The Portland daily press., 1896-12-12
WASHINGTON GOSSIP.
Happenings Of Week At The Gap.
it0l.
MATTERS OF PARTICULAR INTER
EST TO MAINE PEOPLE.

The Condition of the Pacific Railroad
BiiIs-Baiting of Pop ulist BeII-Elijeah
Morse's Bill to Prohibit Liquor Selling
at the Capital and Its Status.
ESPECIAL TO THE PREss.]
Washington, Dec. lin few days
the House of Representatives will proba-
bly, take up the Pacific railroad funding
bill, 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 adyisedly, for the
question is complication of business.
and politics. Even the Congressional COM
mittee reporting on it, do not pretend to
understand thoroughly in.all its remote
details.
The first railroad line across the eplains
to California was completed a few years
after the close Of the civil war. 1t con-
sisted of two railroads, the Union Pacific,
running from Omaha, Neb., to Ogden,
Utah. distance of 1034 miles, Eand th e
Central Pacific, running from Ogden to
Sacramento.
Crocker, Huntington aud Oakes Ames
were original pioneers, and their names
are almost as well known as the rail
roads which they built.
The construction of the first trans-con-
tinental railroad across the plains Twas
too great an effort for private capital
unaided. So the government, desiring
to unite the extremities ftf the country
more nearly, loaned it's credit to | the un-
dertaking.
/ In the first place, the companies build
ing the line were allowed to issue first
mortgage bonds to the extent of SCI, 3e5,
600. Then the United States govern
ment issued in aid Of the. road it's own
subsidy bonds to the amount Of s61, 1896,
1872, taking as security lien on the
road secondary to the lien of the first
mortgage bonds.
The government expected to get back
its SOL, 3s5, 1872 with interest, in two ways.
The act of 1869 provided that government
troops, mails and other government
transportation, should be done at half
price. AS government Transportation
was then costing very high 1t was
thought that this arrangement would
recomponse the government for the In
tsrest on the bonds. Then further the
road wes required to pay annually to the
government five per cent of its net earn
inge. 1T was thought that this amount,
could ne Invested in a sinking fund which
would, at the maturity Of the bonds
issued to help the road, wipe them out.
But other Pacific railroads came Into
the field rs 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 to cover
So in 1878 the Thurin an act was passed
providing that the whole of the cost CT
government transportation should ba
reserved to pay the government, and that
Mt least 25 per cent of the net earnings
should go to the sinking fund. But
when the Thurman act was passed gov
ernmeut securities suitable for the sink
ing fund could be bought on six per
cent basis, while only few ears after
the basis fell to nearer 2 per cent.
So again the arrangements made
for carrying and ultimately paying the
government mortgage on the roads
Groks down, because Of the decrease of
rates Of transportation and the falling
CT the rate of interest, due to Ethe higher
credit of tins government
So it has resulted that in all the years
that this system has been in operation.
there has been paid to the government in
services and cash, what amounted on
January l, 1897, to only $50, 755, 394.
This is 81, $50, 797 less than this amount of
the subsidy given thirty years or more
ago.
But the whole of that immense sum
has been rawing Interest all the time,
SO that in spite Of the millions realized by
the government, there is still due to the
government from the railroads the i'm
mense sum of S112, ,000 600.
How to get this money is the question
which Congress is considering, and the
I 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 Uhited States
fabeut s112 600, 000), such bonds to bear
interest at the rate of per cent per
annum. payable feni-annually, and for
annual payments by each company on
account of principal, for the first ten
years at the rate Of 1856, 900 Cor 81, 600
day1, for the next ten years at the rate of
$3.50, 600 per annum Tor something over
81, 500 day), and for tine balance of the
term at the rate Of $3.50, 900 per annum
(sonething over So, 0O0 day); and this
provision will exhaust all the anticipated
earnings Of the companies based upon
the earnings realized therefrom during