The record-union., 1894-08-04
THE REFuNDTNG BILL.

Ignoring for the purpose of this argu-
ment the details of the measure before
the Congress of the United States called
the refunding bill, we take occasion to
correct some popular misunderstanding
concerning the relation of the Govern
ment to the Central Pacific and Union
Pacific Railroad Companies.
1t is too evident that great many
people think that the only thing the
Government has to do is to refuse to ex-
tend the time OF payment Of the amount
which the Pacific railroads owe the Gov
ernment when the second mortgage
bonds mature.
AS nearly as has been ascertained the
Pacific railroads from Omaha to San Jose
viii owe the Government of the United
States the principal and interest on the
bonds issued in aid of the construction of
the line, which will amount to about
s125, 100000. The payment of this sum is
secured by a second mortgage.
The Government can take possession of
these roads only by discharging the first
lien. Approximately that lien amounts
TO 500, 10000. The plan, therefore, of re-
fusing to extend the time for the pay
ment of the amount which will be due
the Government involves the necessity of
paying from the treasury of the United
States within year about $50, ,0O0,00 in
gold coin, or, as an alternative propo-
sition. the issuing of Government bonds
in place of the first mortgage bonds au-
thorized to be issued by the Act of 1864.
Add this to what the railroads will owe
the Government, and the amount which
the line, when it reaches Government
ownership and control. will have cost the
United States will be SlS5, 0,0OO.
When any one is found declaring him
self to be in favor of the plan of having
the Government take possession of the
Central and Union Pacific Railroads
when the debt reaches maturity, he
should be asked this question: Are you
willing that the Government of the
United States shall pay off the first mort
gage of S60,000,0 900, either in gold coin or
by the issue of Government bonds to the
amount of S60,OO0,O00, bearing interest?
Are you willing that the Government of
the United States should acquire the
Union and Central Pacific Railroads at a
cost of S1S5, 600, 600. when parallel line
might be constructed for S40,000,0 900 or
SO, ,000, 600 at most9 Do you believe the
Government ought TO take $50, ,0O0, 900 and
discharge the first mortgage on lines of
railroad when for ten to twenty millions
less the property could be duplicated and
equipped?
The answer to these questions would
most likely be in the negative. A little
cheap popularity may be achieved by
protesting to be in favor of the Govern
ment taking possession OF the line from
San jose TO Omaha. But suppose the
real position in which the profession
places q man were exposed. Suppose
the party processing that opinion were to
meet the whole issue boldly, he would
find it necessary to say that be was in
favor of the Government taking SO, 000,
600 of the peoples money to pay off the
frst mortgage on the Pacific railroads
when a new road could be constructed
for from ten to twenty millions less
There is something quite unpleasant in a
proposition of this kind. 1t lacks the
sweet flavor of demagogism. And yet
between the Government and ownership
of the roads stands the first mortgage
bonds which must be retired and can
only be retired by being discharged, or
having securities equally good sub
stituted.