Omaha daily bee., 1895-12-08
AND THE Pacific RAIL
mans.

VI tlie ucDl lUSl lHdluTluS' lue Ctutl'S
now in session finds itself confronte,
. with duty bequeathed to 1t by its pre-
. dcccssors which cannot well be longe
deferred or again evaded. Upon th'
adjustment of the Pacific railroad deb
depends the future policy of the roads
aud the immediate prosperity of the
people inhabiting the vast region
traverscd by them and their branches
= The concentration in Washington during
the past week of a powerful Pacific
, railroad lobby, representing the bond
holders and stock jobbers' interests, in
dicatcs that the side of the capitalists
and stock exchange operators will be
we'll taken care of, while the duty OF
upholding the rights of the people will
devove upon few western congress
men who conscicntiously represent the
zeal interest OF their constituents.
All the plans that nave been sug-
gcsted for the settlement of the Pacific
railroad debt fall naturally into two
classes. The first class is typified
in the Reilly funding bill that
failed III the last congress, in
the scheme of the bondholdcrs'
reorganization committee, and in the
proposed bill of Senator Thurston, which
he has given to the public in outline.
The recommendations contained in the
last report of the government directors
Of the Union Pacific are in line with
the various plans of the second class.
The first set of plans contemplate the
consolidation of the first and second
mortgage bonds into one huge blanket
mortgage Indebtedness, either by the eX-
tension of the governments loan, by the
purchase by the government of the
claims of the prior lien creditors, or by
the sale of the governments claim at
n sacrifice TO the first mortgage bond
holders or their associates. Each and
every one of these plans contemplates
the legalization of all the existing
fictitious capitalization and the ratifica-
ton of all the fraudulent diversion of
revenue from the Union and Central
Pacific to the private fortunes of their
original managers. Each and every one
of them contemplates a continuation of
the present colossal fixed charges and
the perpetuation of the burden that is
now weighing down upon the shippers
and consumers who constitute the
patrons of the roads.
The plans which fall into the second
class, on the other hand, provide for
winding up the roads by sale in fore
closure and reorganization upon an
lptnoI vo1IIa In
one stroke all the watered stock and
fraudulent capitalization. They require
the purchasers to operate the roads
economically upon an honest capitaliza-
ton that will place them in a position
where they can compete for traffic, un-
handicapped by mountain of dead
weight interest-bearing debt.
From the omission of all mention of
this very important subject from the
presidents message and the general en-
dorsement which the president has
given to the recommendations of his !
department secretaries, the reasonable |
Inference is that Mr. Cleveland prefers
to avoid committing himself for |
the present to any proposition |
for Pacific railroad debt settle |
ment, but is in accord with the |
views expressed in the report of Sec
rectary Of the Interior Hoke Smith. |
Secretary Smith, in that part of his
annual report bearing upon the question
of the Pacific railroads, which is
printed in full in this issue
of The Bee, repudiates the sug-
geStions of the government directors
for foreclosure under conditions that
would assure the operation of the roads
as one through line from Omaha to the
Pacific coast. Computing the average
annual net earnings of the Union and
Central Pacific main lines and com
pairing them with the total mortgage
Indebtedness of the roads, less the sink
ing fund, the secretary arrives at the
that the properties have
earned nearly q per cent on the entire
amount the government has paid and
would pay il forced to pay off the first
bonds, and that the govern
ment ought not to lose any large
AMOUNT il compelled through foreclosure
to collect its debts. Right here Secre-
AIRY Smith displays wide difference of
opinion with Senator Thurston, who is
quoted as saying that the roads are
hardly worth more than the first mort
gage Indebtedness. In order to realize
anything on the governments security
Mr.. Thurston would set the minimum
bid to be received at 80 per cent of that
security, in addition to the sum of the
irst mortgage bonds.
The suggestion in the report of the com
mission for the purpose of perfecting
| plan of debt settlement, Is only an 5
lfterthought. AS congress would have
o pass on the work of the commission
before it could become effective the
hief result of its appointment would be |
llSrely another postponement of final
ction. If the commission idea offers
he proper solution, why should the sec
etary go to all the trouble to discuss
peciflc plans now and commit himself :
n favor of new blanket mortgage
ecurity bearing 3 per cent interest and
overing the entire outstanding debt?