The record-union., 1896-06-20

that end; to create corporations TOT the
purpose as necessary.
1t did in fact create four railway
corporations but the Central Pacific
was not one of them. It aided these
corporations with lands and bonds as
subsidies, and though the Government
clearly wished the roads built in haste,
as it was in the midst Of great emer-
gency, Congress carefully and explic-
lily refrained from involving the Gov
ernment in direct construction in their
operation or ownership. 1t provided,
as conditions, for the carriage of it's
mails, the transportation of it's troops
and munitions of war, and for use of
the companies telegraphic lines for
Government dispatches and reserved
the usual right of entry in default Of
payment.
If this policy of freedom and discOn-
nection was wise at that time, when the
construction Of the roads was demanded
by grave exigencies how much more is
it wise to-day, when there are over
10000 miles of railway in the country
with a capitalization of $10,740, 100000
and over? The committee therefore re-
of the roads. Aside from the established
policy referred to it would be unwise to
acquire the roads constituting single
system in competition with the roads
i 11,y Wv - &or
prise, and because it would necessitate
the policy eventually of Government
opera tion of the entire system of rail-
ways in the Union.
Foreclosure of the Government lien
the committee disapproves, because the
lien does not cover the whole mileage; it
covers one vast stretch that is unpro-
duetive desert and another unproductive
mountains; the extensive lateral prop
critics of the roads are not affected by
the lien; the Government aided parts are
incomplete as to outlets and practically
without terminals and other essential
adjuncts. These lines then could not be
of value except by enormous outlay to
acquire the laterals and terminals and
to discharge the first mortgage lien or
debt. No foreclosure should be attempt
ed without prior provision to discharge
the senior liens, and the acquisition of
the adjuncts referred to, and this would
necessitate the outlay of S90,00O,000,
exclusive of the amounts held in the
sinking fund. Any such expenditure is
preposterous, says the committee.
Extension of the debt then alone re-
mains and the reasons making that ad-
visable are put by the committee with
force and conclusive vigor. 1t advises
extension under conditions that will en-
hance the security and insure payment.
These conditions are covering all the
of the companies by the lien
included the non-aided parts and the
terminals; payment of fixed sums st
prescribed dates with interest at as high
a rate as the earnings will justify; as to
the Central Pacific Indebtedness the
Southern Pacific Company shall guaran-
tee the payments by that company;
that the 100000 now to the credit of
the Central Pacific Company on the
books of the United States Treasury for
services overnon- aided lines shall be ap-
piled to cancellation of bonds issued
under the Act.
Under this adjustment there will be
paid by the Central Pacific Company on
its debt some $4,000 in the first year.
The committee points out that with the
reduced interest from to per cent
the earnings of the Union Pacific will
suffice to meet new requirements rec
commended. When the amounts due the
Government are accurately ascertained
to January /, 1897, and adjustment
bonds are executed to represent the in
debtedness, a mortgage on all the prop
critics of the companies is to be made
in behalf of the Government to secure
such bonds.
Thus the debt due the Government will
be steadily reduced each year, the Sc
curity for the remainder will be steadily
by guarantees, and completed railroads
with requisite terminals, so that If
thereafter the Government has to enter
it will have at command a complete sys-
tenn. 1t is provided in the bill the COM
mittee reports that in case Of a six
months default in compliance with any
OF the payments required, the entire
sum shall, at the option Of the Presi-
dent, Immediately mature.
The committee believes that fixing the
interest at per cent. and payments on
account of discharge at the rate Of
81 600 a day for the first ten years,
81 800 for the second ten years, and
upwards of $4,000 thereafter, will meet
the needs of the case and assure the dis
charge of the debt.
The report should be read in full, since
it is easily understood, is obscure in
nothing, and gives in detail the only
rational and business-like plan for the
adjustment and discharge of the in
debtedness of the Pacific Railroads, and
the perfect security of the Government
against loss.
\ COLLAPSED CASE.
The Assessor of San Francisco as