The record-union., 1896-01-16
SHALL A FUNDING BILL PASS /?
The Government Ownership of Rail-
reads.
What It Would Mean-How California
Would Suffer-Danger to Govern
ment In Such an Enterprise.
What It Won
(From the Marysville Daily Appeall

the fund1ng OF the Central Pacific Rail-
roads Indebtedness to the Government.
The Examiner and Call" are put
ting forth extraordinary efforts to make
such convention a success, and to make
it appear that the opposition to q fund.-
ing bill of any kind is practically
unanimous in California The so-called
arguments of these journals are general
in their nature, broadly assuming that
to give the Central Pacific an extension
of time in which to pay its debt would
be ruinous to California. So far as we
have seen, no specific data have been
given which warrant such an assump-
ton. We are simply told that Cali
fornia will have the debt to pay But
we are told, almost in the same breath,
that if funded for one hundred years
the debt will never be paid, as the COM
pany will be sure to find some way of
evading payment. There are several
questions to be considered in reviewing
this subject
First, Senator Thurston submits a
proposition to sell the Governments
claim for what it will bring-say forty
cents on the dollar. In that case the
road would fall into the hands of a cor
poration, and would be run in the inter
est of that corporation, and the Gov
ernment would have given away so per
cent. of its claim. Would that be con-
| sidered, in business circles, a business
! proposition? Candidly, laying aside all
prejudice and all demagogy; sink
ing out of sight the political aspirations
OF would-be leaders, and the extrava-
CANT assertions of certain newspapers,
would it not be more business-like for
| the Government to extend the time of
payment, taking a new bond, charging a
reasonable interest in proportion to the
value and length of the loan than to
give some now unknown corporation so
per cent of our claim? Senator Thur
ston's proposition is untenable from any
standpoint. 1t is absurd to discuss the
propriety of giving away so per cent of
the debt, while at the same time reject
ing an offer of full payment, If an op-
portunity be afforded.
Second-As to the question of Gov
ernment ownership of the road. In the
| first place, the Government cannot, in
equity own and operate a single trans
continental line in the manner pro-
posed by advocates Of that plan other
| trancontinental lines have rights which
the Government ought to respect.
| Millions have been invested in these
| competing lines, and 1t is not now
within the province of the Government
! to place itself in competition with
these lines to their material injury. This
is said on the assumption that the Gov
ernment could successfully operate the
! line at greatly reduced rates. Unless
| this could be successfully DONE wherein
would California be benefited? But we
submit that the Government cannot
/ undertake such a scheme with any
hope of success. In case of foreclosure
| the Government would own a single
| track line from Omaha to San Jose.
Without feeders and without terminal
facilities, the Government line, SPAN
ming nearly 1000 miles of practically
desert and non-paying territory, would
be absolutely at the mercy of other cor
orations unless Congress should at once
buy or build feeders and extend its
main line to the Atlantic seaboard.
| This desert line now pays, because it
| has a productive country at each end
with feeders reaching out therein in
every direction. As soon as the Govern
ment would own the Central Pacific
and Union Pacific, the corporations
owning these principal feeders would
make transcontinental lines of them
Great corporations would combine to
| impoverish the Government line, and in
a short time the line would be for sale
| at about twenty cents on the dollar
Thus, at the outset, Government own
ership would get black eye from which
it would not soon recover. The two
roads would again be in the hands of a
corporation and the Government would
| be minus the amounts now due it from
them. By giving an extension of time,
| just as any banker would do, the Gov
ernment will collect its entire claim
with interest.
Third-The Government could not
take possession of the road and operate
it with anything like its present eff
! cheney, much short of an expenditure
of $100,000,000. The holders of the first
mortgage would have to be settled with
and it would cost the balance of the
| S100, 900, 600 to put the roaCs in shape
as to connections, feeders and equip
ment. This would mean an addition Of
| $100, 600, 600 to our bonded Indebtedness
with no possible benefit to the people
There is another point which seems to
have escaped the notice of the writers
on this subject. 1t is assumed by anti
| funders that California would be great
! ly benefited by Government ownership,
because freights would be largely re-
| duced. Let us see how that would
work. Our principal agricultural pro-
| duct must seek foreign markets and
must go by water. 1t will be many
years before wheat can be taken across
the continent by rail at any profit, even
at extremely low transportation rates.
On the other hand a low rate East
would mean a low rate West and the
result would be the flooding of this
State with the staple products Of the
Mississippi Valley. If rates are greatly
reduced this evil will necessarily in
crea Sc. If rates are not reduced where
is the advantage of Government own
ership? The fact is, all this hubbub
against funding bill was born in po-
| litical demagogy and interested
| parties see their own advantage in
/ keeping up the howl. The people of
| California are not excited about it. Two
| leading papers of San Francisco are
| striving energetically to work up
| sentiment against funding, but from
present appearances it is up hill work
The Government is not ready to go into
| the railroad business As our Govern
ment is constituted it may never be
ready. Certainly it would be unwise
| to attempt at this time to operate a
single line. 1t follows that the only
option left to the Government is to ex-
| tend the time for payment of the rail-
road debt in such shape that il will Sc
cure payment and hurt nobody. 1t will
| hardly be urged that Congress does not
possess the timber necessary to draft