The record-union., 1894-11-15
THE RAILROAD DEBT QUESTION.

Our evening contemporary, the Bee, in
sists that the only way out of the railroad
debt question is through seizure Of the
transcontinental roads, wiping out the
apltalization-which means ignoring the
equities of the stockholders-and opera
ton of the roads by the Government at
rates so low as to be of material benefit
to the public"
In this sweeping demand no account is
taken whatever of the facts relative to
rates for shipment of California's chief
products out, that, as shown by Mr..
Nimmo's letter, which we published the
other day, are the lowest rates in the
world. No account is taken whatever OF
the important fact that the Eastern people
will most assuredly oppose and prevent
any operation of the roads at their cost
that we on this coast may have excep-
tional advantages.
The proposition of our contemporary
also assumes the entire willingness of all
the country east of the Rocky Mountains
10 forego its interest in the debt due-in
other words, it is assumed that out of
hand the Government will present the
State of California with some $50, 100000,
and in addition the lines of the roads,
and then operate them without profit for
our sole benefit. We submit that this is
assuming too much. and that there is no
warrant for it.
The assertion is boldly made that the
present rates on the Central Pacific
Railroad will, if continued with interest
at per cent. on $4,000, 900, in hundred
years discharge the principal, pay the in
terest and leave an annual surplus of
100000. Therefore, it is argued, if the
earnings are regulated so as to pay in
terest on but $4,000, 900 and provide a
fund for the payment of that much of
principal besides, rates could be reduced
one halt. Passing the fact that this as
sumes absolute abandonment of S45,-
100000 by the Government, we call atten-
ton to the fact that there is no proof Of
fered, or even suggested or limited at
that any such reduction is possible with
the results as forecast by our contem-
porary.
A bit of sound conclusion is reached by
takes the roads and offers them for sale,
they will not bring an amount equal to
half the sum of the debt. This is as the
RECoRD-UNIoN put it long ago. That is
tosay, the Government can duplicate the
roads for less than half the sum of the
debt. Therefore, to take the roads is to
cancel the debt for less than fifty cents on
the dollar. Our contemporary also dis
covers and admits the important truth,
that for the roads to be sold or leased by
the Government to Eastern operators.
would be disastrous to California inter
ests.
To insure the capacity of the debtor
to earn itself free of debt, at once en- =
hances the value of the security, and as
sures the recovery of the debt-but this
can only be done by extension of the
period for payment. For the Government
10 take the roads and offer them for sale
will amount to extension for SO much of
the debt as the roads bring, since it is
conceded by our contemporary that
in that case, as no cash payment
Down could be expected the purchasers
would have to be given time, and issue
bonds on their acquired property in the
roads bearing a low rate of interest.
Therefore, as our contemporary well
says, to take the roads and sell or lease
them, means less return to the Govern
ment than extension of the debt as 1t
stands. so that payment may be made on
long time and at low rate of interest.
Theworn ground is travelled over again
by oltr contemporary that was trod much
by the anti-raiiroad stumpers in the re-
cent campaign, namely, that for the time
of{payment of the debt to be extended,
means the drawing of the money from
the people to meet interest and sinking
fund By an incSease of rates; or, as it is
loosely said. TIA sum would be
ewrung from the people," This is little
better than silly. Rates Of freight and