The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1894-07-22
IN EXTENSION OF TIME.
And the Gift of the Sinking
Fund.
EFFECT OF THE TREASURE.
There Is Manifest Purpose to Fight
Away From Government
Ownership.

WASHINGTON. July 21.-Representative
Reilly OF the Committee on Pacific Rail-
ways made report to the House to-day on
the bill to adjust the debts of the Central
and Union Pacific railroads. A review Of
the legislation affecting the roads from
1862 is given in the report. The purpose
of the company, it Is explained, is not only
to devise some plan that will insure pay
ment of the Government claims. but that
would be final in its operations and dis
solve the complicated relations that have
heretofore existed between the Govern
ment and these companies. The bill is
said to differ from former bills contem-
plated in the extension or fund
ing of the entire indebtedness,
the first mortgage as well as the Gov
eminent debt. and the application of the
amount in the sinking fund to the credit
of the companies on their Indebtedness TO
the Government. 1t is pointed out that
both the first mortgage bonds and the Gov
eminent bonds bear 6 per cent interest.
which the committee believes it is and will
be possible for the companies to pay as it
has been in the past.
The interest on the first ID ortgage bonds
has been paid regularly, but the principal
of the Government bonds has been more
than doubled by the accumulation of in
terest in excess of all reimbursement, and
no one expects the companies to pay their
debts to the Government at maturity.
The annual interest on the first mortgage
bonds has amounted to over 100000 a
year for the Union Pacific and S1,600,0 900
for the Central Pacific, and it seemed 10
the committee that if the first mort
gage was to be continued with
priority then it would be futile
to attempt an adjustment on that
basis. Accordingly the committee d.
rected its efforts to plan looking to the
extinguishment of the lien. and by the bill
the amount in the sinking fund is applied
to that purpose upon condition that the
companies shall provide in a manner
satisfactory to the Secretary of the
Treasury for the payment of the
remainder of the bonds and the discharge
of the first mortgage. giving the Govern
ment first instead of a second lien on the
property, disposition of the sinking
fund considered more advantageous to the
United States than its application as a
credit on its own debts.
The Government must continue TO pay
interest on the subsidy bonds until their
maturity, and the bill provides for the
methods of ascertaning the amount of the
debt due the Government on January !,
1895, and that bonds of the company to run
fifty years shall be given for the amount
bearing 3 per cent interest payable
semi-annually. with a semi-annual and
he
principal. The bill contemplates setting
the extent of the Government lien and in
cludeS in the mortgage the valuable terml-
nal properties of the Union Pacific at
Omaha, Kansas City and other points esti-
mated to be worth S15,000.000.
There are other provisions covering the
payment Of the dividend by the companies
as long as the United States shall own
any bonds for payment for transportation
services and reserving other rights of the
United States.
In case of default in respect to any OBJ
legation for which any lien exists in favor
of the United States upon any property
of any other companies, or in case any
proceedings be brought by holders of any
other lien, the Attorney-Gene is au-
thoriZed to euforce the claim and foreclose
any lien of the United States by sale or
otherwise, and if by such sale the property
shall not be sold to the highest bidder for
a sum not less than the amount Of the
debt due to the United States and all in
terest thereon to the date of confirmation
Of the sale. the Attorney General is author
lied to bid such amount in order to protect
the Government. The Court of Appeals
of the District fir Columbia is given juris-
diction over legal proceedings.
Unless some adjustment is effected Mr..
Rsilly's proposition, concludes the report,
foreclosure seems inevitable and that
might involve the necessity of the Govern
ment being compelled in order to protect
itself to pay off the first mortgage, there
by involving an additional outlay of public
money on the roads of over $4,000, 900
above the sinking fund, which would make
the aggregate of the Governments invest
ment about S170, 100000.