Sacramento daily record-union., 1890-03-10
THE RAILROAD DEBT.
The Proposed Settlement no Benefit to
the People.
From the American Standard


From the American Standard
The basis on which Congress proposes to
settle with the Union and Central Pacific
Railroad Companies is not acceptable to
the companies and would not be beneficial
to the people. The corporations could not
liquidate their Indebtedness within the
stated period, and their efforts to earn the
sums needed to meet their annual pay
ments as per proposed settlement, would
necessitate rate of charges that would op.
press both producers and consumers. A
railroad must earn its fixed expenses or be-
come insolvent. If these railroads were to
accept the terms offered by the Senate
committee they could not meet their an
nual payments under the law now govern
ing their charges for freights and passen-
gers. If the inter state commerce law was
so amended as to enable them to make the
necessary earnings, the people would lose
S. while the Government received 50.
The settlement ought to be made, if
such a thing is possible, on basis that
will not compel an advancement of
charges. The advantages which the Cana
dian Pacific road has over the Union and
Central are all combined in the single fact
that its necessities do not tax to the utmost
its capacity to meet them. This condition
of things does not exist, nor unless there
is change in public sentiment, will it
ever exist, with the Union and Central
roads. They find il difficult to meet the
demands upon their ready cash, and un-
friendly legislation has tended to swell the
volume of demands and diminish the
sources from which the cash is derived. If
the settlement offered by Congress will not
assist the roads in this respect it will not
benefit the people, and it would perhaps be
better both for those who ship and travel
over the roads, and for the companies
themselves, for the Government to take
the roads for their Indebtedness.
The parties mos. interested in the settle
ment are the people. The Government has
lost nothing. On the contrary, it has
saved millions-perhaps 100000, ,000-in
the cost of transportation and from the civ.
ilization that followed the construction of
the transcontinental line. The Govern
ment gave away large area of land, but it
sold the alternate sections for double price.
Without the road the land could not have
been sold at any price. It is said that the
people were made to pay 81 so per acre for
land which but for the land subsidy they
could have bought for 81 25 per acre.
This is true, and it is also true that but for
the roads the land subsidy aided in build
ing, the people would not have bought the
land at cent and quarter per acre. The
railroad has created values more than fifty
times in excess of its Indebtedness.
But all this does not remove the fact that
it owes the Government large amount of
money. The question is, how can this in
debtedness be secured, and how can salts
factory terms for its payment be arranged
Congress admits that the security-the
main lines of the Union and Central-is
very much short of being sufficient, and it
proposes to take mortgage on the unaided
lines built and owned by the two COM
panies. If the companies were willing to
increase the security value on an indebted
ness about which they have been subjected
to large amount of annoyance and har-
assment in advance of its maturity, there
comes up the question of whether this ad-
ditional security would be worth what it
cost
The Senate committee seems to have
overlooked the fact that these unaided
lines are bonded for 50 much per mile, and
that any lien which the Government
might obtain upon them would be in the
nature of a second mortgage, the value of
which could only be estimated in connec-
ton with the previously-issued bonds, for
the payment of which first mortgage has
been recorded. If these roads are bonded
for amounts approximating their value,
the companies will no doubt consent to
their going in as security for their indebt-
edness to the Government. So also would
the bondholders, as the Government would
then become responsible for both principal
and interest. AS a whole. the Congress-
ional plan of settlement will hardly re-
ceive the approval of the people. 1t pre-
sents no phase of advantage to the Govern
ment. 1t is proposition to throw large
amount of good money after compara-
lively small amount of bad.