The Wichita daily eagle. [volume] (Wichita, Kan.) 1890-1906, 1892-11-23
THE PACIFIC RAIL ROAD DEBT,

| railroads, relative to senate bill No. 1lJ
providing for the funding of the debts oi
the Pacific railroads, which he has made a
part of his annual report, has been re-
ceived by Secretary Noble. The report
shows that there were bonds issued in aid
of these roads in the following amounts:
Union Pacific. s35. 139 512; Central Pacific,
S27, ,S55, ESQ., There has been paid by the
United States in interest on these bonds
to December 81. 1891. in excess of payments
made by the companies in reimbursement:
For Union Pacific, $50, 800. GAG; for Central
Pacific, s27 ,235. .433. The total amount due
| the United States December 81, 1891, was:
From Union Pacific $50. 500. 456; from Gen.
trail Pacific, S55069. liz The subsidy
bonds begin to fall due January 16, 1895,
| and the last are due January l. 1899. The
| average date of maturity is about July J.,
| 1897. First mortgage bonds have also been
issued on these roads which constitute ii
| lien prior to that of the United States,
amounting on the Union Pacific TO $S5-
7,i2 Oa0. and on the Central Pacific to s27.-
$4,000. The first mortgage bonds mature
at practically the same dates as the sub
Sidy bonds.
The commissioner reviews the pending
measure at length and suggests amend
ments as follows:
l. Change the method of computation in
ascertaining the present worth OF the
debts by compoundiDg the interest for
the time between the settlement and the
maturity of the subsidy bonds semi-an-
nually, instead of with three rests only.
as provided in the original bill.
z Make the rate of interest percentum
from the start
5. Insert special provision in section 2
requiring the Union Pacific Railway COM
TO- ha rnr ,anf all lf-
rights, titles, interests and equities in
certain mortgages, bonds, stocks, notes
and other securities of any description,
held in trust by Drexel, Morgan q Co.
trustees, to secure the payment OF certain
notes given in settlement OF the floating
debt of the company.
4. Section providing, in case of de-
fault by said companies TO make any of
the payments provided for by this act.
that ''the attorney general of the United
States shall Immediately thereupon insti-
tute proper proceedings in a proper court
for the appointment of receiver" is
amended by inserting after the words
United States" in the sixty eighth line
of the section, the words upon the re-
quest os the president to do"
). Amend section 20 by adding at the
end of the section the words, Subject,
however, to the prior lien of the mort
cages to the United States herein pro-
vided for"
The general purpose of the bill is the ex-
tension of the debt to 100 years, with in
terest at per cent, a certain portion of
the principal to be paid at the expiration
OF each six months of that time, that at
the end of 100 years the entire debt will
have been eXtinguished. The bill As
amended, the commissioner believes,
would, ii enacted into law, fully protect
the interests of the government and secure
the hnal payment to iG of all the money,
principal and Interest, due from the bond
ed roads He does not believe that any
measure fixing IA shorter period of pay
1nent or higher rate of interest will be
accepted by the railroad companies Then
1t is useless for the government, he says,
to Insist upon terms of settlement 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 their future pros
pee 3
mo advantage can accrue to either
party by the one imposing and the other
agreeing to conditions that 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 the money to pay with, and the
rate of interest fixed should be equal with
the rate the government is compelled to
security should be held and such further
security required to be given as the COM
panle5 have 1t in their power to give.
Upon these conditions II settlement would
seem to be to the advantage of both the
railroad companies and the government"
All of the essential features of the bill
are exhaustively discussed, as are the al
ternatives presented to the government in
case the bill does not become a law. The
commissioner combats the proposition
that the government foreclose its mort
cages and take possession of the roads as
wholly impracticable, and closes his re-
port as follows:
II am of the opinion that in view of the
foregoing facts it would be sound business
Judgment to settle with the railroad COM
panies and extend their debts under the
provisions OF the accompanying bill, rather
than to foreclose on the roads and seek re-
lmhursemenG for the cost to the govern
ment, either through their sale or opera
ton. l am sure that when the facts of
the situation are fully understood. and the
alternatives, a settlement or foreclosure,
are squarely presented, ,aS they must be, con-
gress will decide and the people approve
the decision that it is wise to make IA set
tlement which promises to secure the pay
ment or all the interest and a part OF the
principal of the debts each six months
from the date Of settlement rather than to
resort 10 Il foreclosure tnaG Involves the
additional Investment of an amount
equal TO the original investment.
1T is time 70 be getting more money out
of the bonded railroads rather than put
ting more into them. BY the passage of
THIS bill the government hazards nothing.
1t valves no existing rights, releases no
present securities, Il lmpalrS no existing
obligations. II the railroads refuse to ac-
cept 1t, or, accepting, neglect or refuse to
comply with its provisions, the interests OF
the government viii not be thereby IN any
way put in peril. If the railroad com
panies accept it and discharge their oblIga-
uons under it, rs they agree TO do, then
would IL prove Il happy solution of this
veXed question. A careful study of all the
facts ol the situation leads me to the con-
clusion that the interests of tine govern
menJ and Of the people along the lines of
the bonded roads would be best protected
by such a settlement rs Is provided for i'll
the amended bill submitted herewith. F"
This matter Will be discussed by Secre-
tary Noble in his annual report, as no
doubt it Will be by the president in his an
nual message.
THE ANTi-OPTION BILL.
WASHINGTON, Nov. at Is stated here
that Senator Hiscock will be recognized as
the leader of the opposition TO Senator
Washburn's anti-option bill in the seu-
ate, and that Representative Il Abner lay