New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1894-07-22
PACIFIC Railways DEBT.
PROVISIONS OF THE REILLY BILL FOR
ITS ADJUSTMENT.
a PLAN FOR GRADUAL REDUCTION. THE ENTIRE
INDEBTEDNESS TO BE CANCELLED IN FIFTY
YEARs-Iow THE GOVERNMENT

n PLAN FUN bttADl Al. HJDUCIION. THE EMILE
INDEBTEDNESS TO BE CANCELLED IN FIFTY
YEARs-How THE GOVERNMENT
WILL BE SECURED.
Washington. July 21-The report made TO the
House to-day by Mr. Reilly Dem, PENN the
bill TO adjust the Indebtedness OF the Central and
Union Pacific railways to the Government is
voluminous being about five printed columns in
length. 1t says that all the former bills designed
to meet the present situation contemplated the
extension funding OF the entire indebtedness OF
these companies. and applied the amount in the
sinking fund to the credit Of the companies their
Indebtedness the Government. The first mort
gage bonds Of both companies bear interest at Q
per cent, as do the Government bonds making an
annual fixed charge equal TO IL per cent on this
enormous Indebtedness. which the committee be-
licve II will be impossible for the companies to
meet. The Indebtedness of the Union Pacific Com
pany upon the maturing of the bonds Will be
something than 500 100000 exclusive of 49,
100000 In the sinking fund. The Central Pacihc's
indebtedness will be nearly equal to this amount.
exclusive OF 100000 in their sinking fund.
The report shows that the interest the first
mortgage bonds has been regularly paid by the
companies. but the principal Of the Government
bonds. which is a second mortgage. has been more
than doubled by the accumulation Of the interest
In excess Of all reimbursements. and no one be-
lieves that this debt be paid to the Govern
ment at maturity. The annual interest on the frst
mortgage bonds has been heavy drain upon the
earnings of the companies. and IL the first mort
gage is to BE- continued with priority Of lien It
would be futile to attempt any adjustment Of the
Governments Indebtedness on that basis. The
annual fixed charges this account in the case
of the Union Pacific amount to 100000
year, and OF the Central Pacific 10 over sl,6C,OOO
The committee has accordingly directed their ef-
forts to the ex,ingushment of this lien. and by the
~ tba nv ing
sinking fund is applied to that purpose, upon
the condition that the company shall provide for
the payment OF the remainder Of the bonds and the
discharge OF the first mortgage. The effect of this
would be to give to the Government a first Instead
OF a second lien upon the property of the compa-
MES The committee believe that such disposition
OF the sinking fund under these terms Is Of more
advantage to the United States than would be 80 -
application as a credit on its debt. This y, :.
would be advantageous to the companIe nro.
Is within their ability to comply W.
The Government must contpgr 10 pay n'eT Tbe
on the subsidy bonds until ertaining the amount
6ill provides method OF January l. 1896 and also
that the bonds Oh mint bearing per cent Interest,"
be given Tor tne salHly together with stipulated
payment on ATS on account Of principal grad
nated & the nrst ten years tney are 10 De v Tnd
nan OF reased each succeeding ten years for
ualy OF Atty years when the debt Will be can,
&c Union Pacific at Omaha Kansas sity ana a1
other points are estimated to be worth $l9"cVo
and viii add greatly TO the security OF the uoVerh-
ment. . 800 -, A.
section Is OF the bill provides that In case or de-
fault in respect OF any obligation or conuitl0n ioI
which any lien now exists in favor OF the united
states upon any property OF any Of the companies.
or in case OF any proceeding brought Dy any person
claiming TO be the holder OF any other lien upon the
property. the Attorney General may enforce ,thS
claim and foreclose any such Hen or the United
States by sale or otherwise H., ~.
II IS also provided that upon sucn proceedings tne
hall ha n highest
i.ct To any prior lien or incumbrance thereon LOT
n gum not less than the amount OF the deDt que
70 the United States and all interest thereon 10 the
date OF the confirmation OF such SALE ana autnoriz-
ing the Attorney General at such sale 10 Dld we
also provides in the event of purchase at sucn
sal. that the purchasers and their associates sha
10 invested with all the property ana franchises
upon confirmation OF the sale by the court anu
unon filing the certificate accepting the provisions
~ this act and specifying the corporate name OF
Tho comnanv 10 be organized and naming hfteen
directors shall be vested with all or the powers
and franchises. including the franchise 10 De d
cornoratlon. and making all provisions or existing
law relating the appointment or government
directors applicable TO said reorganZed company,
This nrovlslon the committee deem essential IN
cos he nropOsed adjustment should not be carried
orIt so that the necessary steps may he taken 20
pro,ect tho interests OF the Government as occa-
some nd iustment IL effected OF this matter.
foreclosure seems inevitable. and this may IN
vove tho necessity OF the Government being com
peled in order 20 protect its analrs 70 pay OF I
ars, mortgage thereby involving an additional
on, lov OF hubble money these roads or more than
90 co 40 above the Sinking Fund. which would
make the aggregate OF Government investment