The record-union., 1896-12-27
FIGHTING FUNDING.
A Dispassi0nate View of the Whole
Situation.
(From the Stockton Mail.)

Some Of the San Francisco papers are
endeavoring to persuade Mayor-elect
Phelan to join the antifunding con-
tigent at Washington. If Mr.. Phelan
consults his own political interests and
is guided by proper regard for the
dignity of his office (as we feel sure he
will be) he will have none of it. As
citizen he has the right to take sides in
this or any other public controversy,
but he has no right to throw the weight
of his office into the scale, and if he
should go to Washington it would not
BE as Mr.. Phelan. but as Mayor Phelan.
That is not what he was elected for. He
was chosen by people who are in favor
of the funding bill as well as by those
who are opposed to it. They selected
him to be the executive head of the mu-
Eicipal government mad not to take
sides in pending legislation in Con-
gress.
There u.s. by the way, deal of rot
running through portion of the metro
rolitan press concerning this measure
for the ultimate payment of the debt of
the Pacific Railroads to the Govern
ment. 1t is not that the objectors are
opposed to the pending scheme because
1T is not as good as the one which they
propose, but because it is a funding
scheme. That is to say, the debts being
due and the debtors unable to pay, they
object to the plan devised by which the
interests of the creditor party Chat is,
the GOvernment) would be protected,
but propose no way themselves out of
10 u Go, h. T,t1
concerned it is now and always has
been dn favor of the Government pay
ing the first mortgage indebtedness and
foreclosing on it's own second mort
cages, taking possession of the Union
and Central Pacific roads and operat
ing them in the interest of the people.
But this finds no favor with the oppo
nents of the pending bill, and we are in
formed that there is absolutely no hope
of such a proposition being accepted by
Congress in the present temper of East
ern opinion.
What, then, is to be done? The
first mortgage bonds on the Union and
Central Pacific roads amount to SOL
$50, 900. These must be paid before the
claim of the Government, amounting
to $101 ,333, $50 according to the latest
report of the Treasury can be real
iZed upon. The Federal Supreme
Court has decided that the Government
must recover it's debt from the prop
erty against which the mortgage is
held and cannot as in the case Of in
dividualS, have recourse against any
other property Of the debtor. 1t is con-
ceded by all parties to the contro
versy that the roads would not sell for
mere than one-half of what they owe.
They could be duplicated to-day for 80
per cent. of what it cost to build them,
so great has been the. advancement in
this line Of work The Government
could foreclose and sell it's equity of re-
demption, burt for the reasons just stat
ed it would get next to nothing for it.
That is to say, the claim of the Govern
ment, after the prior claim had been
settled, would have little or no value.
the first claim covering about all that
the property would fetch at a forced
sale.
In this situation it is proposed to pro-
long the debt, increasing the security
by including in it the Oregon line, the
great ferry system at San Francisco
and all the valuable terminal facilities
there. The security now includes only
the Central Pacific from Ogden to Sac
and the Western Pacific from
to San Jose. The interest
is to be low, it is true q per cent. per
annum we believe), but any private
party holding a mortgage against an
other under similar conditions would
be glad to refund the debt at any rate
of interest if the secu rity could be in
creased and ultimate payment assured.
And considering that the interest as
we'll as the principal must. as surely
as the operating expenses, come out of
the earnings, it would appear to be
most advantageous to Californians to
have the interest rate low, especially
as the debt is due by the roads to the
people Of the whole country, represented
by their Government but must be paid
by the people who use the roads-most-
iy by the people of California. Citizens
of other States, through their Repre-
sentatives in Congress, might be ex-
pected to demand a higher rate of inter
est and severer terms of payment of the
principal in view of the fact that none
of ii comes out of them, but on the
contrary, most of it comes to them, but
by singular moral perversity Eastern
sentiment is more liberal on the ques-
ton than Western sentiment.
These being the facts of the case as
nearly as we can state them briefly and
it would be exceedingly
in the Mayor of San Fran
cisco to throw the weight of his office
on one side or the other of the contro-
versy. more especially on the wrong
side of Il. as the matter presents itSnlf