The record-union., 1896-03-12
Weather Forecast.
Northern California-Fair; light west
erly winds
BEAUTIFUL INCONSISTENCY.

BEAUTIFUL INCONSISTENCY.
The Sutro-" Examiner combination
declared that the advocacy of Govern
ment ownership of railroads was con-
spiracy against the people of the United
States. Our readers need not be told
that they have been opposing all extern
sion of the time for payment of the
claim secured by a second mortgage
which the Government has against the
Pacific railroads. And yet our San
Francisco contemporaries are openly
advocating proposition made by Sen
ator Morgan to refund all the debts,
both first and second mortgage bonds,
at B per cent, and extend the time in
definitely. Senator Morgan's proposi-
tion is not one which forecloses the
claim of the Government and sells the
road to the highest bidder. Tt is not
one which by proceedings in foreclosure
secures to the Government of the
United States the amount that is due
from the Pacific railroads. It proposes
torelieve these railroads of debt, assume
the burden of that debt itself, carry it
indefinitely at 8 per cent. and charge
rates of transportation that will pro-
duce sinking fund equal to the dis
charge of the first and second mort
gage, and turn back the road to the
stockholders or their successors free of
all bonded Indebtedness.
This is a munifcence which, in our
opinion, the stockholders of the Pacific
railroads would not have dared to ask.
This is a superb scheme from the stand
point Of the stockholders, and we will
be very much surprised if eventually
the Union and Central Pacific Railroad
Companies will not be found advocating
it. 1t takes into their firm a business
partner with unlimited capital, one
having in its own hands the routing of
a vast amount of freight, one already
an extensive patron Of the roads by
reason of the carrying Of mails, ship
ments of troops and munitions of war,
and we can conceive of no more COM
Portable situation than that in which
the stockholders of the Union and Cen
trail Pacific would be placed with the
sovereignty Of the United States as
their partner in business.
If the Congress of the United States
is willing to pass this bill on the lines
indicated by the summary which has
been sent by telegraph, we cannot see
why the Pacific railroads should not
accept it. From the standpoint of the
shipper, however, we can see many rea-
sons for grave apprehension. The rate
Of interest on the entire Indebtedness
of the road with a rate of charges which
will create a sinking fund equal to the
discharge Of the Indebtedness within a
reasonable time will certainly bear
heavily upon the shippers who must use
the line. Practically, therefore, Sena-
tor Morgan has proposed that the Gov
ernment pay off the first mortgage on
these Pacific railroads, issue bonds
bearing 8 per cent. interest, and pro-
ceed at once to collect from the COM
merce of California the annual interest
at per cent. on the whole debt and a
sufficient profit over operating expenses
to pay the bonds at their maturity in
order that the road may be turned back
to its stockholders free of all bonded
obligation.
This crazy complication, constructed
cut of vague misconceptions OF the
financial problems underlying the situ-
alton, meets with the Endorsement clf the
Examiner and CALI and the amaz-
ing feature of the case is that our con-
temporaries are unable to see ts- glar-
ing inconsistency of the Morgan prop
Osition with everything they have ad-
vocated. If we divest this Morgan
proposition of its misleading DISCUSSES
its deceptive verbiage and its seeming
of wisdom, it is provision simply
which in effect pays rhe debts of the
Pacific railroads by the Government of
the United States. SimpIified to its
lowest terms, it means that the Govern
ment is to issue its bonds in an amount
equal to all the Indebtedness repre-
sented by the first and second mort
cages on the Pacific railroads. issue
stock to the present stockholders in an
amount equal to the surplus value
which the roads may be found to pos
sess over the amount of their indebt-
edness, enter into the management of
the roads by the Government with the
avowed object of making the shippers
pay the interest, and also eventually
and within reasonable time pay back
to the Government the aggregate
amount of the present indebtedness.
When that is accomplished. nothing re-
mains but for the Government to retire