St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1895-01-10
THE DEBT NOW NATURES.

By what may be fortunate coinci
dence. the vote in the senate upon the
adoption of Senator Morgan's Nicaragua
canal scheme will be very nearly COIN
cident with the maturing of the first OF
the obligations into which the governs
ment entered thirty years ago by guar
anteeing the payment of the interest
and bonds of the Central and other
Pacific roads. On next Wednesday the
first of these bonds mature, and the
government will be called upon to pay
81, 1862, 900, on which during the thirty
years il has paid interest amounting TO
81, 25l 800.
The conjuncture of these two events
ought to be unfavorable to the canal
scheme. Though the latter is carefully
guarded so as to protect the interest of
the government, still there is the virus
of the personal and private interest in
it. the partnership of the government
with private individuals. which in all
of these schemes has been so perniciOu S
and so injurious to the interests Of the
government. The treasury department
has sent cut notice that the bonds will
be paid, and that interest will cease
after next Wednesday.
For thirty years the government has
been helpless. When the first default
was made in the payment of interest
and the government began to look into
the contract it had entered into to see
whether the payment could be recov-
cred from the company it was discov-
! cred that the company would not be I'M
! der any liability to pay the interest I'M
| til the entire bond issue had matured.
So on the S25, 1885, 120 Of subsidiary bonds
| that it issued to the Central sPacific, to
| aid i'll the construction of that line it
| has been paying interest annually until
| that has more than doubled the debt of
! the bond, and over 100000 is due to
! the government from the roads. De-
fault will undoubtedly be made in the
| payment Of the bonds by the company,
| and the question is, what is the govern
| ment going to do about ii? A fOreelos-
ure of the mortgage would result in the
ownership of the road by the goyer6-
ment. subject, however, to first mort
gage equal in amount to its own, which,
of course, the government would have
to assume. The income of the road has
been reduced by the mismanagement of
its officers to a sum insufficient to pay
the interest on the first mortgage bonds,
leaving the second not worth the paper
| they are written on.
Business men under similar circum-
stances would charge the debt off to the
account Of profit and loss. and credit the
wisdom they had gained by it up to the
account of experience. The govern
ment, however, not being conducted on
business principles, it is probable tina;
some scheme of extension will be
passed, or the opportunity may be used
as the entering wedge of the expert
ment i'll the naturalization of roads.
Undoubtedly, the first mortgage bond
holders would be very glad to have the
government assume the possession and
control of the road, and let their obllga-
lions continue to run at possibly a re-
duced rate of interest. Now that the
bonds are maturing, and the right OF
the government to take action has been
fixed, the question will become one oil
present and pressing Importance, and
will probably enter into the policies OF
parties.
If the government is to make the eX-
pertinent of operating railways, the Pa
cilic road opens as good an opportunity
as any that will present itself in many
years. For thelDurDose OF demonstrat-