Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1888-03-21

of Washington Territory Idaho and Montana
How much of the trade was cut off by the Utah
Northern and the Southern roads?
Senator Stanford-Eyerything, so far as sup
plies were concerned, which naturally started
from this ide TO go west-that was all lost 10 us.
Aside from the competition caused by these
competing ines of raiIIoad we should have had
established our sinking fund, and except for the
interference by the Thurman Act it would have
been ample TO meet our obligations, and up to
the present time we have met every obligation.
There has never been a claim against the Cen
trail Pacific Road which has not been promptly
discharged Every department of the Govern
ment can certify that they have nsver had occa-
SION TO md fau-t with us in sis gle instance in
that respect, and the Government has received
all the Benefits 1t expected and great deal
more.
THE COMPACT.
The agreement between the Central Pacific
Railroad Company and the Government consti-
tuted contract. Each party to the contract
covenanted 10 perform certain things. AL those
things whit h the Government agreed TO give
the company were to become the property of the
company built and maintained The road held
II subject to certain governmental uses paid TO
the Government per cent of the net proceeds,
and allowed the Government to retain one-half
the value of the charges for Government trans
portation. Ii fully performed its contract If
the company had given 10 chari y all it received
from the Government. or had sunk it in the
ocean, either woulo have been the right of the
company, so lar as lis relations with the Gov
ernment were concerned. ALI the Government
had the legal or moral right to claim was that
the company should perform the Obligations of
the contract. That it has done from the day OF
the organization of the Central Pacific Railroad
Company down to this year; it has performed
every obligation public or private which il ever
undertook to perform. In regard to the savings
of the Government it can easily be thown tnat
the difference between what has actually been
paid out for this much better service and what
they were paying out on an average from 1850
to the present time is S7,0000OO year. That
they nave saved, and when you come to con-
slider the benefit TO the development of the
country II has caused IL is impossible to over
rate the amount besides this we saved
THE DISCOUNT TEST.
The Government in all other cases has SUBJ
mltted to discount in parting with the bonds
excepting to these railroads, and in their case
the Government has demanded the face of their
paper, and are collecting six per cent. int rest
upon it, so that at the date of the maturity of
the bonds, If we are called upon to pay them,
We shall pay s20,000,0UO TO the Cove nment for
that OF which we never had one penny. That
Is, the six per cent. interest ou the $1,000 600,
the difference between the value of the bonds
the Government loaned us and the amount we
realized at the end of thirty years the date of
maturity of the bonds, will amount to about
500 1900.
The Chairman-And you have realized as
much from the bonds as the Omitted States did
from the bonds 1t sold directly for its own
benefit?
Senator Stanford-We realized more, because
we held on to Them as long as we could We
had faith in the ultimate success of our Govern
ment i'll the war; and we hypolhecated those
bonds and in that way got much better price
than we otherwise should. We did not sell any
bonds at 40 cents on a dollar but one time the
currency was SO low that it took IS in currency
to buy 81 in gold, and, you know all our
business over there was done on gold basis.
COST OF SUPPLIES
Then the cost of our supplies was enormous
We had two engines on the road that cost us
S65, GOO which could be placed there to-day for
s14, 600 In order to push this road forward rap
idly we had great deal of the iron sent across
the lsthmus, and we had to pay $50 ton for
that. The war risks were very great Insurance
was very high and we had TO meet all OF them,
so that our road cost fully double what it would
have had it been built before or subsequent to
the war and built in the manner the contractors
would ordinarily build a road. But it was not
optional with US. We had to build it in that
way or lose what we had invested and there
fore we made the sscrifice
Senator Butler-When do your bonds ma
ture
TRAFFIC FALLEN OFF
Senator Stanford-In about ten years from the
present time. Now we are here, not because we
are derelict in our obligations to the Govern
ment, but because, as the entire evidence
shows, our business has fallen off very much
owing to the reasons l have stated, and the
probability is that we shall be unable to meet
our obligations at maturity. II was anticipated
that the Government business would alone pay
more than the interest that would save the in
| crest and pay large amount in addition. In
all the debates in Congress you will observe that
| they discuss this question. They said We
are paying out g, S,OOO,OC0 annually for tranSpor-
! tation west of the Missouri river" and the laws
! of 1862 and 1864 require that one half of the
| amount due on account OF transportation should
| go TO our credit with the Government and the
other half we were 10 receive in cash. They
said . We have been paying Ott 5000 COO
one-haf of that will be employed 10 protect the
| Government, and the company will have the
| other 100000 and can make that amount OF
| money but, as matters turned out, the Coy
ernment has paid out less than 81 10000 and
| that did not pay the Interest on the bonds. The
government, III that respect, was disappointed,
but it was owing to the fact that the great bene.
| fit expected by the railroad company in doing
| the Government business was not realized al.
| though the Government has had the service per
| formed at a rate cheaper than ever before. The
Government has lost nothing by reason of that
| fact on the contrary, it has been the gamer
| because, had the business been paid for at that
same rate, 1t would have put into our treasury
100000 year, and we should have bad that
| amount 10 our credit to settle this Indebtedness
AN UNDEvELoPED TERRITORY.
But contemplate for n moment the condition
of that country when we first went into it, In
the 1,S00 miles from the Missouri rlver to the
Sierra Nevadas there is not navigable water
course. There was 10 settl, ment except that OF
the MormonS in Utah. The Government has
had opened for settlement all that country and
II we pay these bonds at maturity the Govern
ment will enjoy all these great benefits without
having expended dollar in money 1t is en-
Joying those benefits now, and will for all time
to come You are all more or less acquainted
with the history of these times. 1t was consid-
cred very doubtful enterprise when first inti-
ated, so much so that in California until the end
OF 1861 no one would have anything to do with
it. 1t was regarded a hazardous enterpri. e.
and to snch an extent that in San Francisco all
the stock ior which we could get subscriptions
amounted to ten shares, valued at 81 600. At
sacramento some stock was subscribed for
caused by the local feeling and piide existing
will linz IN q. hi
but in San Francisco but ten shares were sub-
scribed for, and that subscription was made by
foreigner-a Frenchman. Nobody had any
confidence in it.
RECKLESS ENTERPRISE.
1t was considered most reckless enterprise
have been led to say much more than | eX-
pected TO when began, but l wanted to show
you the circumstances under which we COM
menced TO build this road. 1t was with the idea
that we were not to have competition: that we
would command a country which would prob
ably develop, and if we could get over the
mountains at all that the enterprise would be
great success, and the subsequent history of that
line shows that in this respect we should have
made no mistake and the reason the aided por-
ton of the road now is not ample security to
the Government arises entirely from the fact
that by the Governments own acts competing
lines have been constructed, and the business
injured 10 such an extent that it is doubtful if
we have the ability to pay. OF course it was
never supposed that the railroad would nav off
the bonds at maturity. l do not know of any
railroad in the country which pays its bonded
indebtedness except by issuing new bonds and
that Is the way we expected to do, because the
Government bonds and the first mortgage oonds
mature at the same time. AS it is, we have our
private sinking fund, and it is now between
nine and ten million dollars; gradually it will
take care of these first-morig gage bonds and
every dollar that goes into that fund adds so
much to the advantages the Government has.
SINKING FUNDS
The Chairman-That sinking fund YOU will
take care of yourselves?
Snator StanfoTd-Yes sir; and | want to i'm
press upon you the TACT that before these roads
came in competition with the business we were
then doing we were able to pay dividends, and
we wonld have been able 10 pay off the Govern
ment debts so far that we would have had no
difficulty in renewing a loan to meet it, and
were ourselves providing a sinking fund for
that purpose. When the Government passed
what is known as the Thurman bill and took
the management of the sinking fluid and the
payment of the debt out of our hands, we could
not make the provision required and also have
another fund, and 1t is not our fault that we do
not make that sinking fund. As things have
turned ou,, we could not have carried out the
earning capacity If the road at that time It
would not have been any trouble at all.
Senator awes-You would have had the sink
ing fund on that basis 10 meet bOth2
Senator Stanford We have our own private
sinking fund
Senator Dawes-That sinking fund did not
contemplate the meeting of both sets of mort
cages?
Senator Stanford-We have our own private
amount to about twenty million dollars at ma
turity, so we will lack ah0ut savan rnif1ior dni