Crawford avalanche. (Grayling, Mich.) 1879-19??, 1888-01-26


by the law Of 1862 to constitute hrst mort
gage upon all the property Of said companies,
should become a junior lien and be subordin-
ated TO a mortgage which the compani es were
by the amendatory act, authorized to execute
TO secure bonds which they might from time to
amount Of the United States bonds which
should be advanced to them. The immense ad-
vantages to the companies Of this amendatory
act are apparent. and in these days we.may
well wonder that even the anticipated public
Importance Of the construction OF those roads
induced what must now appear to be a rather
reckless ana nnguaIded appropriation of the
public funds and the public domain
Under the operation OF these laws the princi-
pal OF the bonds which have been advanced Is
missioners; the interest TO November /, 1887. is
calculated to be S76.O2s. .2O6. making an agRre-
gate at the date named OF sl4o. 4I71s The
interest, calculated TO the maturity OF the
bonds, added TO the principal, produces ag-
gregate Of Sl76, ,759 Against these amounts
there has been repaid by the companies the
sum OF S3O.9,5.O39 1t is almost needless to
state that tho companies have availed them
selves to the utmost extent of the permission
81 en- them to issue their bonds and to mort
gage their property to secure the payment OF
the same by an incumbrance having prefer
ence of the government lien and
precisely equal to It in amount. 1t will be
seen that there available for the building
of each mile OF these roads $4,000 in bonds OF
tho companies, secured by 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 be-
tween the Government and these companies
by the legislation referred to is considered it is
astonishing that the claim should be made
that tho directors Of these roads owed no duty
except to themselves in their construction
that they regarded no interest but their own,
and that they were justified in contracting with
themselves and making such bargains as re-
suited IN conveying to their pockets all the as
sets of the company AS a lienor the Govern
ment was vitality interested in the amount OF
the mortgage to which its security had been
subordinated, and it had the right to insist
IN nnn Of fhn na Fnh hui D. do.
mortgage should be issued fraudulently or for
the purpose Of divis on among these stockhold-
ers without consideration. The doctrine OF com
plete independence on the part OF the directors
OF these companies and their freedom from any
obligation to care for any other interest but
their own in the construc lion OF these roads
seemed to have devel ped the natural conse-
quences of its application. portrayed as follows
In the majority report OF the commissioners:
"The result Is that those who have controlled
and directed the construction and development
OF these companies have become possessed OF
their surplus assets, the reissue of bonds,
stocks. and payment of dividends voted by
themselves, while the great creditor the United
a1ate secnrty or Y ytsn9st % ado
The laws enacted in aid of these roads, while
they illustrated a generous liberality and a
generous surrender of the Governments ad-
vantages, which 1t is hoped experience has
corrected, were nevertheless passed upon the
theory that the roads should be constructed nc
cording To the common rules of business fair
ness and duty, ard that their value aud ability
to pay their debts should not bo impaired by
unfair manipulation and when the Govern.
ment suS 1rdinated its lien to another it was
in the expectation that the prior lien would
represent in its amount only such bonds as
might 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 improving the security afforded by its junior
lien, the Government should have the right now
to purge this paramount lien of all that is
fraudulent, fictitious, or unconscionabe. II the
transfer to innocent hands of bonds of this char
anNa .Nn11 Il,
their cancellation, il might be well to seek
remedy against those who issued and trans
ferred them. If Hlesislation is needed to secure
such remedy Congress can readily supply it.
desire to call attention also to the fact that
IL all that was to be done ON the part of the
Government to tully vest in these companies
the grants and advantages contemplated by
teen erfected, and II tie FAILURE Of such COM
panies to perform in good faith their part OF
the contract Justifies such a course. the power
rests with the Congress to withhold further per-
formance the part of the Government. II
donated lands are not yet granted to those COM
panies, and il their violations Of contract are
such as in justice forfeits their rights to such
lands, Congressional action should intervene
to prevent further contamination.
Executive power must be exercised according
to the existing laws, and executive discretion
is probably not broad enough to reach such
difficulties.
part OF the Central Pacific system, and is a
iand-grant road. It's construction has been
carried ON with the same features and incl
dents VIII ch characterized the other conStruc-
ton of this system, as is made apparent OH
pages 7S 40 and 81 of the report Of the majority
of the Commissioners have in my hands for
approval the report bof the COmmissiI ners ap-
pointed to examine two completed sections OF
this road. Upon such approval the company,
or the Central Pacific Company will be entitled
to patents for a large quantity Of public land.
iespecially commend to the attention OF Con-
cress this condition of affairs in order that it
may determine whether or not it should inter-
vene to save these lands for settlers. II such
course is justihable.
1t is quite time that the troublesome compli-
cations To- us sh as legacy from former
days, should be adjusted aud settled. No one,
/ think, expects that these railroad companies
will be able to pay their immense indebtedness
to the Government at its maturity.
Any proceeding or arrangement that would
result now. or at any other time IN putting
these roads, or any portion OF them, in the pos
session and control of the Government Is, in my
opinion, to be rejected certainly as long rs
there is the least chance for indemnihcation
through any other means.
suppose we are hardly justified in indulging
the irritation and indignation naturally arising
from contemplation OF malieasa1ce 10 suen
an extent as to lead to the useless destruction
of these roads or to the loss OF the advances
made by the Government. / believe that our
Efforts should be in n more practical direction,
and should tend with no condonation OF wrong
doing to the collection by the government ON
behalf of the peep OF the public money now
While the plan presented by majority OF the
commission appears to be well devised and gives
at least q partial premise OF the results sought,
the fact will not escape attention that its sue
cess depends upon its acceptance by the COM
panies and their alb lity to perform its condi-
tions after acceptance. It is exceedingly Inn
portant that any ad lustment now made should
be final and effective.
Those considerations suggest the possibility
that the remedy proposed in the majority re-
port might we'll be applied to q part only OF
these aided railroad companies.
The settlement and determination OF the
questions involved, are peculiarly within the
province of the Congress. The subject has
been made quito q familiar one by Con-
gressional discussion. This is now supple
mented in a valuable manner by the facts pre-
sented in the reports herewith submitted