Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1888-01-02
Pacific Railway Commission Reports.


The majority of the Pacific Railway Com
mission has filed an extremely lengthy re-
port, accomp panied by four bills which il
advises Congress to pass, in order TO make
an adjustment of the issues between the
railways and the Government.
The debt of the Central Pacific Railway
to the Government is computed as follows
by the Commission:
Principal of So7 S55 $50 90
Interest to maturity, November 16,
So 140 224 90
Total................. ......... .s77, ,995, ,s04 O5
Deduct bond and interest account. 6,2OSS79 S.
Balance. 1922 524 Go
The approximate present value of ST.
792, ,524 65 is So, 100000, and deducting the
amounts in the sinking fund, 3,41S 996 OF ,
leaves the approximate present value of the
debt of the Central Pacific to the Govern
ment $49, ,331 ,003 80.
The Commissioners signing the majority
report find that neither the Union Pacific
nor the Central Pacific can pay the debt to
the United States Government al maturity.
They sustain the position taken by the
railroads that only the aided portions of
the road are covered by the Government
lien and not the branch lines. They say
that the value of the aided portions of the
lines if foreclosed under the lien of the
United States would be wholly inadequate
to satisfy the debt, and they recommend to
Congress the passage of the accompanying
measures for the adjustment of the debt:
In brief the bills, which differ onlyin the
names of the aided roads, authorize the
proposition to be made to the roads to issue
to two Trustees, one to be named by the
praSilapf and hu roads
gage, and issue bonds upon which it is to
be based, payable in fifty years. To the
principal of the present bonds is to be
added the interest paid and to be paid by
the United States deduct the amount of
interest paid the United States in REIN
bursement by the roads, and all credits
which appear in the bond and interest ac-
count Then compute the worth of the
amount so found as of the first day of July.
1888, on the basis that money is worth 8
per cent. per annum by discounting the said
amount at per cent. per annum,
compounded semi annually for the period
between the date of average ma
turity of the said bonds and the first
day of July, 1888. From the sum so
ascertained, deduct the amounts in the
sinking fund, computing the value of anv
bonds in the sinking fund at their market
value at the time of such computation.
The final sum so computed and ascertained
to be deemed the sum that would be re-
quired to be paid in cash on the first day
of July, 1888. The bills then provide that
the new bonds are to bear three per cent.
interest, are to be $1,000 each, and be pay
able in fifty years.
The roads are each annually, on the 1st
day of July in each year, commencing on
the 1st day of July, 1889, to pay to the
Trustees the sum of one-half of one per
cent. of the entire amount of the outstand-
ing bonds issued under the mortgage until
and including the year 1888, and after that
date pay annually the sum of one per
centum. The annual payment shall be
held by the Trustees as sinking fund ap-
plicable to the redemption of the principal
of the said bonds at maturity. The said
Trustees shall have full power to invest, re-
invest and change the investment of the
funds securities and moneys held by them
in the said sinking fund
It is estimated by the commission that
in fifty years this porcess will discharge the
debts. Restraining provisions are given
as to payment of dividends, SO as to forbid
dividends in excess Of per cent. and only
then when earned, above all interest pay
ments, in the year preceding excess of
per cent. is to be paid TO the Trustees to be
applied to reduction of the debts. II the
companies refuse these propositions then
the Thurman Act is to be amended so as
to collect 40 per cent. of these net earnings
instead of %, and the Secretary of the
Treasury is to sell securities held by
him and apply the proceeds to the
purchase of first mortgage bonds of the
roads, or in other securities If the roads
accept, the Government is to offer to the
roads 81 % per acre for all unsold lands
granted them, that are free from incum-
brance, the aggregate to be applied on
account of the bonds authorized by the
Act.