Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1890-02-17
Report of the Senate Special Committee
on Pacific Railroads.

EXTENSION OF TIME.
Report of the Senate Special Committee
on Pacific Railroads.
WASHINGTON, February 16th.-The Sen.
ate Special Committee on Railroads, aftel
many hearings, thorough investigation
and careful consideration, have finally SC
cepted the reports of Senator Frye on the
Union Pacific, and Senator Davis on the
Central Pacific and agreed to bill provid.
ing for refunding their debts.
The report on the Union Pacific reaches
the following conclusions:
/. That the policy of building or acquiring
branch lines was wise, and through the period
covered by their inquiry, were honestly and
economically carried out.
2. That the main line has derived an immense
advantage from the branches, and there is no
foundation for the charge that the latter have
received undue belent at the expense OF the
main line.
3. That the building of the Oreson Short Lima
and the subsequent requirement Of the Oregon
Railway and Navigation Company's lines in.
stead of being menace to the interest of the
Government, have proved decided advantage.
That the recent consolidation Of the several
branches under the name of the Oregon Short
Line and Utah Northern Railway Company
sim plifes the system of the Union Pacific and
makes possible more effective and economical
management, and in no regard evidences any
purpose of evading obligations to the Govern
ment
5. That the branches, instead of being main.
tanned at the expense of the main line, con-
tribute at least 5000, 900 year to the treasury
of the company.
6. That the improvements have been for
several years past greater on the main line than
on the branches, and some of them are very
important and expensive.
z. That there Is no evidence of any purpose on
the part OF the company to surrender that por-
ton OF their road over which the Government
has ct fat at rtrhf thn Al.
is every reason tending TO satisfy any candid
person that no such purpose exists
s. That this is capable and well managed road
and is abundantly able to pay its debts, requir-
ing only, like every other railroad, time in
which to pay.
9. That the present management is honestly try.
ing to effect fair adjustment with the Govern
ment.
TO- That the interest of the Government and
the railway company will be promoted by The
settlement, and one can be made now under
which every dollar of the debt with in
terest can be paid. 1t finds the present security
to be a statutory lien on the road commencing
three miles west of the Missouri river and ex.
tending TO point five miles west of Ogden, and
on the other road commencing half mile west
of Kansas City, and extending to point 1898
miles westerly. Commencing in the prairie
and ending in one. Not enough to protect the
Government debt if it shall not be adjusted un-
til it becomes due, within fifty millions OF dol
lars while under the bill to be reported the Sc
curity obtained will be twice the Government
debt in value and payment according to the
terms of the bill will be absolutely certain.
THE CENTRAL PACIFIC.
The report on the Central Pacific finds
the United States has for security statu-
tory lien on the road commencing at a
point five miles west of Ogden and extend
ing to San Jose, without terminal facilities
at either end, made subject to mortgage to
secure bonds equal in amount to the or
iginal Indebtedness of the company to the
United States. That that portion of the
road from Ogden to the westerly slope of
the Sierra Nevadas is practically only a
bridge, without any local business of any
amount; that the lines reaching from the
main line into Nevada do not now paw
actual expenses, and that the present secur-
ity TO the United States upon this property
is entirely inadequate that foreclosure of
the first mortgage would substantially ex-
haust in satisfaction thereof the entire
property. and that il would be inexpedieEt
for the United States to redeem it from
said first mortgage, ur to become the owner
of the property through redemption and
foreclosure.
The report finds it is expedient, neces-
sary and practicable to adjust and further
secure the Indebtedness to the United
States upon extended time at q reduced rate
of interest within the ability of the com.
pany to pay, upon such terms as to sd-
vance the development of the country
through which said roads pass, and afford
the inhabitants thereof reasonable rates of
transportation for passengers and freight.
From the report it appears the Central
Pacific has not the ability to pay at all
equal to that of the Union Pacific, but
under the terms of the Dill to be reported
can make final aad full payment reason
ably certain. The bill agreed upon ia
cludes within its provisions the Union Pa.
cific Railroad Company, the Kansas Pacific
Railway Company, the Central Branch of
the Union Pacific Railroad Company, con-
solidated under the name of the Union Pa
cific Railway Company; the Central Pacific
Railroad Company, successor to the Central
Pacific Railroad, California and Western
Pacific Railroad Company.
II provides for finding the present worth
Of the indebtedness of the Union Pacific
Railway Company on July l. 1890, aud for
the payment to the United States of that
amount with 3 per cent. interest, payable
emi-annually; also portion of the prin-
cipal semi annually. so that the entire
debt can be paid in fifty years.
1t requires that the Union Pacific Rail
way shall give mortgage On all the prop
erty, of every name and description, real,
mixed and personal, and also preserves to
the United States the present statutory lien
in the event of a failure of said company
to accept the provisions of the Act. There
shall be carried to the credit of the sinking
fund one-haif of the compensation for
services rendered for the Government aud
in addition thereto the sum of 50 900, ,000 a
year or rs per centum of the whole net
earnings of the Union Pacific Rail way
Company.
Extending, also, the provisions of the
Thurman Act to the Kansas Pacific Rail-
way Company and the Central Pacific Rail-
road Company and that on their failure to
pay a areceiver shall be appointed TO take
charge of, manage and operate the road
and the branches and lines of said CON-
pany until the principal interest and debts
of said company shall have been fully
paid.
Section six provides for the ascertain
ment of the present worth of the debt oi
the Central Pacific Railroad Company,
then for the payment of interest at the rate
of two per cent. per annum payable semi
annually, and so much of the principal as
shall result in payment of the entire debt
in seventy five years.
But in order to relieve the road from too
great burden during the next ten years
it is necessary for it to make some exten.
siye Improvements. 1t capitalizes for that
time one half of the two per cent. to be
held. The bill requires mortgage of the
entire properly of the Central Pacific Rail.
road Company, including some very inn
portant roads in California, and also by that
section and subsequent one that the
Southern Pacific Railroad Company and
the Central Pacific shall make the present
lease subsisting between them additional
security TO the United States for payment
of the debt.
Either of said companies may extend the
payment or refund the Indebtedness prior
to that. The United States to extend the
par value of such first mortgage bonds, the
rate of interest not to exceed five per cent
In the event OF any default for ninety days
in the payment of interest or principal, as
required By the Act, the entire debt shall
Immediately mature. A record of the
mortgage BY the Secretary OF the Treasury
in conformity with the law of the various
States and Territories where the property
is situated is provided for.
The United States may retain all the
money due TO these companies for services
until the installments of the principal and
interest upon their bonds next maturing
after such services are rendered shall be
fally paid. The companies shall pay nc
divifeflfis I1nless the same shall have