The record-union., 1894-10-16
THE FORECLOSURE OF THE LIENS

All political parties are now chorusing
in unison for the foreclosure of the Gov
ernment mortgage on the Central Pacific
Railroad. 1t is none the less demagogic
for that. The fact that the political pack
is in full cry, each breed seeking to out
below the other, proves its economic in
sincerity. The fact is that the whole
scheme is one of vengefulness. The rail-
road company in question being a large
target, there is general effort at marks
manship in that direction for applause.
But when it comes to action, the people
of the United States will be bound to
look upon the matter as business prop
osition. 1t will present itself thus: ''Shall
we, by taking up the first mortgage loan,
IN order to avail of our own, expend
more than twice the sum for which the
property can be duplicated, even to pun
ish the railroad people for alleged misde-
meanor?"
That is really the long and the short of
the whole matter. When the debt shall
have matured the Central Pacific will
stand debited with some $S5, 100000. less
the sum to its credit in the sinking fund,
accumulated under the periodical pay
ments exacted by the Thurman Act and
less the sum due for mail carriage. Here,
then, we have two creditors and one Sc
curity. One of the creditors, by reason
of seniority Of claim. will take the whole
of the security to satisfy his mortgage. If
the other would have an inning at all in
the foreclosure, he must do one Of two
things satisfy the senior claim. or trust
to surplus after the senior debt is dis
charged. But because of changed condi-
tions since the origination of the debts.
affecting costs and values in railroad
construction, there will be no surplus,
and the redemptionary interest of the
junior creditor will be nothing in the
realm Of the tangible.
Very naturally the junior creditor, the
United States Government, does not wish
to throw away it's claim and security in
that or in any other manner. What,
then, should it do? Precisely what any
other creditor similarly situated would
do-aid the debtor, to the end that the Sc
curity may be preserved and its value
enhanced.
Such extension of credit will naturally
stop proceedings in foreclosure under the
CHI
temptation, since that claim is we'll Sc
cured. Under extension with recon
structed sinking fund the debt could be
retired, the railroad company earning it
self free from the first mortgage and thus
saving the mortgage lien of the Govern
ment.
So it resolves itself into this question,
''Can the two debts be made by fore
closure out of the present value of the
security 2', It is conceded that they can
not be. What, then, would the adroit
and far-seeing creditor do in such a case
Clearly the one and only thing left to be
done, namely, give the debtor time to
free himself from the first lien, according
to plan that will enable him to earn il
without injury to the industries in part
or in whole dependent upon the use OF
the security, 4. e., the railroad.
Every man, therefore, clamoring for
immediate foreclosure of the Government
mortgage is simply and fatty demand
ing that the Government security be
abandoned and the debt be wiped out
without payment, when in law it is a
debt and should be paid.
There is no other conclusion possible to
be reached. Let any man demanding
foreclosure get outside of his prejudiees
and assume the judicial attitude, and lie
must reach that conclusion. So far as
sentiment is concerned in this matter
there is nothing of hardship to the Gov
ernment in an extension On some iusi
basis: Examination of the earliest de-
bates. and those of the consummation Of
the idea in Congress, on the scheme to
promote the construction of Pacific
railway, will disclose the fact that the
statesmen of those times had in mind the
possible inability of the roads to earn