Cottonwood report. [volume] (Cottonwood, Idaho) 1893-1901, 1896-05-01
HOUSE COMMITTEES REPoH1s On
THE Pacific ROADS.
An Amount Equal to Subsidy Bonds
Has Already Been Returned
Future Legislation.

ument. The report sketches very briefly |
the familiar history of legislation py |
which the government granted subsidy |
bonds to the Pacific roads, and then out
lines exclusively the provisions which
congress has made from time to time for
the repayment of the bonds. The report
says on this point:
THE acts of congress prescribing the
provision to be made by the companies
for the repayment of bonds and the in
terest thereon have all been fully COM
piled with by the companies"
1t was believed by congress, the report
says, that the provisions prescribed to
be made would suffice to discharge the
subsidy bonds and the interest thereon at
maturity. AS a matter of fact they have
not sufficed The insufficiency of the
congressional provision has not resulted
from any failure or omission of any of
the companies to fully carry out the pro-
visions of the various acts of congress,
but has resulted from two causes First,
the great reduction in rates of transporta-
ton, which has reduced far beyond the
original anticipation the amount of COM
pensation which the companies were en-
titled to receive from the United States
for government transportation and sec
ond, the reduced, and until a very re-
| of interest upon the government bonds in
| which the Thurman sinking fund was
| originally required to be invested. 1t was
| expected that the retention of half of the
! compensation for services rendered for
| the government would equal or exceed
| the current interest upon the subsidy
bonds. and that the reserved per cent
| of new earnings would suffice for the re-
| payment of the principal of the debt at
| maturity.
| 1t was estimated that the aggregate
| annual interest would be s., 1885,, $50, and
the fact that the army and navy trans
| portation and postal service to the Pa
| cific had cost the government annually
| S,s577o1, one half of this compensation for
| services to the government would have
| very nearly paid the whole annual inter
| est account; but, Notwithstanding the
vast increase in the government transpor-
tation to the Pacific coast the rates of
| compensation at which the companies
/ were paid for the services which they
| rendered the government were reduced
SO low that the companies instead of re-
| ceiving an amount double, or even equal
| 70 the annual interest on the subsidy
| bonds, found themselves left debtors an
| nualiy to the government in the interest
| account in large amounts. The insuffici-
ency of the acts of 1862 and 1864 becoming
obvious, the report states, congress in
1873 passed the Thurman act. providing
for the reservation of the whole instead
Of half the compensation for government
transportation and with amounts reserv-
ed in the bond and interest accounts $50
called, and that further amounts speci-
fed in the act to be paid into the Thur
man sinking fund, should at least equal
2h per cent of the net earnings of the
properties. The provisions of the law
have been fully carried out, and there
has been no interruption in the contin-
ued compliance by both the Union Pacific
| Railroad Company and the Central Pacific
Railroad Company with the full require
ments which congress has heretofore es-
teblished, but the expectation of Senator
Thurman that the sinking fund could be
invested in government bonds upon a 5
per cent or anything like a per cent
basis utterly failed, as for very consid-
cradle portion of the time government
bonds have sold very much nearer a 2
per cent than per cent basis
These companies have repaid to the
United States sums, which in the aggre-
gate are almost equal to the entire amount
of the subsidy bonds loaned, and in the
case of the Union Pacific Railroad Com
pany the repayments will exceed by the
sum of $5,000.000 the entire amount of the
subsidy bonds issued to it's constituent
| companies.
The Thurman sinking fund, instead of
earning per cent per annum on the
} amount invested therein, has yielded only
! comparatively insignificant returns.
: The remaining debts to the government
on January 1, 1897, are: Union Pacific &
Kansas Pacific, $5.O5O, 4OS; Central Pacific
& Western Pacific. $57,6S1,514
, Three possible lines of policy seemed
I | open to the government, Mr. Powers
states, viz; First, to enter into possession
OF the properties, which would involve the
= immediate payment of SCI, 1856, 600 first mort
gage bonds. Second, foreclosure and sale
OF the governments lien which would
! practically reach the same result of The
governments acquisition of the roads.
The roads If sold for what they would
fetch would yield little or nothing for the
government on its debt. Third, to make
an arrangement with the companies which
would secure to the government the pay
ment of fixed amounts at prescribed dates
as large as the reasonably anticipated
earnings would bear.
The company, the report continues.
adopted the third plan and extended .be
, government lien to embrace the whole
! properties. including terminals. branch
lines and feeders and equipments. In this
, connection 1t said:
Without these 1t would be impractical
BILE to operate successfully the subsidized
properties. which are confined to interior
railroads without terminals and outlets in
dispensable to complete. efficient prop
erty. ON the other hand. no settlements
had been made which would leave the gov
| eminent at its dow
which does not provide for the govern
ment security completed in the respects in
which it has been heretofore so clearly
deficient. The lien of the government will
! embrace additional indispensable properly.
! which includes more than % per cent Of
J the mainline mileage of the Union Pa
J cific railway, go miles of branches, its ex-
tensive terminals at Omaha, Kansas CITY
Denver and Ogden, the bridge across the