The representative. [volume] (St. Paul, Minn.) 1893-1901, 1894-08-01

terest anO BUnG14 Due, 10 rake
Charge of theoRoad in the Name
of the United States.
ST. LOUIS July 2s.-A special to the
Republic from it's Washington bureau
states that Messrs. Boatner, Snodgrass,
Harris and Cooper, members of the house
committee on Pacific railroads, differ from
the majority of that body on the Reilly
funding bill reported last week, and will
on Monday present minority report
written by Mr. Boatner, of Louisiana.
1t will be followed by a resolution direct
ing the secretary of the treasury, in event
of a defalcation of the payment of the
first interest and bonds due, to take charge
or the road in the name of the United
States under section of the act of 1862,
and the encouragement to protect the
rights of the government as provided by
the same act, and also to proceed against
the directors and stockholders according
to the act of 1873.
The minority, after stating that it is
able to join the majority of the committee
in recommending the passage of III. B.
7799, reported by them a substitute for
all bills pending before the committee,
which provide for the settlement of the
obligations of the Pacific railroads to the
United States, submits it's subjections to
the plan adopted by the committee as
follows:
The only reason which should induce
congress to extend the time of payment by
the several bond-aided railroads to the
United States on the bonds issued in aid of
their construction and the interest paid
thereon would be to 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 reimburse it
for the payments of interest already made,
to $50, 724, 775.73 The measure reported by
the committee does not in our judgment,
fill any of these requirements to suf-
ticient degree to justify the extension it
grants and
IS OBJECTIONABLE
in the following particulars:
First-The mortgage bonds which the sew
eral companies are authorized to issue are
to be received by the United States merely
as collateral security for the debts due il.
as ascertained and fixed in the act, and as
of no value whatever, because the mort
gage which the companies are to execute
to secure their payment will be subordinate
to all other liens and mortgages on the
property mortgaged, and we are, therefore,
taking collateral security junior mort
gage upon the same property upon which
we have prior statutory lien.
Second-The act fails to provide that the
debt due the government should bear any
interest.
Third-The act is to become operative
Ouly wien Sdlu companies OF eltneT OF tnem
provide for the payment of the first mort
gage bonds which have precedence over the
lien of the United States
These bonds mature in 1895, 1896, 1897, 1898
and 1885, and just what is meant by pro
vide for their payment does not appear
nor in what manner this provision is to be
made. The collateral bonds authorized to
be taken will be worthless as a security
Continuing, the report says that the Uni
ted States holds lien on all the railroad
and telegraph lines, rolling stock, fixtures
and property of all kinds, which is sub
ordinate only to the first mortgage bonds,
the payment of which must be provided
for by the companies. as condition proceed
ent to issuing the
COLLATERAL BONDS.
The effect of such payment would be to
extinguish the first mortgage and to con
stitute the government lien the first in
cumbrance. The collateral bonds being Sc
cured by SUBSEQUENT mortage certainly
would not afford additional strength to a
first mortgage upon the secured property.
The laws of congress are the supreme law
of the lands; if it had power to create a
statutory lien to secure the payment of
bonds issued in aid of the Pacific railroads
it has the power to extend the lien and APP
ply it as it WILL provided no contract or
other rights are infringed, and, hence, we
conclude that it is perfectly competent to
apply the existing lien to any bonds or OBJ
legations which may be taken in payment
novaton of the debt now due to the
United States.
Considering that the collateral bonds
authorized by the bill will be entirely val
ueless, 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 and hence all payments
of interest in the collaterals would be i'm
70 hn md in on, 70
of the principal. Justice requires the state
ment that such result intended or
expected by the committee, and that it was
caused by the change in the text of the act,
which provided that the bonds should be
cepted collateral security instead of in
settlement and liquidation of the debt as
originally written in the act The act is to
become operative only when the companies
provide for the payment of the first mort
gage bonds, which now have priority of the
life Of the United States. These bonds ma
ture in 1885, &c. 81 SO and SO. No time is
fixed in the act when provision for payment
is to be made nor is there anything to in
dictate 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 it is expected that they are to be retired
at or before the maturity of the first in
stallment of
SUBSIDY BONDS
issued by the United States, the bill is
utterly impracticable and cannot be carried
into effect. If, on the contrary, by "provid-
ing for their payment is meant any under
taking or contract to do so as they mature
the United States will be giving up the
benefit of the sinking funds amounting to
$2S, 795. 1872, extending payment of the sums
due it for SO years and obtaining no addi-
tional security advantage whatever
When it is considered that the United
States has paid total of $50 ia, us. 70 inter-
est on it's bonds issued in aid of these roads
in excess Of all credits on which it is to re-
ceive no interest and which it is proposed
to repay in the manner above stated, the
gross iniquity of the transaction becomes
apparent.
If the debt was proposed to be refunded
on terms which would enable the United
States to substitute the bonds or securities
which it received for it's own bonds as thew
fall due, and to sell the remainder so as to
reimburse the treasury for the $50. 900 600
1t has paid In interest on account of these
roads, it would be the best from financial
standpoint to grant any reasonable extern
sion-1OO years if necessary-to carry such
plan into effect, but to consent that the
United States shall pay the bonds now out
standing, amounting to- principal $64 623 512
and TO meet the interest thereon at 6 ner
cent until ma turity, and to receive therefor
collateral bonds worthless as n merchanta-
BILE security, and worthless to the govern
ment, to be held untit the debt is paid in
the manner above stated, is in our iudr-
ment out of all reason.
In the absence Of any proposition from,
the several companiesj or any of them. to
settle the Indebtedness to the United States