St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1888-01-18

to be conveyed to said companies on the
completion of each section of said roads
should be ten sections per mile instead
of five, that only half of the charges for
transportation and service due from
time to time from the United States
should be retained and applied to the
advances made to said companies by
the government, thus Obliging immedi-
ate payment to its 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 companies in bonds, which lien was
declared by the law of 1862 to
constitute first mortgage upon
should become junior lien and be sub
ordinated to mortgage which the COM
panieS were by the amendatory act au-
thoriZed to execute to secure bonds
which they might from time to time
issue i'll sums not exceeding the amount
of the United States bonds to be ad-
vanced on them.
The immense advantages to the COM
panieS of this amendatOry act are ap-
parent; and in these days we may well
wonder, that even the anticipated pub
lie Importance of the construction of
these roads, induced what must now APP
pear to be rather reckless and UNI
guarded appropriation of the public
fundS:and the public domain.
Under the operation of these laws the
principal of the bonds which have been
advanced is $6i,023,512 as given in the
reports of the commissioners; the inter
est Nov. l, 1887, is calculated TO be S76,-
O24, 2O6.5S, making an aggregate at the
date named of $40, ,71S.5S. The in
tereSt calculated to the maturity of the
bonds added to the principals produces
an aggregate of SITS. S74.759.50. Against
these amounts there has been repaid by
the companies the sum $50, 1855, 039. 81.
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 prop
erty to secure the payment of the same
by an encumbrance 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 in thirty years
With per cent interest, $4,000 i'll bonds
of the companies secured by a first
mortgage on all their property, and ten
sections of government 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, 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 need re-
gard no interests but their own, and
that they were justified in contracting
with themselves and making such bar
gains as resulted in conveying to their
pockets all the assets of the companies.
AS lienOr, the government was vitality
interested in the amount of mort
gage to which its security has
been Subordinated, and it had the
right to insist that none of the bonds
secured by this prior mortgage should
be issued fraudulently or for the pur-
pose of division among these stockhold-
ers without consideration. The doe
trIne OF complete independence on the
part of the directors of these cOmpan-
les, and their freedom from any obIiga-
ton to care for other interests than
their own in the construction of these
roads seem to have developed the nat
ural consequences of its application,
portrayed as follows in the majority re-
port of the commissioners: "The re-
suit is that those who have controlled
and directed the construction and de-
velopment OF these companies have be-
come possessed of their surplus assets,
their issues on bonds, stocks and pay
ment OF dividends voted by themselves,
while the great creditor, the United
States, is itself substantially without
adequate security for the repayment of
its loans" The laws enacted in aid of
these roads, while they Illustrate pro-
fuse liberality and generous surren-
der OF the governments advantages,
which, it is hoped, experience has cor
rected, were nevertheless passed, upon
the theory that roads should be con-
Structed according to the common rules
OF business, fairness and duty,
ana that their value and
their ability to pay. their
debts, should not be impaired by unfair
manipulations; and when the govern
ment subOrdinated itself to another, it
was in the expectation that the prior
lien would represent in its amount only
such bonds as should be necessarily
issued by the companies for the con-
Struction of their roads affair prices,
agreed upon in an honest way, between
real and substantial parties for the
purpose of saving or improving the
security afforded by it's Junior lien. The
government should have the right now
to purge this paramount lien of all that
is fraudulent, fictitious or unconscious
able. Ii the transfer to innocent hands
of bonds of this character, secured by
such first mortgage, prevents their can
collation. it might be we'll
TO SEEK A REMEDY
against those who issued and trans
ferred them. If legislation is needed
to secure such result, congress can
readily supply it. desire to call atten-
ton also to the fact that if all that was
to be done on the part of the govern
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 contract,
Justifies such course, the power rests
with the congress to withhold further
performance on the part of the govern
ment. If lands are not granted
to these companies, and if their vio-
lation of contract or duty are such
as, in justice and morals, forfeit their
rights to such lands, congressional ac-
ton should intervene to prevent fur
Their contamination. Executive power
must be exercised according to existing
laws, anu executive QlSCretl0n is prOba-
bly, not broad enough to reach such diff
cultieS. The California q Oregon is
now part of the Central Pacific sys-
TEN. and is land grant road. Its con-
struction has been carried on with the
same features and incidents which have
characterized the other constructions of
this system, as is made apparent on
pages rs, 70 and so of the report of the
majority of the commissioners. have
in my hands for approval the report of
commissioners appointed to examine
two completed sections of this road.
Upon such approval the company, or
titled to patents for large quantity of
public lands. l especially commend to
the attention of congress this condition
of affairs, in order that it may determine
whether or not it should intervene to
save these lands for settlers, if such a