The record-union., 1896-05-14

States is upon a road without terminals
or terminal facilities: upon a road, a
very large portion of which passes
through unproductive country; road:
the larger part of which is almost wholly
unsupported by Local or contiguous In
dustry. This security could not be made
profitable or self-supporting without the
Government acquiring a large part OF
the unsubsidized proportions OF &he
property. But under the plan OF the
will be extended to all the physical prop
erty of the company, including non-sub-
sidized main lines, terminal properties
and facilities, equipments and land
grants and these represent values
which will amply secure the United
States as creditor.
AS the average net earnings OF the
Central Pacific Company are less than
the payments imposed under the bill it
is provided that the Southern Pacific
Company shall guarantee the payments
required, and in case of it's ceasing to
be lessee Of the Central Pacific the prin-
cipal of the bonds representing the new
security shall, at the option of the Pres
ident, mature 1t is also provided that
the sum Of So, ,4O9S1S, due to the unsub-
sidized roads for services rendered the
Government in transportation work,
shall go to the payment of the bonds to
be issued to represent the new security.
The committee shows that the pay
ment under its plan will in the very first
year amount to nearly four millions of
dollars on behalf of the Central Pacific
Company AS whatever the Govern
ment can possibly get must come out
nittee gives close examination to its
earning capacity, saying that it would
be folly to exact more than the income
each year can possibly discharge. The
result of its exploitation of the subject
is, that it finds the Central Pacific Com
pany could pay interest on the first
mortgages, interest on the Government
debt, and installments of principal as
fixed charges, 1885. $50 a year.
But in addition to this annual pay
ment the Central Pacific Company is
required to consent that the charges
against the Government for transporta-
ton of mails and supplies shall be with
held Il default is made in any annual
payment, and these charges alone al
most meet the interest charges each
year. Thus there is still another addi-
tional security obtained by the Govern
first mortgage at a rate Of interest not
exceeding per cent, which, added to
the mortgage lien on the non-aided por-
tion of its property, aggregates 500, ,564,-
900, less sinking funds applicable there
to (S10, ,763, ,00O, leaving the mortgage
Indebtedness on the entire system
$50, ,sO1, 900.
So the security of the Government
under the bill will be greatly enhanced
in value, and will offer the best posi-
BILE indemnity against the loss Of any
fraction Of the indebtedness. AS pro-
vision against default, the whole in
debtedness is to become due If the
United States is ever required to pay
off any paramount lien upon the prop
erty; and If there is default in any pay
ment for six months the entire debt
shall mature, and the Government shall
then enter and take the property with
out applying to the courts or to Con-
gress for authority.
The final portion Of the committees
report is devoted to pointing out the
necessity for immediate legislation, in
a sketch Of the present status Of the
Indebtedness of the roads, and Of pro-
ceedings in courts concerning them. To
enable the Government to take the
roads, it is pointed out that it would
have to advance some SS0.0O0.00O,
course the committee cannot advise,
and then concludes with invitation to
examination of its plan, as a business,
sensible and safe method Of settling the
whole question; in fact, as the only
method that business wisdom suggests.