The record-union., 1896-08-16

If it was bad for the United States, no
one is to blame but the United States.
1t is not claimed by anyone that the
companies did any more than to accept
the contract that the Government
made.
The Central Pacific has fully COM
piled with every requirement of its con-
tract from the day that it accepted the
same.
When every other Pacific railroad
company and many other railroad COM
panies defaulted in their interest pay
| ments, the Central Pacific met all it's
obligations at the day appointed. When
every other Pacific railroad company
and many other railroad companies
went into the hands of receivers upon
the application to court of their credit
ors. the Central Pacific attended to it's
own business, paid all it's debts when
due and kept one railroad out of court
and In the hands of it's owners
AS a Californian, 1 am proud of this
fact, and proud that it was owing to the
keen business sagacity, honest purpose
and untiring efforts of Californians
that the Central Pacific was enabled to
make this glorious record. AS a Sacra-
mentan, also, I am particularly proud
of 1t, for these men were all residents of
our city.
The Central Pacific did not realize the
full amount of the bonds issued to it by
the Government.
They We're made payable in lawful
money meaning greenbacks, were
known in commercial circles as eur
rency sixes," and were sold by the
company at an average rate of seventy
| cents on the dollar, thus netting the
company but $40, ,49S, ,9T6
! This amount was much reduced, as
the company was forced to buy gold at
fearful premiums for use in California
and Europe.
| This does not change the generous
purpose or statesman-like idea that
| prompted the subsidy. but should be
remembered when talk is had about
the immense sums donated to the Pa
| cific railroads.
The debt must be settled The uues-
ticn is how? We are called upon to
decide it as the representatives of the
| United States and the dictators of the
situation. We must act upon business
principles. Cries of fraud" malevo-
|
bill, demagogical shrieks against par
| ticular men must not swerve us from
our duty to settle a busness-like mat
ter on business lines. What, then, is
our situation?
The United States has a second mort
gage for security.
There is a first mortgage on all the
Central Pacific, constituting lien prior
to that of the United States, amounting
tC S21, ,So3,OO0. Add this to the sum
due to the United States, and the
amount of $103. 1888 "a is due it's
creditors by this company
| The holders of these first mortgage
bonds are asking for their pay and
threatening foreclosure
The Central Pacific cannot pay the
principal of the bonds due the United
States or the first mortgage holders as
| they become due.
| What shall be done?
| AS | have said before the duty of
every creditor holding a second mort
gage when his debtor says, Il cannot
pay my debts as they fall due" is to
carefully examine the assets and liabil-
| tiles Of that debtor and see what settle
| ment can be made So as to save the
| creditor if possible from loss. Lawsuits
are to be avoided by nations as we'll as
| individuals
Applying this common sense rule to
the present case we find that the Gov
ernment mortgage covers a line of rail-
road from a point five miles west of
Ogden, Utah, to Sacramento, Cal, a
distance of 1880 miles, and from Sac
! T. ami fn Col
CT 1876 miles, in all a distance of
S6O.66 miles. 1t is a road without ter
minals or terminal facilities. 1t does
not enter San Francisco, the queen city
OF the Pacific Coast, but stops at San
Jose, fifty miles away.
The value of any large railroad is
that it may reach some large city,
some great distributing point some
center of business and population, some
hub of the wheel of commercial rela-
tions, into which the spokes Of trade,
of manufacture, of progress, of devel-
opment lead from every point the
money and people of the land This
is not the case with the Central Pacific
as mortgaged. 1t is like the heroine of
Gunter's novel, Miss Nobody from No
where" in that it begins in a desert and
ends many miles from it's true ter
minus. 1t is a disjointed vertebrae
unable to do business of itself Who
ever purchases must make terms with
other companies else he can do no busi-
ness.
In addition, the road from Ogden to
the Sierra Nevadas, distance of about
JS9 miles, passes over a country as
barren of way business as a hen is of
teeth, and acts merely as a conduit
over which the people and products of
the East and West can pass, as the
citizens of New York and Brooklyn
cross the great East River bridge
The total receipts from this part of
the railroad from way traffic will not
pay for the oil consumed in lubricatine
the wheels of the locomotives that pull
the trains.
All the paying business comes from
California and the far East known as
through travel.
We find a mortgage ahead of the
United States that must be paid or in
some manner cared for, or the United
States will lose every dollar of it's debt
We find that the business of the road
has been increased and made valuable
by the construction of numerous other
railroads in California, not covered by
the Government mortgage, that serve
as feeders to the main line and are alb
solutely necessary to be obtained by
the creditor, in case he decided to take
possession of the road, for without
them he can do but little traffic
We find a valuable road leading from
the subsidized line to San Francisco