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


ment OF their trust. and to that end they should
De dismissed from attendance in Washington to
defend themselves in neverceasing Congress
ional controversies Roscoe Conkliug Ia the
/ United states Senate. February 6, lS7T, will
{. never be realized"
Mr., Mitchell-it will be seen. Mr.. Pr sident
that the government Directors of the Union Pa
ciic Railroad in their annual report for 1856 as
well as iii several other reports, repudiated not
only the principle OF the Thurman Act, but the
Act itse.f. and acting for the Government and
as It's ofhcers, and in its interest recommet ded
the passage of bill by Congress providing for
the payment of that company's debt in liked
semi,annual instaiiments. And again this
board OF high officials in their report of Noyem-
Der y, 1856. in condemning the Thurman Act
as not only comparatively worthless. hut
strangely and ridiculously unjust, in some re-
spects 10 both the Government and the compa-
mes, and in proposing new leg Station based on
the theory Of fixed s-mi-snnual payments into
a sinking fund irrespective of the amount of
net earnings. recommended an extension of
time of payment. and used this forcible and
significant language:
'ln its last annual report this Bosrd earnestly
some Act which would change aud settle the
present very unsatisfactory relations between
the Government and the railway company.
1T is admitted upon all sides that ext. ting
legislation is insufficient and las utterly failed
in several rescects
a. First-lt does not provide an annual sum
large enough even TO prevent an annual in
crease of the debt.
THE average amount of increase for some
years past has been over half million per an
mum
second-Existing legislation m axes no nro-
vision whatever for the large amount OF princi-
pal and accured interest which will become
due. at the maturity of the debt, in about ten
years
Innd-Existing legislation locks up even the
annus l,smounts which it does provide in such
manner that they do not earn per cent. per
annum. benefitlng no one by. this low rate, out
delaying the Government in the receipt of its
dues al causing serious and permanent loss TO
the railway company. The present amount
thus locked up is about Sc, 500 COO. and the an
nual IS to the company from the low rate OF
interest which ii earns is over $4,000"
While this relates, of course, only to the
Union Pacific, as the jurisdiction of the Direc-
tors did not extend any further, all that is said
here applies in general way to the condition
of Affairs connected with the Central Pacific
"Fourth-The method of determining the
annual amount to be reserved by the company
for meeting its debt is vague and uncertain
Differences of opinion onstantly arise between
the represe natives of the Government and
those of tDe company, which create friction aud
can only be authortatively settled in the Courts
after protracIed and expensive litigation. New
officers of the Government possess and exercise
the right of reviewing the methods and rulings
of their predecessors in office, and reopening
the accounts and settlements of former wears
The Government in short is made quasi part
ner of the company, with all interest in every
detail of its business, an unnecessary relation.
ship, and yexaiious to both.
Legislation has been suggested, and is now
before Congress. which seems well adapted to
correct all of these defects in existing laws and
to restore the Government to its true position
that of creditor.
ats debt is not yet due and is too large for its
debtor to pay Immediately, if it were due
Meanwhile its present security is Insufficient
But the debtor has additional securities which
may be pledged, and a solvent business Capable
of paying the entire interest and part OF the
principal each year if he only be per-
mitted to conduct and manage it in accordance
with business principles and with the same
| freedom enjoyed by its rivals. AT present the
debtor is hampered both by the partnership
and by the cloud upon his credit caused by tue
attitude of the Government Surely it is 10 the
great advantage Of both parties t1at this state
OF affairs should cease, that permanent ad-
justment should be made which will give the
Government ample security for its debt and nav
the interest in tull and part of the principal
each year, and give to the company freedom of
| action in the management of its business and
good credit in financial centers.
And OF the two the Government will be the
greater gamer by the adjustment. 1t not only
receives additional and ample security for its
debt in place of what is entirely insufficient
but ii win share indirectly in the benefs to re-
suit from the building of new lines and the de-
velopment of new territory in the west"
But not only so, Mr.. President, we find the
judiciary Committee of the Senate of which
/, the honorable Senator from Vermont Mr. Ed
! mundsl is now. as he was eleven years ago,
when he and his able colleague aud coadutor
on that committee, the then distinguished Sen
ator from Ohio, secured by their able efforts the
| passage of the Thurman bill the Chairman
| submitting a report to the second ses-
port No. 1890 in which the following statement
| is made in reference to the worthlessness and
| failure of the Thurman Act. That report says:
ut is further shown by the Commissioners
report, as all who have examined the matter
| now fully understand. that the Act of May T.
| 1875 (the Thurman Sinking Fund Act, has
| failed to accomplished Its ends and purposes
and it is manifest the payment of these debts
cannot be secured by and under this measure
and this from causes that could not be autici-
| pated when the Act was passed"
But, Mr.. President, they were not only antici.
4, pated when the Thurman bill was under discus
sion in this body, but were distinctly and
plainly brought to the attention of the Senate at
that time by more than o1e Senator, and urged
| as valid reasons why it should not become
| law.
l myself on that occasion, among other things,
of March TO- 1873:
.'wnile, therefore, Mr.. President 1 favor the
creation of sinking fund that will fully in.
Gemuify the Government dollar for dollar for
| the S150, 600 and over that will be due from
these companies about the year 1900, oppose
the measure reported from the Judiciary Com
miitee; first. because | believe it to be meas
! ure clearly beyond our constitutional power to
enact"
| 1t is true the Supreme Court subsequently. bv
bare majority decided Otherwise but a full
minority, including Justices Field, Bradley and
one her Justice, which one | do not remem-
Der, dissented and held to the view suggested
here:
"And, second, because believe it to be one
even had we the power to pass it and compel
its enforcement against these companies through
the judicial tribunals that is unjust, oppressive
ana contrary 10 the true spirit of cur institu-
tons, and above all one that is not in the true
| interests of the government; measure that the
companies could, if disposed, by manipula-
! tion OF their various accounts OF operating ex-
penses, construction accounts, accounts with
branch roads, etc, eyade ana render inoper-
alive TO very great extent in so far as any
| good results to The Government are concerned"
That my prediction as 10 the effect OF the
| Thurman Act when the bill was under discus
| sion here eleven years ago.
| now desife TO read from the report sub
mitted by the Chairman OF the select committee
| of the Senate Mr.. Fryel on the same subject
| On page he says:
The thurman Act took effect June 80. 1878.
| Its trainers based their calculations upon the
assumption that the fund would increase at the
rate OF e per cent. annually through the COM
| pounding of interest, but the reduction in the
| rate OF interest which followed the refuuding
| measures of 1873 and the rise in the price OF
| United States bonds, in which alone the sinking
! fund could be invested defeated these eXpecta-
tons, and the result is that the sinking fund
| to-day would be almost as large if the money
| paid In by the companies had remained I'M
invested and earning no interest.
| 1.-The premium on bonds called and bonds re-
naming in the sinking fund December 81, 1887,
exceeded the interest received from such bonds
| by the sum OF Sil5 2S2 O9, as appears by the
| following statement:
1 HIS - TIE CulOu dClHC DOuuS III SinhluS
| fund, at par, e6,Z73,65o; cost 10 the sinking
fund, S7.Sl627S U7; premiums, sl,5i2,623 o. ;
total interest collected on bonds, 1927 $40 IS ;
| excess premiums, sis, 2s2 o."
| The excess OF premiums on this transaction
amounted to S7l5,2Sl 90; that is To say, the
| premiums paid on these investments exceeded
| the interest collected the Investments by
S7l5, 2o2 90. If this thing is permitted to go on
| few years under the operation OF the present
funding bill there will not be cent left; it will
| be all absorbed.
While l am earnestly DESTROYS, and always
| have been. that toe Union and Central Pacific
Companies should be compelled TO reimburse
| the Government tor every dollar of aid, prin-
| cipa al d interest, which they or either of them
received from the United states, and which by
any fair and reasonable Interpretation of the
i laws under and 3y virtue OF which such aid in
| or either of them, are legally or equitaby
| bound to pay or reimburse. have always held
/ To the opinion, and IL is my opinion still, that
| the true policy 10 be pursued by Congress, III
view of the precarious, subordinate, and flimsy
| character of liens held by the Governm mt, and
the policy better calculated than any and all
others 20 protect and certainly secure the inter-
ests of the Government, aud finally the full
payment Of the debt, prUcIpal and
| interest, is one not of violent antagonism, but
rather one looking TO cooperation, n.utual con-
cessions and an amicaDle arrangement.
Sometimes creditor. especially If he hold a
| first-mortgage lien on property oil ample value
| 10 secure a present Indebtedness slreaiy due,
| to the most radical and violent means imagna-
be for the purpose of collecting his debt with
out caring to consult his debtor or without run
ming ANY risk ri losing his aim or any ra Of