Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1896-12-14
PACIFIC RAILROAD BILL.
Which Is Pulling the National lawmaktr
Not a Little.

/
sentatives will probably take up the
Pacific railroad funding bill, a measure
which. while affecting property remote
from New England. is still of sufficient
national interest to merit an effort to
understand it. The word effort is
used advisedly, for the question is a
complication of business, and politics
Even the congressional committee re-
porting on it do not pretend to under
stand thoroughly in all it's remote de-
| tails.
i The first railroad line across the plains
| to California was completed few
&, years after the close of the civil war
1t consisted of two railroads, the I'm
ion Pacific, running from Omaha, Neb.
to Ogden. Utah, a distance of 1894 miles,
and the Central Pacific, running from
Ogden to Sacramento.
Croker, Huntington and Cakes
Ames were original pioneers. and their
names are almost as well known as the
railroads which they built.
The construction of the first trans
continental railroad across the plains
was too great an effort for private
capital unaided. So the government
country more nearly, loaned it's credit
to the undertaking.
In the first place, the companies build
ing the line We're allowed to issue frs,
mortgage bonds to the extent of Sol, 1856.
900. Then the United States govern
ment issued in aid of the road its OWE
subsidy bonds to the amount of SCI.
1876, 1872. taking as security lien on the
road secondary to the lien of the first
mortgage bonds.
The government expected to get bach
its SCI 395, 1872 with interest in two ways
The act of 1862 provided that govern
ment troops, mails and other govern
ment transportation. should be done a
half price. AS government transporta
lion was then costing very high il was
thought that this arrangement would
recompense the government for the in
| terest on the bonds. Then further tbs
road was required to pay annually L
the government five per cent. of its ne
earnings. 1t was thought that this
| amount. could be invested in a sinking
fund which would. at the maturity OF
| the bonds issued To help the road, wipe
them out.
the field as competitors, and brought
the cost of transportation down so low
that the one half reduction for govern.
ment business failed utterly to meet the
| interest cost which it expected t.
cover
! So in 1873 the Thurman act was
passed providing that the whole of the
cost of government transportation
should be reserved to pay the govern.
ment. and that at least % per cent. OF
the net earnings should go to the sink
ing fund. But when the Thurman act
was passed government securities suit
able for the sinking fund could be
bought on six per cent. basis. while
only few years after the basis fell tC
nearer two per cent.
| So again the arrangements made for
carrying and ultimately paying the
government mortgage on the roads
broke down, because of the decrease OF
rates of transportation and the falling
of the rate of interest. due to the high
er credit of the government.
SO it has resulted that in all the
years that this system has been in OPP
Grafton. there has been paid to the
government in services and cash. what
amounted on January l. 1897. to only
S56 1874. This is $4.639.797 less than
he amount of the subsidy given so
years or more ago.
But the whole Of that immense sum
so that in spite of the millions realized
ly the government, there is still due
to the government from the railroads
! i,. 6
How to get this money is the ques-
ton which Congress is considering,
ard the funding bill which is soon to
come up is one of the plans.
The bill provides for the issue of
bonds of the companies for the whole
| balance due from them to the United
States (about $1l2,000, 000). such bonds
to bear interest at the rate of 2 per
cent per annum. payable semi-annual-
~ and for annual payments by each
company on account of principal. for
the first ten years at the rate of
SS65.0o0 Cor $1,000 a day. for the next
ten years at the rate of $5oO00o per an
mum Cor something over $500 a day..
and for the balance of the term at the
rate of $150,00O per annum (sOmething
over $4,000 a day. and this provision
will exhaust all the anticipated earn
ings Of the companies based upon the
earnings realized therefrom during the
last few years and the conditions
now affecting their revenues. The
conclusion of the committee. reached
after extended investigation, is, that
the provisions of this bill. in respect
to payments, are as favorable to the
government as can be imposed without
exceeding the limit of safe and pru-
dent exactiOn.
There is opposition to this bill. both
business and political. Those who OPP
pose on business grounds think that
the government should foreclose on
the road at once. This would mean
that the government would have to
advance SCI, 900 to buy up the claim
of the first mortgage bond holders.
Having done that it would have a rail-
road on its hands.
The political opposition is a very
important element: and arises from a
curious situation The great mogul of
the Southern Pacific is Coils p. Hun
tington. That road is a competitor of
the Union and Central Pacific lines.
which the government is now consid-
aripO hnuf Q1avpn years apn the