The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1888-01-18

mile instead of five. that nly half of the charges
for transportation services due from time TO
zine from the United States should De retained
and applied to the advances made TO said COM
panies by the government, thus oblcing imme-
date payment to its debtor of the other half of
said charges and that the lien OF the United States
TO secure the reimbursement OF the amount
advanced to said companies In bonds which lien
was declared by the law of 1862 20 constitute
first mortgage upon all the property of said
companies. should become q junior lien and be
subordinated to n mortgage which the compa-
nies were by the amendatory act, authorized
to execute to secure bonds which they might
from time to time put forth, In sums not ex-
eeedipg the amount Of the United States bonds
which should be advanced to them The I'M
nense advantages TO the companies of this
amendatory act are apparent, and in these days
NAV well wonder that even the anticipated
public Importance OF the construction OF these
roads induced what must now appear to be
rather reckless aud unguarded appropriation OF
the public funds and the public domain
Under the operation Of these laws the prin-
eipal of the bonds which have been advanced ia
e64 O23. 5l2 as given in the reports OF the COM
missioners the interest to Nov l, 1851, Is calcu-
lated TO be SO, 024, 200. 80, making an aggregate
mt the date named of $40. 047 716 90. The inter-
est, calculated to the maturity of the bonds.
added the principal. produces an aggregate of
s176, SS4, 759. So Against these amounts there
has been repaid by the companies the sum OF
800 955 039 61 1t 10 almost needless to state
that the companies have ayailed themselves to
the utmost extent of the permission given them
erty secure the payment of the same by in
cumbrsnce having preference of the governments
lien, and precisely equal to it in amount 1t
will be seen that there was available for the
building of each mile Of these roads $4,000 of
United States bonds due 10 thirty years, with
per cent. interest, SIG 900 in bonds of the com
panies, secured by first mortgage on all theirs
property, and ten sections of government lands,
to say nothing OF the stock of the companies.
When the relation created between the govern
Ynent and these companies by the legislation re-
rrad IN in ia
claim should be made that the directors of these
roads owed no duty except to themselves in their
construction. that they need regard no interests
bns their own, and that they were justified in
contracting with themselves and making such
bargains as resulted in conveying to their
pockets all the assets of the companies. As a
lisnor the government was especially int erested
la the amount OF the mortgage to which its So
eurity had been subordinated, and it had the
right 20 insist that none of the bonds secured by
this prior mortgage should be issued fraudu-
lentIy for the purpose OF division among
these stockholders without consideration. The
doctrine of complete Independence OF the di-
rectors and their freedom from any obligation to
for other interests than their own in the
construction of these roads seems to have de-
veloped the natural consequences of its appca-
ton, portrayed follows in the majority report
OF the commissioners:
s'The result is that those who have controlled and
directed the construction and development of these
companies have become possessed of their surplus
through issues of bonds stocks and payment of
dividends voted by them while the great credit
or the United States finds itself substantially with
out adequate security for the repayment OF its loans
1.-THE laws enacted for these roads. while they
illustrated a profuse hberaity and a generous
surrender of the governments advantages, which
It is hoped experience has corrected, were never
theless passed upon the theory that the roads
should be constructed according to the common
rules of business fairness and duty. and their
value and their ability to pay their debts should
not be impaired by unfair manipulations; and
when the government suoordinated Its hen to
another IL was in the expectation that the
prior lien would represent in it's amount only
such bonds 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 improving the security
offered by it's junior lien, the government should
have the right now to purge this paramount lien
of all that Is fraudulent, fictitious or uncon-
scionable. If the transfer to innocent hands of
bonds of this character, secured by such first
mortgage prevents their cancellation. it might
be well to seek remedy against those who is
sued and transferred them. IF legislation is
needed to secure such remedy, Congress can 7
readily supply it.
II desire to call attention, also, to the fact
that If all that to be done on the part of the
government to fully vest in these companies
the grants and advantages contemplated by the
acts passed in their interests has not yet been
perfected, and If the failure of such companies
to perform. in good faith, their part OF the con-
tract justifes such course, the power rests
with the Congress to withhold further perform
ance on the part of the government If do
mated lands not yet granted to these COM
panies, and IL 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 consumma-
tion."
Speaking of the California g. Oregon Rail-
road now n part of the Central Pacific system,
the President says some OF its land grants
not yet made. and he asks Congress if it should
not intervene. Proceeding, he says:
ANY proceeding or arrangement that would
result now 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 long
there is the least chance for decentralization
through any other means. / suppose
hardly justified in INDUCING the irritation and
indignation naturally arising from coutempla-
ton of malfeasance to such an extent as to lead
TO the useless destruction of these roads the
loss of advances made by the government. l
believe that our efforts should be in a
practical direction, and should tend, with
no conformation of wrong doing, to the col
lection by the government, behalf of the
people, of the public money now in jeopardy
The fact will not escape attention that the
cess of the majority plan depends upon it's
ceptance by the companies and their ability to
perform it's conditions after acceptance. 1t is
possible that the remedy proposed In the ma
jority report might well be applied TO part
only of these aided railroad companies. The
and determination of the questions
involved are peculiarly within the province of
the Congress. The public interest urges prompt
and efficient action. GROVER CLEVELAND.
EXECUTIVE MANSION, Jan. II, 1885,"
RPEAKER CARLISLE