Los Angeles herald., 1892-11-22
DEBT Of THE SUBSIDIZED ROADS,
Commissioner Taylor's Report
on Refunding 1t.
He Thinks 1t Better to Refund Than
to FOrecl0se.
Secretary Noble Is of the Same Opinion.
The Time to Be Extended One
Hundred Years With Two
Per Cent Interest. a
Ry the Associated Press.

BY the Associated Press.
WASHINGTON. Nov. 21.-The special
report OF Hon. A. Taylor, commissioner
of railways, relative to senate bill No.
751, providing for funding the debt OF
the Pacific railroads, which he has made
q part of bis annual report, has been re-
ceived br Secretary Noble. The report
closes thus:
81 am of the opinion that it would be
sound business judgment to settle with
the railroad companies and extend
their debts under the provisions OF the
accompanying bill, rather than foreclose
the roads, and seek reimbursement TOR
their cost to the government either by
their sale or operation. l am cure that
when the facts OF the situation are fully
understood and the alternative of set
element or foreclosure are sQuarely pre-
sented, as it must be, congress will de-
eide and the people approve the
decision, that it is wise to make set
tlement which promises to secure the
payment of all the interest and part OF
the principal of the debts each elk
months from the date of settlement,
rather than to resort to foreclosure
that involves the additional investment
of an amount equal to the original debt.
1t is time to be getting that money out
of the bonded railroads rather than
to put more into them. By the
passage of this bill the govern
ment hazards nothing. 1t valves
no existing rights; releases no present
securities; impairs no existing obliga-
tions. If the railroads refuse to accept
it, or accepting, neglect or refuse to
comply with its provisions, the interest
of the government will not be in any
way put in peril. If the railroad COM
panies accept and discharge their obli-
cations under it as they agree to do,
then would it prove happy solution of
the vexed question. A careful study OF
all the facts of the situation leads me to
the conclusion that the interests OF the
government and the people along the
lines of the bonded roads would be best
protected by such settlement as is pro-
vided for in the amended bill submitted
herewith
This matter will be discussed by Sec
retary Noble in his forthcoming annual
report, as no doubt it will be by the
president in his annual message.
The general purpose of the bill in
question is the extention of the debt to
100 years, with interest at 2 per cent.
and certain portion of the principal to
be paid at the expiration Of each six
months during that time, so that at the
end of 100 years the entire. debt will
have been extinguished.
The commissioner suggests several
amendments to the bill as it now stands,
and thinks with such amendments it
would fully protect the interests of the
government and secure the entire pay
ment of all the money, principal and in
terest, due from the bonded roads. He
does not believe that any measure fixing
a shorter period OF payment or higher
rate of interest would be &C.
cepted by the railway COM
panies. He thinks it useless for the
government to insiet upon terms OF set
Element that the railroad companies will
not agree to, and folly for the companies
to agree to conditions not warranted by
their present financial condition or iu-
ture prospects. No advantage can ac-
crue to either party by the one imposing
or the other agreeing to conditions thaS
will not or cannot be complied with. The
railroad companies should be made to
pay as rapidly as they can reasonably
be expected to earn money to pay with,
and the rate of interest fixed should be
equal with the rate the government is
compelled to pay on it's obligations. All
the present security should be held and
such further security required to be given
as the companies have it in their power
to give.
The commissioner combats the prop
osition that the government foreclose its
mortgage and take possession OF the
roads as wholly impracticable.
There was due the United States on
the 31st of December last, from the
Union Pacific, $55, 800, ,45S; from the
Central Pacific, $55, ,0S9, liz. The average
date of the maturity OF the bonds
is about July !, 1897. The
first mortgage bonds were also
issued which constitute a lien prior to
that of the United States, amounting
to: Union Pacific, $35, 1852, 900; Central
Pacific. $27 1863, 900. These mature prac-
tically at the same dates as the subsidy
bonds.
Among the amendments the commits
sioner suggests ia to change the method
of computation in ascertaining the pres
ent worth of the debts by compounding
the interest for the time between the
settlement and the maturity of the sub
Bidy bonds semi-snnually, and to make
the rate of interest per cent from the
start.