The Jersey City news. (Jersey City [N.J.]) 1889-1906, 1895-01-28
BRICE SAYS ''RHFuND'.
Report Of the Senate Committee
on the Pacific Railway
Problem.


WASHINGTON. D. c.. JAM. IS, 1885
Mr.. Brice. from the Senate Committee
of Pacific Railroads, today submitted an
important report upon the roaes OF that
system in which the r~efundtng OF the
debt OF the Union Pacific IS recommend
ed. This report is in reply to a resolu-
ton passed by the Senate October 10,
| 1893, which reads as follows
.'That the Committee on Pacific Rail
roads be directed to investigate and re-
port to the Senate if the Union Pacific
Railway Company has passed into the
hands of a receiver. and if so, by what
/ action and under what circumstances;
and what steps, if any, are Necessary
to protect the interests and secure the
indebtedness Of said railway, reporting
by bill or otherwise. The Committee
is further directed to inquire into and
make report upon the extent of the au-
thority of Congress over said pad
For more than a year the committee
has been at work on the solution of the
problem called for. by this resolution.
| The result is a committee report of one
hundred and twenty-three printed pages,
| dealing with the affairs of both the Union
and Central Pacific Railroads in an ap-
parently exhaustive manner. The Union
| Pacific, the most important of the two,
is treated under four heads, to wit
% The charter, construction OF ROADS
and subsequent legislation. % The roads
comprising the system at present ana
their financial status. () The policy OF
owning and controlling branch lines Of
road and other outside investments. "a
Measures of relief.
A LIVING AGREEMENT.
1.-THE increase of relief to be provided
says Mr.. Brice, Ought to be compre-
hensive and far reaching enough to er-
brace all these interests. 1t should
especially aim to preserve the rights OF
the United States in the premises, ana
to such as the roads can live under.
Whatever of partnership relations exist
between the United States and these
ner as shall be to the interests of both.
Kin dealing with this subject more re-
gard must be had for present conoitions
than for past grievances. Recoliecrions
of the Credit Mobilier and other just
manipulations should not over-balance
the sober business thought of today, or
outweigh considerations and conditions
obtaining at the present time" After
deliberately setting forth the present con-
dition of the road. the appointment OF
receivers, and reviewing the legislation
concerning the road from the time the
original act was passed, the committee
discuss at great length the measures of
relief, or, as stated in the report. what
action ourht the United States to take
in the premises in order to SuDSerye the
interests of all parties concerned and
save or secure the Pacific Railway. debt"
The committee oppose the absolute
foreclosure and sale OF the pr2pefty lor
a policy would be the extinction of the
Government debt with little or no re-
colnpeEse beyond the amount now in the
sinking fund; a virtual sacrifice of, say,
$50 co., co.,
Should the United States conclude, in
stead, to pay off the first mortgage
so as to give it a first mortgage on the
lines of the Union Pacific, the first CUES
ton that suggests itself is that OF the
cost. The bonds necessary to be fitted
are as follows, in round numberS:-Flrst
mortgage, t~h.rty-ive and one-half mil
lions: subsidy, S35, 900, 000: excess of inter-
est (approximatee, S25,000,000; making q
total of $4,000 ,00o, or an average cost of
So, $50 per mile on 1852 miles of road.
These ngures apply only to the subsidized
portions of the road without the ter
minals, and the committee, quoting the
language of the Commissioner Of Rail
roads in his 1882 report, says 1T would
not seem to be desirable for the Cavern
ment to acquire railroad properties at
these figures" To become possessed of
a first mortgage on the entire line from
Council Bluffs to the Junction with the
Central Pacific, the branch lines and the
expensive term.na facilities in the vari-
Gus cities woul6, the committee says, in
volve an outlay of $3.50, 600, 600. The road
could not be sold for enough to satisfy
the debt secured by such a mortgage, 80
that" the report continues, sit is diff
cult TO see wherein the situation of the
Government would be improved by such
a course Of procedure over what 1t Is
CHARTER FORFEITURE.
Continuing the subject of remedial legis-
lation, the report says:-"Another course
seems to have been left open by the Gov
ernment under the sixth section of the
act of 1862, which provides that the
grants were made upon, the condition
bonus at maturity. This is a condition
subsequent, and for a breach of the
same the tinted States may, at the ma
turity of the debt, proceed to forfeit
its business through a receivership,
AXE its chances for a recovery of what
ever portion Of the debt it may be able
to obtain.
From what we have said above we
think it clear that that amount would
be very small. indeed. 1T is a question,
however. whether, IN the whole, 1t
circumstances to do. 1t might leave out
a LARGE number of Junior securities alto
gether, and it might practically annihil-
without the payment or any portion of
the same: yet, while this would entail
a great deal of loss on persons who have
honestly and in good faith invested their
money in securities of the roads, believ-
ing that tie road was practically backed
by the Government, yet, on the whole,
by a reorganization of the system on a
purely business basis, at It's real value,
without any water in. it's securities,
the road would be more easily put upon
a paying basis, and would, in the end,
be of more benefit to the communities
which it would serve, inasmueh as to
meet it's necessities 1t would not need
to earn nearly so much as it does, on its
present basis of capitalization and debt,
n the rates of passenger and freight
traffic could thus be materially reduced.
Your committee. however. does not
wish TO be understood as recommending
this measure of relief, but merely sug-
rests it as an alternative In case other
remedies believed now to be better
should fall"
A FLAT FAILURE.
In concluding this part OF their report,
the committee says it is clear beyond
question that, as a financial Investment,
the operation of the bond-aided Pacific
roads by the Government, would be a
fiat failure" I'VE are abundantly salts
He'd they add, that, on the question of
governmental policy, it would be at pres
.ent and under existing circumstances,
unwise, and would be fraught with seri-
Gus consequence to the republic and
with results far-reaching and In the end
injurious.
IF the adoption of rome OF the plans
we have discussed would be for the in
terest of the Government or the com
mun.ties and people who are to be served
with railroad facilities by this system of
roads and no other comprehensive