The Palatka daily news. (Palatka, Fla.) 1884-1888, 1888-01-18


panies Of this amendatory act are ap-
parent, and in these days we may well
| wonder that even the anticipated public
importance of the construction of these
roads induced what must now appear to
be rather reckless and unguarded appro-
priations of the public funds and public
| domain
Under the operation of these laws
the principal of the bonds which have
advanced is $64 .O23, SIG, as given in the
reports of the commissioners Interest
to November 1, 1897, is calculated to be
$40 ,O24 .206, making an aggregate at the
date named of $i4O,0f7, ,71S. Interest
calculated to maturity of the bonds
added to the principal produces an ag-
gregate of $11s. .sS4, ,759. Against these
amounts there has been repaid by the
companies the sum of $50, ,9J5, ,O39.
1t is almost needless to state that the
companies have availed themselves to
the utmost extent of the permission
| given them to issue their bonds and to
| mortgage their property to secure the
payment of the same, by an Incum-
brance having the preference of the Gov
ernment lien and precisely equal to 1t IN
amount.
| 1t will be seen that there was available
| for the building cf each mile of these
| railroads $40, 600 of United States bonds,
due in thirty years with six per cent. in
| terest, SIC, 900 in bonds of the companies.
| secured by a first mortgage ON all their
| property, and ten sections of Govern
| ment land, to say nothing of the stock
| of the companies
When the relations created between
| the Government and these companies by
| the legislation referred to Is considered,
| il is astonishing that the claim should
be made I'll at the directors of the roads
4 nyVg6 Tn dnfv RXcaf.f tnan94iNS3
their construction, that they need regard
no interests but their own, and that they
were justified in contracting with them
selves and making such bargains as re-
suited in conveying to their pockets all
the assets of the companies as a lien, for
the Government was vitality interested
in the amount of the mortgage to which
its security had been subordinated. and
it had right 10 insist that none of the
bonds secured by this prior mortgage
should be issued fraudulently or for the
purpose of division among these stock
holders without consideration
The doctrine of complete independence
on the part of the directors of these
companies and their freedom from any
obligation to care for other interests
than their own in the construction of
these roads seems to have developed the
natural consequence of Its application,
portrayed by the following in the ma
iority report of the commission ''The
result is that those who have controlled
aad directed the construction and de-
veIopment of these companies have be-
come possessed of their surplus assets
through ISSUES of bonds, stocks and pay
ment of dividends voted by themselves,
while the great creditor, the United
States, finds itself substantially without
adequate security for the repayment of
it's loans" The laws enacted in aid of
these roads, while they illustrated the
profuse liberality and generous surren-
der of the Governments advan-
tages which it is hoped experience
has corrected, were nevertheless
passed upon the theory that the
railroad should be constructed ac-
eording tn the common rules of business,
fairness and duty, and that their value
and their ability to pay their debts
should not be impaired by unfair man.
ipulations, and when the Government
subordinated its lien to snoIher it was in
expectation that the prior lien would
represent the amount of only such bonds
as should be necessarily issued by the
companies for the construction of their
roads at fair prices agreed upon in an
honest way between real and substantial
parties, for the purpose of saving or in-
proving the security afforded by its
Junior lien. The Government should
have the right now to purge this para
mount lien of all that Is fraudu ent or
fictitious. If transfers to innocent hands
of bonds of this character secured by
it might be well to seek "A remedy against
those who issued and transferred them.
If legislation is needed to secure such
remedy Congress can readily supply it.
desire to- call attention also to the
fact that if all that was to be done { N
the part of the Governmen mt to fully vest
in these companies the grants and adj
vantages contemplated by the acts
passed in their interest, has not yet been
perfected, and if the failure of such com
panies to perform in good faith their
part of the contract Justifies such a
course, the power rests with Congress to
withhold further performance on the
part of the Government. If the donated
lands are not yet granted to these COM
panies and if their violation of contract
and of duty are such as in justice and
morals forfeit their rights to such lands,
Congressional action should intervene to
prevent further contamination. The
executive power must be exercised ac-
cording to existing laws, and executive
discretion is probably not broad enough
to reach such a difficulty.
The California and Oregon Railroad is
now part of the Central Pacific system,
and is a land grant road. Its construc-
ton has been carried on with the same
features and incidents which have char
acteriZed the other constructions of this
system. / have in my hands for APP
proval the report of the commissioners
appointed to examine two completed Sec
tions of this road. Upon such approval
this company or the Central Pacific Com
pany, will be entitled to patents for a
large quantity of public lands. i espe-
cially commend to the attention of Con-
gress this condition of affairs. in order
that it may determine whether or not it
should intervene to save the Lands for
| settlers. If such a course is justifiable. 1t
| IS quite time that the troublesome COM
| plications surrounding this entire subject
| w Iich has been transmitted to us as a
| legacy from former days should be adj
| iusted and settled.
| No one, i think, expects that these
| railroad companies will be able to pay
| their immense Indebtedness to the Gov
| e ecnnent at its maturity. Amy proceed
/ ing or arrangement that would result
/ now, or at any other time, in putting
| these roads or any portion of them in
| possession and control of the Govern
ment is, in my opinion, to be rejected
| certainly as long as there Is the least
| chance for indemnificatioh through any
other means. i suppose we are hardly
Justified in indulging the irritation and
| indignation naturally arising from the
contemplation of malfeasance to such
an extent as to lead To the useless de-
| ssruction of these roads or loss of the adj
| vances made by the Government. 1 be-
lieve that our efforts should be in a more
practical direction. and should tend,
4 Il -