Evening star. [volume] (Washington, D.C.) 1854-1972, 1888-01-17
THE PACIFIC RAILROADS,
Message Of the President % Congress
To-day.

Il
To-day.
| IN FAVOR OF WITHDRAWING THE GRANTS, But oP-
POSED TO GOVERNMENT CONTROL OF THE ROADS
HE URGES THE NECESSITY OF FINAL AND RP-
| FECrIvE LEGISLATION.
| The President to-day sent TO the Senate and
House the majority and minority reports Of the
| PACING Railroad Commission which have been
| published, accompanied by message on the SUBJ
Ject, In which he says that 'rhe majority Of the
commission are In favor Of an extension OF the
time for the payment OF the Government indebted
| ness of the companies upon certain condition.
But the chairman OF the Commission, presenting
the minority report, recommends, both upon prin-
cple and policy, the institution OF proceedings for
the forfeiture OF the charters Of the corporations
and the winding up OF their affairs.
The President quotes from a statement or argu-
ment In DEFENSE OF the transactions connected
with the construction OF the Central Pacific Road
ana It's branch lines for the purpose of showing
now some OF the operationso the directors OF sucn
road, strongly condemned by the commissioners,
are defended by the directors themselves and says
IN view OF this statement and the facts devei-
oped 10 tne commissioners reports ~ seems proper
10 recall the grants and benefits derived from the
General Government by both the Union and Gen.
Of iGr 81 AZ
TO the law Of 1852 giving the first aid to the COM
panles IN conStruciing their roads the mes
anu privileges provided for in this law, were
granted oy the General Government for the
purpose OF securing the construction OF these
| roads. which would complete the connection be-
tween our Eastern and Western coasts and
| thei were based upon consideration OF the
pubic benefits which would accrue TO the entire
country from such construction.
But the projectors OF these roads were not con-
tent, and the sentiment which then seemed to
peryade the Congress had not reached the limit OF
us generosity. Two years after the passage OF
ms law IT was supplemented and amended In
various Important particulars In favor OF these
othe: things that the bonds at the rate already
specified should be delivered upon the completion
OF sections of 20 miles in length instead OF 40,
that the lands 10 be conveyed 10 said companies
on the completion OF each section OF said roads
i've that only half OF the charges for transporta-
tlOn ana service due from time to time from the
United states should be retained and applied 10
the advances made to said companies by the Gov
ernment-thus Oblig1ng immediate payment to It's
debtor Of the other half OF said charges-and that
the lien OF the United states TO secure the reim-
burSement OF the amount advanced to said COM
panies In bonds, which lien was declared by the
law OF 1862 to constitute first mortgage upon all
the property OF said companies, should become
junior lien and be suboTdinated to a mortgage
which the companies were by the amendatory act
authorized TO execute TO secure bonds which they
might from time TO time issue In sums not exceed.
ing the amount Of the United States bonds which
should be advanced to them.
'.The immense advantages to the companies OF
days we may wen wonder that even the antici-
pated public Importance OF the construction OF
these roads induced what must now appear to be
rather reckless and unguarded appropriation Of
the public funds and the pubic domain.
''Uhder the operation Of these laws the principal
OF the bonds which have been advanced Is $64 O23-
5l2, as given in the reports OF the commissioners
The interest to November 1, 1887 is calculated TO
be $I6,O24, 2OS.5S making al aggregate at the date
named OF $l40 ,O47, 71S.5S The interest calculated
10 the maturity or the bonds added 10 the princi-
pal produces an aggregate OF $l7S Ss4, 1880.
Against these amounts there has been repaid by
the companies the sum OF $50, 9o5, 0396l.
at is almost needless TO state that the compa-
hotn ind alxr1,-
Of the permission given them 10 issue their bonds
and TO mortgage their property 10 secure the pay
ment OF the same by an incumbrance having pre-
ference OF the Governments lien and precisely
equal to 1t In amount.
ut will be seen that there was available for the
building or each mile OF these roads $4,000 OF
United states bonds, due in thirty years. with per
cent interest; $4,000 in bonds OF the companies,
secured by first mortgage on all their property,
and ten sections or Government land, TO say
nothing of the stock of the companies.
when the relations created between the Govern
ment and these companies by the legislation
ferred TO Is considered, it is astonishing that the
claim should be made that the directors OF these
roads owed no duty except to themselves in their
construction. that they heed regard no interests
but their own and tnat they were justified In their
contracting with themselves and making such
bargains as resulted In conveying TO their pockets
all the assets OF the companies. As a leinor the
Government was vitality interested In the amount
OF the mortgage TO which its security had been
Subordtnated, and IT had the Tight TO insist that
none OF the bonds secured by this prior mortgage
should be issued frauduently or for the purpose of
division among these stockholders without con-
Sidera ton.
1.-the doctrine of complete Independence on the
part OF the directors OF these companies and their
freedom from any obligation to care for other in
ereSts than their own in the construction OF these
roads seems TO have developed the natural cOnse-
quences OF It's application, portrayed as follows in
the majority report Of the commissioners:
The result Is that those VINO nave controlled
and directed the construction and development OF
these companies have become possessed OF their
surplus assets, through issues OF bonds stocks
and payment OF dividends voted by themselves
while the great creditor. the United States finds
itself substantially without adequate security for
the repayment or It's Loan
1.-THE laws enacted In aid of these roads while
they illustrate profuse iberality and a generous
II is hoped experience has corrected, were never
theeSS passed upon the theory that the roads
should be constructed according to 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 manpulations
and when the Government subOrdin aLed Its lien 10
another II was In the expectation that the prior
lien would represent Units amount only such bonds
as should be necessarily issued by the companies
prices, agreed upon in an honest way between real
and substantial parties. For the purpose OF saw.
ing or improving the security afforded by its jun
Tor lien the Government should have the right now
to purge this paramount lien OF all that is rraud-
lent, fictitious or unconSciOnable II the transfer
to innocent hands or bonds OF this character Sc
curel by such first mortgage prevents their can.
collation. IT might be Wen to seek a remedy
against those who issued and transferred them.
the Congress can readily supply 1t.
81 desire TO call attention also to the fact that
IL all that was TO be done the part OF the Gov
eminent to fully vest in these companies the
grants and advantages contemplated by the acts
passed in their interest has not yet been perfected
and II the failure OF such companies to perform in
good faith their part Of the contract 1ustes such
Il course, the power rests with Congress to with
hold further performance on the part OF the Gov
eminent. II donated lands are not yet granted to
these companies, and II their violation OF contract
and OF duty are such as In justice and morals for
felt their rights to such lands, Congressional ac
ton should intervene 10 prevent further consume
ton. Executive power must be exercised accord
ing to existing law, and Executive direction is
probably not broad enough TO reach such difficult
ties.
'The California and oregon Railroad is now a
part OF the Central Pacific system, and Is land
grant road. It's construction has been carried on
with the same features and Incidents which have
characterized the other cOnStructiOn of this syS-
TEN, as Is made apparent on pages 7S, - and So
OF The report OF the majority OF the Commissioners
have in my hands for approval the report OF COM
sections Of this road. Upon such approval the
company or the Central Pacific co. will DE entitled
TO patents for large quantity OF public lands, l
especially commend TO the attention of Congress
this condition OF affairs, In order that 1t may de-
ternine whether or not 1t should intervene to save
these lands for settlers II such course Is justia-
be.
at Is quite time that the troublesome complica.
tlo1s surrounding this entire subject which has
been transmitted to US as a legacy frOm former
days should be adjusted and settled.
mo one, think, expects that these railroad
companies will lie able to pay their immense In.
debtedneSs to the Government at its maturity.
ANY proceeding or arrangement that would re-
suit now or al any Other time in putting these
roads or any portion of them In the possession and