The morning call., 1894-07-29
Debts of the Pacific Rail-
roads.
LET THEM PAY OR LOSE.
Government Should Take What
Belongs to 1t.
BOATNER'S MINORITY REPORT.
He Does Not Believe With Reilly
on the Funding Bill
Proposition.
BOATNER'S MINORITY REPORT.

Republic from its Washington Bureau
states that Messrs. Boatner, Snodgrass.
Harris and Cooper, members of the House
Committee on Pacific Roads. differ from
The IN a jority of that body on the Reilly
funding bill, reported last week, and will
Oh Monday present minority report.
written by Boatner OF Louisiana. 1t will be
followed by a resolution directing the
Secretary of the Treasury in the
event of a defalcation Of the payment Of
The first interest and bonds due to take
charge of the road in the name of the
United States, under section of the act
of 1862, and the Attorney General TO pro-
tect the rights of the Government, as pro-
vided by the same act, and also to proceed
against the directors and stockholders,
according 10 the act of 1873.
The minority in stating that 1t is able
to Join the majority Of the committee in
recommending the passing Of House bill
1898, reported by them as a substitute for
all bills pending before the committee,
which provides for the settlement of the
obligations of the Pacific railways TO the
United States, submits its objections to the
plan adopted by the committee, as follows ::
Congress to extend the time of payment
by the several bond-aided railways to the
United States on the bonds issued in aid
of their construction and the interest paid
thereon would be 10 obtain a security
which would insure the payment of debt,
relieve the treasury of the necessity of
providing for the payment of the subsidy
bonds as they fall due and reimburs it
for the payments of interest already N ade,
amounting to S50,724.7 .775 The measure
reported by the committee does not, in our
judgment. fill any of these requirements
to a sufficient degree to justify the exten-
sion of its grants and is Objectionable in
the folio wing particulars:
First-The mortgage bonds which the
several companies are authorized to issue
are to be received by the United States
merely as collateral security for the debIs
due it. as ascertained and fixed in the act,
and are Of no value whatever, because the
mortgage which the companies are to eX-
ecute to secure their payment will be sub
ordinate to all other liens and mortgages
on The property mortgaged. and we are
therefore. taking as collateral security a
junior mortgage on the property on which
we have prior statutory lien.
Second-The act fails to provide that the
debt Gue the Government should bear any
interest.
Third-1he act is TO become operative
only when said companies, or either of
them, provide for the payment of
the first mortgage bonds which have pre-
cedence over the liens of the United
States" These bonds mature in 1895,
1896, 1897. 1898 and 1899. and just what is
meant by "provIde FIR the payment" does
not appear nor ir what manner this pro-
vision is to be made. The collateral bonds
authorized to be taken will be worthless
as a security.
Continuing the report says that the
United States holds lien on he railroad
and The telegraph roads, rolling stock. fix
lures and property of all kinds which Is
subordinate only to the first mortgage
bonds, the payment of which must be pro-
vided for by the companies. as a condition
precedent to the issuing of the collateral
bond. The legal effect Of such payment
would be to eXtingulsh the first NOR gage
and to constitute the Government
lien first incumbrance. The collateral
bonds being secured by a subse quent
mortgage certainly would not afford addi-
tional strength to first mortgage upon
The secured property. The laws of Con-
gress are the supreme laws of the land,
therefore, If 1t had power TO create a statu-
tory lien to secure the payment of bonds
issued in aid of the Pacific railroads, it
has the power to extend the lien and ap-
ply it as it will. provided no contract or
other rights are nfringed. and thence we
conclude it is perfectly com etens to
apply the existing lien to any bonds or
obligations, which may be taken in paw
ment of the debt now due to the United
States Considering that the collateral
bonds as authorized by the bill will be en-
tirely valueless, that they will afford the
United States no additional security and
serve no useful purpose, it is submitted
that they might not be issued.
The principal, by the terms of the act,
bears no interest, hence all payments of
interest on the collaterals would be i'm
puted to the credit and extinction pro
tanto of the principal. Justice requires
the statement that no such result was in
tended or expected by the commi ttee and
that it was caused by the change in the
text of the act, which provided that the
bonds should be accepted as collateral Sc
curity instead of In settlement and liuuida-
ton of the debt, as originally written 10
the act.
The act Is to become operative only
when the companies provide for The pay
ment of the first mortgage bonds, which
now have priority over the lien of the
United States. These bonds mature 10
1895, 1885, 1897, 1898 and 1899 No time is
fixed in the act when provision for pay
ment is to be made, nor is there anything
to Indicate what provision is contemplated
We do not perceive how payment of
bonds held In the general market amply
secured and drawing per cent interest
can be paid in advance of their maturity.
If il is expected that they are
TO be retired at or before the
maturity of the first installment of sub
sdy bonds. issued by the United States,
the bill is utterly impracticable and can
not be carried into effect. IF, on the con-
trary. by providing for their payment"
is meant any undertaking or contract to
do so, as they ature. the United States
will be giving up the benefit of the sinking
funds, amounting to S25, 795, 1872. extend
ing payment of the sums due it for fifty
years, aud obtaining 10 additional security
or advantage whatever When it is
considered that the United States
has paid a total of $50. 724. IT'S
interest on its bonds Issued
in aid of these roads in excess of all
credits. on which it is to receive no inter-
a L