic and
enable the company under economical
management to pay it's debts. From
Cheyenne to Ogden the road ran
through
A GOD-FORSAKEN COUNTRY
Which promised nothing to the
future, and the Union Pacific would
have to depend for its resources upon
it's line between the Missouri river
and the Rocky Mountains. The
majority had reported that the Union
Pacific was solvent, and with fair ex-
tension of lines would be able to pay
its debt Some of its branch lines
were worthless and had been acquired
under circumstances which reflected
discredit upon the integrity or judg-
ment of the persons managing the
road at the time. The Utah Northern
and the Oregon Short Line were val
liable acquisitions and with the de-
velopment of the country would add
largely to the revenues Of the Union
Pacific Company.
TO ESTIMATE THE VALUE
Of the Union Pacific railroad an in
spection was made by the Engineer of
the Commission, who after personal
inspection OF every mile of
the road, and after making an inven-
tory of every tie and fish plate and
every item which entered into the
construction and operation of the road
had given it as his opinion that the
Union Pacific system was worth
$150, 100000 and it would cost that
sum OF money to reproduce it. The
bond aided portion of the system was
encountered to the extent Of $61 600
600; $33, ,O00, 900 prior to the Govern
ment lien and the balance subsequent
to it. In the light of the facts elected
by the Engineer, the Commission had
unanimously reached a conclusion
that Notwithstanding the great value
of the property and the enormous
annual income which it received, the
Company could not pay its debt to
the Government in 1896, 1896 and
1897 when it matured, and the
majority had recommended an ex-
tension Of so years in order to increase
the Governments security and get
out of the Company everything it had
in the way of security.
THE MAJORITY BILL
Provided that the company should
give plain, old fashioned contract
mortgage on everything it possessed.
There was in the treasury of the I'm
ion Pacific securities on branch lines
amounting to $22, 900, 900, and it was
the intention of the bill to retain to
the government not only the equity
remaining in the property after the
payment after the payment of prior
liens, but also all securities which the
Union Pacific held in it's branch lines.
If that bill passed it would scoop in
everything Of value belonging to the
Union Pacific and when the debtor
gave all that he had in the way Of Sc
curity that was all that could be ex-
pected.
PATTIsoN's REPORT ALLUDED TO.
Turning his attention to Commits
sioner Pattison's majority report,
witness said that it required more of
lawyer than he (witness) was, to un-
derstand how Congress could forfeit
charter to the railroad company
granted by the State and Territorial
governments. He could not under
stand how Pattison would forfeit the
charters of the Pacific roads, branch
lines when Congress had nothing to