The record-union., 1894-02-07
Special to the RECoRD-UNIoN.

Speclal 10 the BECORI-UNION.
WASHINGTON, Feb. Ga plan for the
reorganization of the Central Pacific, as
outlined to the Senate Committee on
Pacific Railroads to-day by G. p. Hunt
ington, looks to the refunding of the in
debtedness of that company and the
issue of bonds. the payment of which is
to be guaranteed by the Government of
the United States.
Huntington submitted the proposition
in the shape of bill to be introduced in
Congress, and also made a statement in
explanation Of the proposition. The bill
is a very elaborate one. In brief, it pro-
vides for the issuance of bonds of 81 900
each, amounting to 34,OO0,0O0, to bear
. per cent. interest, and to run l25 years
or less time, at the option.of the company,
the payment of the principal and Interest
of the bonds to be approved and guar
anteed by the Government, on condition
that the railroad company shall mortgage
its entire property, including interest in
branch or auxiliary lines, to the Govern
ment, as well as the present lease TO the
Southern Pacific Railroad Company,
which mortgage is TO be held as security
for the payment of the bonds guaranteed
by the Government. 1t is stipulated,
however, that the mortgage to the Gov
ernment is to be subject to any prior
liens, and it is not to be construed so as
to prevent the railroad company from
dispOsing of any Of its assets, or prevent
the company from devoting the proceeds
from the lease to the Southern Pacific
Company to the payment of dividends to
stockholders. The company Is also to be
allowed to sell any land grant lands for
the satisfaction of prior mortgages.
Provision is made for issuing S27, ,S53.-
600 bonds, which shall be dollar for
dollar in exchange tor first mort
gage bonds Of the Central Pacific orWest-
ern Pacific Companies, and to which the
lien of the United States issued to those
companies is expressly subordinated.
The bonds received in exchange for the
bonds issued under the bill are To be held
as collateral security in the Treasury for
the old bonds, to be designated as United
States subsidy bonds, and when they
mature, the Secretary of the Treasury
shall cover into the Treasury an amount
Of new bonds equal to the maturing
bonds.
Similar bonds are to be issued to the
amount of SO, ,000, 900 in exchange for
bonds of the California and Oregon Rail
way ana the Soathern Pacific Railroad
and disposed of in the same manner as
above stated. The old bonds shall be
cancelled, unless the Central Pacific
should desire to keep them alive for Sc
curity of new bonds, and the Secretary
should assent to so doing.
The old bonds which are deposited and
the coupons shall not be paid unless un-
der a decree of foreclosure of mortgage
securing them, but such decree shall not
be issued unless in default of the pay
ment of interest on the bonds of this Act
continuing six months.
Provision is made for the redemption
of the new bonds, commencing on the
1st of July, 1895, by depositing for cancel
lation 81, 4,250,000, and continuing at this
rate tor twenty-five years. For the
twenty-five years after July l, 1920, $780,
600 in bonds shall annually be presented
for cancellation; for the twenty-five
years after July l, 1915, S502,000 shall be
cancelled yearly; for the twenty-five
years beginning in 1870, S625, 900 per an
mum shall be cancelled, and for the
twenty-years beginning in 1895 one
twenty-ffth of the bonds outstanding
shall be cancelled yearly.
One section Of the bill provides that as
long as any bonds of the Act remain out
standing no dividend shall be paid by the
company, unless the company has earned
such dividends over all interest and ma
tured Indebtedness. When dividend in
excess of one per cent is paid, an equal
amount of the above four per cent. shall
be applied to the purchase and cancella-
ton of bonds held in the Treasury.
The Act shall take effect upon the ac-
ceptance of it's terms by the Board of Di-
rectors The President is authorized to
direct the sale of the old bonds held in
the Treasury. The bonds issued under
this bill may be deposited as basis of
circulating notes.
The bill provides for the repeal of laws
withholding money from the Pacific
roads and its branches; also laws for bid
ding the company to mortgage property
and allowing them to borrow money. 1t
is made the duty of the Attorney General
to enforce the Act.