The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1894-02-07
with sinking fund to retire the bonds at

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thus give to the Government all its money
without anything more than the most or
dinary business risk. to say nothing of the
fact that it would drop out of Congress a
veXed question that has baffied the in
genuity of some of its most practical
minds"
"At the session of the committee to-day
&. L. Huntington appeared as the repre-
sentative of the Central Pacific Railroad
Company lie answer to the committees in
vita,ion and gave his views concerning the
feasibility of the plan. He expressed him.
self as cOncurring with those who favored
the proposed bill, which he believed the
railroad could live up to- In the course OF
his statement he recited the benefits that
had accrued to the whole country by the
building IF the Central Pacific and Union
Pacific. the completion of which lines to
the Pacific Coast has alone made the West
ern empire possible. He referred to the
fact that the Government lands through
which his road passes, which, before the
road was built, were worth little or moth
ing, had increased many millions
in value because of the exist
ence of the facilities furnished by
the road. he represented the owners
of the road in saying that the company
was ready to DO all it possibly could in or
der to liquidate satisfactorily its in
creasing Indebtedness 20 the Government.
and had made efforts Q t different sessions
of Congress to meet the Governments
wishes and devise plan which should be
approved by Congress, but the earning
power of the road was limited. In fact,
5S4 miles Of the aided line might as well be
on a bridge 1000 feet in the air so far as
productive power was concerned, and the
nature of the country made this con tinu-
ing disability. But the interest of the
patrons of the road should be consulted in
any arrangement for the payment of this
large debt, as the money must in the end
come directly out of their pockets, and it
was useless to agree to any bill with the
provisions Of which the company could
not in reason comply.
I'm his remarks upon the security that
was offered as a basis of the proposed
bonds. Huntington said that the property
which would be subject to mortgage, in
cluding the San Francisco AMI Oakland
terminal properties on San Francisco Bay,
which were now independent of any Gov
ernment lien, but which he and his asso-
CldltS III lD6 IOdu were WlfllUR 10 UTiuR
under the new mortgage. would be first.
class security for the whole amount Of the
bonds, and that the Government could sell
these seCur tiles so as to put the amount of
SO, ,000.00 now due the Government into
the treasury at once. and the company
would be able to take care of the fixed
charges, including the sinking funds,
without even having 10 use any more of
the Governments money.
HE said he knew of DO other way by
which the Government could be paid. and
as the money had to come from the people
who used the road, it seemed to him that
the proposed arrangement would benefit
many while no ono could be harmed by
such bill."
The bill which Huntington submitted to
the committee-for it appears that he did
submit the bin himself-is a very elabo-
rate one. In brief, it provides for the
issuance of bonds of $1,000 each. amount
ing to S134, ,00O, 900, to bear 21a per cent in
terest and to run 125 years or less, at the
option of the company. payment of princi-
pal and interest on the bonds to be ap-
proved and guaranteed by the Government
on condition that the railroad company
shall mortgage its entire property. includ-
ing its interest in branch or auxiliary
lines. TO the Govern ment, as well as its
present lease to the Southern Pacific Rail
road 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
70 the Government is to be subject to any
prior liens. and it is MOTTO be construed so
al to prevent the railroad company dis
posing of any Of its assets or to prevent
the company devoting the proceeds from
the lease to the Southern Pacific Company
to the payment of dividends to stockkold-
ers. The company is also to be allowed to
sell any land-grant lands for the satisfac-
tion OF prior mortgages.
Provision is made for issuing S27, $50. 900
in bonds. which shall be dollar for dollar
in exchange for the first mortgage bonds
Of the Central Pacific or Western Pacific
companies. and to which the lien of the
United States issued to those companies is
expressly suboIdinated. The bonds re-
ceived in exchange for the bonds issued
under the bill are to be held as collateral
security in the treasury. the old bonds to
be designated United States subsidy
bonds" and when they mature the Secre-
tary of the Treasury shall cover into the
treasury an amount of the new bonds
equal to the maturing bonds. Similar
bonds are to be issued to the amount of
S26,000,000 In exchange for bonds of the
California and Oregon Railway and the
Southern 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 the security of the new bonds and
the Secretary should assent to its so doing.
The old bonds which are deposited and
the coupons shall not be paid unless under
decree of foreclosure of the mortgage Sc
curing them, but such decree shall not be
issued unless there is default in the pay
ments of the 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 cancellation
S425O.O0O and continuing at this rate for
twenty-five years. For twenty-five years
after July l. 1920, 1915. 600 in bonds shall
be annually presented for cancellation;
for twenty-five years after July /. 1915,
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