Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1889-05-18

amount of business transacted, the cost O.;
maintaining the road, as to the amount of gross
net earnings, as TO what constituted net earn
lngs, as to business connections or rivalries with
other roads, or any other matter whatsoever
connected with the operation or business of the
companies.
These payments of 81, coo 900 annually were to
continue for q period of twenty-five years, and
at the expiration of that time the principal of
the bonded Indebtedness icing then DUE any
balance remaining due from either of said COM
panles on account of principal and interest was,
a1tsr deducting the amount standing TO the
credit OF the sinking fund.- to be divided into
nifty equal semi-annual installments, to be paid
by said companies respectively, one of which
was to be paid on the first day of April and one
on the first day of October in each year, with ali
accrued interest from October l. 1900, on any
balance remaining unpaid atsthe date of matur-
lty OF each installment, and at the same rate of
interest per annum paid by the United States
on the larger part of its public debt on the first
DAY OF January preceding the date of payment
| of the several installments.
This bill was intended as a full and final adj
Justment between the United States and these
| railroad companies in reference to this greet
controversy. 1t was then generally understood
most certainly was it so understood by the
members of the Committee on Railroads II, the
1rst session OF the Forty-tfth Congress- when
| this bill was reported from the committee BY
senator Matthews with the approval of every
member-that while the representatives of the
companies affected by it insisted strenuously as
| they did In arguments before the committee
That the terms were more rigorous than they
4
| settlement of the controversy, and of with
drawing 1t forever from the halls of legislation
ana the forum of Courts, they would, II nothing
DETER could be tend red accept its terms should
IL become Il law, and take the necessary Steps
on their own account to invest the required
| wv 1900 at once, and to provide fund from
which the sum of 81 600 each six months or
S2O00.0OO every year could be paid into the
| Treasury of the United States to the credit of
me sinking fund proposed by the provisions of
| the Matthews bill. And hence it was that in
the fifth section of that bill it was provided as
| follows
That this Act shall take effect upon its &C
ceptance by said railroad companies or if &C.
cepted by any one of said companies, then as to
! the company SO accepting the same, which nc.
ceptance shall be filed with the Secretary of the
Treasury within four months from the passage
of this Act. ana shall show that said company,
| or SAID companies, have agreed to the same at "a
| meeting of stockholders"
Suppose, therefore, Mr.. President that this
| bill, instead of the Thurman BILL had become a
| law and had been accepted by the companies
and It's provisions complied with, what mani
| testify and unquestionabiy would have been the
result as compared with the results actually ex-
perienced under the Thurman Act? Can any
one doubt, in the light of the history of the
past ten years. as to the great advantage the
| government would have realized under this
Dill as compared with that it has realized under
| the Thurman Act?-to say nothing of the great
Importance to all concerned of securing at that
| time complete and final settlement; OF this dis
| turbing and perplexing problem
Under the latter we had as we have seen, in
| this sinking fund in the Treasury of the United
| States October !, 1886, including Accommodations
of interest on the rs Ter mt of ascertained net
earnings paid in, the sum total of but sl0 49,
| 962 IS, whereas under the Matthews bill we
would nave mad on that date, under compli-
ance OF its provisions upon the part of the COM
panles, exclusive of interest on any part OF the
| 9'nedent selnfannusl paymen s. the sum of
slSO01,OO0, or nearly double. saying nothing
whatever OF interest on semi-annual payments
/ the amount accumulated under the Thurman
| Act, including accumulated interest to that
date, while today we would, under the Mat
| thews bull have had. exclusive of interest on
| anv part of the fund, over S23,0O0,00 in the
| sinking fund to the credit of these cornpanies
as against the sum of S1l 2i3.27l H. or less than
| one-haIf in that fund on the first day of the
present month, exclusive of interest on invest
| ments
But when we come to add the accommodations
| In the shape OF interest, even at per cent as
| stipulated in the Thurman Act there would
had the Matthews bill instead of the Thurman
Act become the law, have been sum total in the
sinking fund in October. 1886 of over S26 600 900
| insteae of Sl0,I73 S62 IS i; while today we
would have had nearly So 600 900 in such fund
as against Sl2652,z26 "a, or but little in excess
| OF one-third of this amount including prinei-
| pal and interest, on investments now in such
| fund under the operation Of the Thurman Act
| while at interest computed according to the rule
| prescribed in the Matthews bill-that is to say,
interest on all sums placed to the credit of the
sinking fund, to be credited and added thereto
semi annually, at the rate of per cent per
annnm the amount in the sinking fund to-day
| would be over S35 900, 0O0 as against less than
Sl300l ,OOO by nearly $50 600 realized under the
| Thurman Act.
But let us inquire as to how the accounts
would stand with the individual companies in
| respect of amount in sinking fund had the
| Matthews bill become a law, as compared with
Its present condition under operation of the
| thurman Act. Take the Central Pacific Com
pany, for instance. Under the operation of the
| thurman Act on October l, 1886, in the sinking
| fund to the credit of that company, including
Cash payments and transportation service and
1 no sI1rrl
was only S2.9l7 ,925 IS, and including the sum of
| s299,6iO 5S interest on investments, n sum total
| OF but So 500 &c. while only slO42OO4 81 of
this amount was then invested in bonds and
bearing interest.
Now, then, under the provisions of the
! Matthews bill, so roundly denounced at the
| time 1t was being urged, had it instead of the
| thurman Dill been enacted, and its provisions
| complied with, there would nave been on Oc-
tober !, 1886, IN the Treasury of the United
| the credit of the Central Pacific Company a
| sum exclusive of all interest on Investments of
W 10000, IS against the sum of 81 1898 IS
then found there under the Thurman Act while
/ with interest accommodations as in the Matthews
| bill provided, the amount would then have been
| about $40! 10000, as compared with the then
| sum total including denominations of interest
| under the Thurman Act
But not only 30. Under the Matthews bill
had II become a law instead of the Thurman
Dill, there would, TO say nothing whatever of
| loterest on semi.annual payments paid in dur.
| ing the forty-Iour periodic terms of TWENTY-FIVE
years until The principal of the bonds matured.
have been paid to the credit of the sinking fund
| in the Treasury of the United States the sum of
81 600 COO in cash toward the liquidation of the
| Indebtedness; and this, too. irrespective of the
| question as to whether either of said companies
had realized per cent. or 200 per cent net earn
| ings; but when we come to consider the proper
| and reasonable aecumnlations of interest on
| that fund, even on the principle of determining
as to the rule of interest prescribed in the Thur
| man Act, which suggested as preferable inv est
lnenIs IN . per cent. interest bearing bonds of
the United States. the amount thd would have
| been IN the sinking fund in the Treasury of the
United States October j, 1900. to be applied in
| liquidation of the Indebtedness in connection
with former repayments of interest by the CON-
pan1es, would have cancelled nearly 500 900 900
OF the debt: while under the provisions of the
] Matthews bill, which provided that each semi
| annual payment should bear interest at per
| CENT the then Government rate of inrere.t. the
| amount in the sinking fund October l. 1906
| would, under the provisions of the Matthews
bill, have been. including all repayments of in
| terest by the companies considerably over $780,
| OO0OOO, leaving only about s52 600 COO of the
| debt remaining unpaid. and it must be re-
membered that ten years ago 6 per cent. was
| deemed reasonable Government rate of inter
| est. And we could then, ten years ago, have Sc
| cured an arrangement with these companies
whereby the Government would have realized
| to per cent. interest on ali deferred payments
| whereas now We will be fortunate il we get 3,
| or even2
Indeed, so fully and conclusively have the
| practical workings of the Thurman Act demon
strated its iDefficency and absolute failure and
| at the same time vindicated the policy and plan
| proposed By the Matthews bill of eleven Years
| ago. and which principle has now been adopted
| not only by an important committee of another
body, but also by the judiciary Committee of
the Senate in bill reported from tnat commit
tee, as l believe, unanimously, during the last
| Congress. for the repeal of the Thurman Act
ana the CREATION of q sinking fund by fixed
semi-annual payments upon the part of each
company, instead of certain per cent. on net
earnings. and also by the ect committee
which reported the pending bill, that all Gov
eminent officials and others who by authority
| have recently spoken on the subject unite in
| recommending new legislation in which shall
be incorporated the principle OF the Matthews
BILL and in which the principle of the Thurman
Act and the Act itself shall be repudiated In
fact, as | understand il, the per cent on net
| earnings idea, which is the fundamental theory
oil the Thurman Act is regarded as having been
tried and found wanting. The honorable Com
missioner of Railroads, in his report for 1881.
page IS, said
| in my judgment il Is clear that the Govern.
ment VIII be best protected by reasonable ex-
| tension of time, and by funding the whole re-
naming debt and iateres: in Obligations of fixed
amounts and maturity. such extensions should
be coupled with provision which shall require
the companies TO pledge for the payment of each
maturing instalmedt all earning for Govern
ment service over all lines. aided and non. aided
owned. leased or operated by such companies,
| respectively"
While the present Commissioner of Railroads.
| in his report for 1856, says:
. II is there suggested that It might be alike
advantageous to the Government and TO the