The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1896-02-25
PACIFIC ROADS HEARING.
Thomas H. HubbarTs Argument for
the Central Pacific.


WASHINGTON, Feb. 24-The Pa
cif1c railroad commission of the house
today continued it's hearing. Thomas
II. Hubbard appeared to argue that as
far as the Central Pacific was con-
cerned. il fully performed its obliga-
lions to the government. He under
took to answer the allegations of the
Anderson report. Whatever existed In
the minds of the public adverse to the
road was embodied in that report. Inc
difference between the two suggested
methods of settlement in the report Oh
the commission and the Frye Dill was
that the former proposed to extend utle
debt fifty years at 3 per cent, the
latter hundred years at per cent.
Taking UP the minority report OF
the commission made by Governor Pat
tison. he characterized its statements
as exaggerated, producing fabulous fg-
ures as to the profits of the construc-
tors of the road, based on compound
interest for thirty years.
Applying the same method OF rea-
soning to the advantages which &C
crued to the government in tine in
crease of it's land values, etc, he sand
the result would be equally fabulous.
The report placed the amount real1zed
from sold lands at $7,9O0,OOO when IN
fact the last estimate was but $3,000,-
600 SO realized. He then took up the
majority report and called attention
to its conclusion regarding several re-
quirements of the act in aid of the
roads He said ut was apparent that
the road had been built according to
the requirements and completed SIX
years before the agreement. 1t had
performed its obligations also; in the
Transportation of troops and in pay
ments from it's earnings. In the light of
these facts. he said, it seemed strange
that the companies were constantly re-
ferred to as insolvent or as undeserv-
ing, and the question was constantly
asked: ''Why not make THE Pacific
railroads disgorge? Why mot force
them to make restitution"
The grounds upon which these ques-
tiorrs were constantly reiterated were
not that the obligations of the COM
pany had not been performed, but that
tine assets were diverted by undue pro
fits during the construction. But u1l-
less the profits to the contractors was
limited by the provisions of the act,
who was to measure what the pro-
fits should be? AS a matter of fact
the profits had resulted from the en-
hancemnt of the value of stocks which
were entirely unsuitable when the
roads were completed. Several years
afterwards, however, much of this
stock was sold abroad and its value
increased until it was worth $50. 1t
had since been as high as $50 and as
low as $40 or SIS.
General Hubbard thought the ques-
tion of settlement should be consider
ed as a business proposition and the
contract as one between individuals.
The question what profit each party
to it made should not enter The fun
damental error in the minds of the
public was that the men who built
the road were treated as trustees. The
government wanted road across the
continent and did not want TO build
one itself 1t agreed to contribute
bonds, the latter to be ultimately re-
deemed The constructors were ex-
pected to do the rest, certainly not
without expectation of profit.
The sensible settlement would be just
such a settlement as business men would
make. They would not get angry and de-
nounce each other with having made
would foreclose. If they were not they
would do what was done in the case OF
every railroad mortgage. No one ever
thought of paying railroad mortgage in
cash WIlHOub PeIlIllSSlOu W ISSUE more
bonds. If railroads had to meet their
obligations in cash every one of them
would be insolvent. The United States
treasury would be insolvent. The proper
thing to do was to make an extension
with such a rate of interest as would
enable the company to carry out the
contract.
The government wanted to avoid the
payments of its bonds. The chief thing
for the government was to avoid the
payment of principal. This proposition
was that the government should take
care of the interests and the railroad
would take care of the principal as il
| became due. For the railroad to do botI
would be for the present too much of E
! tax on the roads. In answer to uIles
| lions from Mr.. Patterson and others hi
amplified his proposition. The sinkint
| fund, he said, could be applied on tht
/ principal, which would reduce it to 8
point where the roads, could take car,
| of it. For the payment of the accrued
! interest he would issue fifty year 2 PEI
! cent income bonds, one half of the ex
cess of the earnings over 2 per cent. t
go to a sinking fund and one-half to tn,
stockholders. 1t was important, h,
thought, that the stock should pay divi
dends and not be extinguished.
The railroads. he asserted, could com
! ply with such a plan.
General Hubbard said he would con
| fer with representatives of the Uniol
| Pacific railroad, and if possible devils
! tie the difficulty General Hubbard will
| Wednesday. =