The Portland daily press., 1890-02-17
ROADS UNCLE SAM HELPED TO BUILD.
How the Union and Central Pacific
May Pay Their Debts.
Results Of the Labors of Senator
Frye and Senator Davis.
Timely Topics Of Interest From the
City on the Potomac.

WASHINGTON, February 16.-The Senate
special committee on the Pacific railroads,
after many hearings, thorough investigation
and careful consideration, have finally ac-
cepted the reports Of Senator Frye on the
Union Pacific and Senator Davis on the
Central Pacific. and agreed to bill provid-
ing for the refunding of their debts. The
report on the Union Pacific reaches the fol-
towing conclusions
The policy Of building or acquiring branch
lines was wise and through the period COW
cred by the inquiry, honestly and economi-
cally carried out. The recent consolidation
OF several branches. under the name OF the
Oregon Short Line and Utah Northern Rail-
way Company simplifies the system of the
Union Pacific and makes possible more ef-
fective aud economical management In no
regard are there evidences Of any purpose Of
evading the obligations to the government.
The branches contribute at least $30O0.000 a
year to the treasury Of the company
No evidence exists of any purpose on
the part of the company to surrender that
portion of their road Overllwhich the govern
ment has statutory lien. This is a capable
and we'll managed road. abundantly able to
pay 1t debts, and requires only the time In
which to pay. The present management Is
honestly trying to effect fair adjustment
with the government The interests of the
government and the railway company will
made now under which every dollar Of the
government debt, with interest will be
paid. The committee finds the present
security by satisfactory statutory lien on the
road, commencing three miles west of Mis-
souri, river and extending to five miles west
of Ogden, and on another road commencing
half miles west of Kansas City extending
to 1893 miles westerly, not enough to protect
the government debt, If it shall not be ad-
justed until it becomes due, within fifty
million dollars. Under the bill to be re-
the government debt In value. and the pay
ments, according to the terms OF the bill,
absolutely certain.
The report of the Central Pacific finds the
United States has for security statutory
lien of the road. commencing five miles west
of Ogden and extending to San Jose without
terminal facilities at either end, and made
subject to mortgages to secure bonds equal
In amount to the original Indebtedness of the
company to the United States. That portion
of the road from Ogden to the westerly slope
of the Sierra Nevadas is practically only
bridge, without any local business to any
amount; the roads reaching from the main
line into Nevada do not pay the actual ex-
penses, and the present security of the Unit
ed States upon this property Is entirely
mortgage would substantially exhaust the
entire property, and 1t would be inexpedient
for the United States to redeem it from the
said first mortgage, or become the owner OF
the property through redemption and FORE
closure. The report fiuds it expedlent. nee
essary and practicable to adjust and further
secu.e the Indebtedness to the United States
upon extended time at a reduced rate OF in
terest within the ability of the company to
pay, and upon such terms as to advance the
development of the country through
which the said roads pass and afford the
inhabitants thereof reasonable rates on
transportation for passengers and freight.
1t appears that the Central Pacific, under
the terms of the bill to be reported, can make
final and full payment reasonably certain.
The bill agreed upon provides for finding
the present worth and indebtedness OF the
Union Pacific on the first of July, 1890, and
for the payment to the United States of that
amount. with three per cent interest payable
semi-annualiy. and also .portiop OF the
debt may b, paid in fifty years. 1t requires
that the Union Pacific shall give mortgage
on all its property and preserves
to the United States for its present
statutory lien and provides that in the event
of failure by the said company to accept the
provisions of the act, there shall be carried
to the credit of the sinking fund half of the
government, and in addition thereto S2,000,-
000 year or 70 per centum of the whole net
earnings. On failure to pay q receiver shall
be appointed to operate said company until
the principal and interest of the debt are
fully repaid.
The bill provides for the ascertainment of
the present worth and debt of the Central
Pacific Railroad Company, and for the pay
ment OF interest at rate OF per centum,
per annum, and so much Of the principal as
shall result in the payment of the entire
debt in rs years.