Fort Worth daily gazette. (Fort Worth, Tex.) 1882-1891, 1888-12-21
IT MEANS MISCHIEF.
A Little Amendment Which Looks Very
InnOcent-Another Attempt at
Wholesale Robbery in the Interest of the Pacific
Roads-A Scheme to Place the Govern
ment in Debt to the Railroads.
Cleveland Plain Dealer Special.

WASHINGTON, Dec. Ex-senator Nit
chell's amendment to the Outhwaite Pa
cific Railroad funding bill, mention of
which was made in these dispatches Fri
day, is said by those who have studied it
| to be the most gigantic attempt to de-
fraud the government which has yet
made its appearance in the wholesale
robbery of the public purse by the Pacific
railroads.
The amendment is not an effort on the
part of the government to make these
derelict debtors of 500 coo 900 pay off
the Indebtedness but it appears to be the
scheme of c. Z. Huntington vice-presi-
dent of the Southern Pacific and the rep
resentative OF the Union, Central and
Kansas Pacific, to avoid payment en-
tirely.
The amendment is virtually a PROPOSE
ton made by the railroads last year with
out the change of a feature. The amend
ment is a monstrous proposition. Instead
of taking the debt of SIl7 900 900, as
shown by bonds outstanding, it proposes
to refer the question of the amount due
from the Central, Union and Kansas Pa
cific to the court of claims for adjudica-
ton. That is, the official records in the
treasury are to be laid aside and the court
of claims is to consider what set-offs and
credits these two roads should be given on
account of certain equities which
they set up, such as the
fact that they finished the road
some years before the limit of time al
loted them and others Of a like character
for which they have the audacity to ask
N money consideration. They claim that
by the allowance of these equities the
total debt would be scaled down to about
dne-half. The total debt as fixed upon
by the court of claims is to be extended
ih semi-annual payments each of l-250
phrt of the debt for 125 years at per
cont. interest. The amendment also
provides that the roads shall give a first
mortgage on all the roads, branches,
of these $50 bonds.
But the trick of the bill is in section %,
which reads as follows:
90 That the said company is and shall be
authorized at any time, or from time to
time, to redeem all or any part of sand
bonds by payment thereof under discount,
reckoning money of the value of per
centum per annum, payable semi-annu-
ally
The, force of this section is only appa-
rent on careful consideration. There are
two kinds of discount, bank discount and
what is known as "true' discount.
Neither is mentioned specifically land it is
far to presume that the most favorable
to the railroad would be taken by them
Now note the curious working of this
plan. Suppose the amount of the debt
should be fixed in the court of claims and
go bonds, payable semi-aunually, should
be issued-each of l-250 of the total debt.
A month after the issue of the bonds
the railroad bondholders could come to
the United States treasurer and ask
him to redeem the bonds at 2 per cent
discount, as agreed by section % of the
amendment, and q settlement on that
basis would place the government in debt
to the railroads 20 per cent. of the
amount due. On q debt bearing interest
to mature i'll certain length of time the
mean debt is half. Discounted at per
cent. for sIXty-twO and one-half years
(half of the time) would place the gov
eminent on the debit side of the ledger
to the eXtent,of % per cent. of the total
amount. This calculation is made on the
bank discount basis. A similar calcula-
tson on the basis of "'true discount
Ncuiu permit tine IullTOuCtS 10 SelIlc OH Il
basis of As cents on the ST.. In other
words it appears to be q shrewd trick on
the part of C. ?. Huntington to draw the
government into a contract which either
vitiates entirely the old debt of the
railroad and makes the government pay
to its debtors or it relieves them to the
extent of 81 per cent. on the 81.
The Union Pacific (or Cultivate bilD
determines the amount Of the debt, for
the records in the treasury department
makes0ne- fftieth of the debt payable
apTnally at per cent. interest, and
Furnishes the road when payment does not
aggregate one-fftieth of the entire
amount by increasing the percentage I'M
der the. Thurman act Default on pay
ment under the Union Pacific bill oper-
ates by Immediately maturing the whole
debt and allowing the government. to
place the roads into the hands of re-
ceiver.
c. p. Huntington, the author of this
scheme, was one OFF the original bond
holders and helped 10 dissipate q great
deal of the company money. Every
one in Washington knows his reputation
as a corruption st, ard seldom session
of congress passes By that he does not
have heavy lobby III Washington in the /,
interest of some railroad bill.