The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1896-02-07
Shows That Prompt Measures
Should Be Taken With
Pacific Roads.
ALL INTEREST COULD BE PAID
Government Ownership Would Not
Necessarily Follow the Sale of
the Bond.Aided Lines.

WASHINGTON, D. c., Feb. 6.-Secre
tary of the Interior Hoke Smith appeared
before the House Committee on Pacific
Railroads this morning in response to the
request of Chairman Powers. He talked
for an hour and half. His statements OF
recommendations were in line with his
last annual report.
The fact that the Smith refunding bill
was referred to the Secretary of the In
terror. led some to believe that he was
favorable to the refunding scheme, but
this impression seems to have been erron-
eous, judging from his statement before
the committee to-day. The Smith bill was
merely referred to him tor his opinion as
TO the practicability of certain features OF
it. Secretary Smith was called before the
committee to-day to explain why land
patents had been suspended, but did not
confne his remarks entirely to this
subject.
Smith declared that if the Government
continued to patent lands there was nc
necessity for a provision for recovery oil
those lands subsequently patented.
"The Union Pacific was about to become
insolvent," said he, 'and might thereby
have forfeited its lands before deemed il
proper to suspend land patents, inasmuch
as Congress was about to meet and con
sider the Pacific Railroads debt question
But this suspension of patents was not in
any sense intended as an adjudication o+
this question. 1t was my purpose, in sus
pending patents, to leave the matter in
statu quo, so that Congress might have
perfect freedom in dealing with this ques-
zion; but if Congress had failed to legis-
late, or had signified its unwillingness to
take any action concerning Pacific railroad
land patents, the Interior Department
would Immediately have resumed then
issuance"
AT this point Chairman Powers sug.
gested that, according to E. Ellery Ander
SON of the Union Pacific Government di
rectors, purchasers of lands and not rail
roads we're the EN- mbarrassed parties. Sec
retary Smith replied:
"Bona-ide settlers should be protected
of course, but how was this to be done
There is no provision of law for it. The
department could not undertake to dis
criminate between the two. The bill
favored by Mr.. Anderson proposes thai
patents shall issue without regard to the
rights and equities as between settlers ano
the railroad and without regard to the
real status of householding mortgages
The bill proposes to issue all patents anG
subsequently endeavor to reclaim some O.
the lands. But there might be nothing tc
reclaim. 1t would all be according to the
extent of the insolvency of the roads, A
Union Pacific sub-company was formed tC
dispose of these granted lands and die
dispose of several million acres of them
The impo.t question then arises
Where did the proceeds go? Who got the
money!
Boatner asked: t'Were these lands dis
posed of by a panEsinstead of tn.
company itseIf?'
That is correct, according to my infor
nation" replied Secretary Smi E, "anc
it might not be bad idea for the Govern
ment to try to trace that fund and as fal
as practicable apply it to the discharge O
the bonds and mortgages upon these
lands"
Boatner-Mr. Secretary, it seems from
the report of the Pacific Railway Com.
mission that the proceeds of those land
grant bonds were divided among ICON.
structIon companies" which were, il
appears, composed of members of these
corporations. Can you suggest any way
by which these diverted funds might be
returned2
Secretary Smith-0f course the Govern
ment would have the right that any cor
poration would have to sue the directors
for the recovery of the diverted funds. II
we can trace or locate these funds. or
ascertain thcf they have been paid to any
of these bondholders, we might reduce
the amount of bonds and save that and
the land. 1t seems to me that, instead of
providing that land patents shall issue, it
would be better to pass an act of forfeit
ure, with provision protecting bona-fide
purchasers.
At this point member of the commit
tee asked If the Pacific roads had done
everything required by the act of Congress
In order that they might properly dispose
of the land granted them.
mo" said Secretary Smith. "a part of
the agreement, viz, That they should
meet their Government bonds, has not
been complied with. Congress therefore
has the right to pass forfeiture act, and
hCongress shall fail to DO so shall SIM
ply issue an order that the land be pat
ehteo and expedited asrapidly as possible.
confess not TO understand the equities
as between the Government and the bond
isoluers, but think we should act as in
.Etuuals would set. Ny own opinion is
sne' we should pass general forfeiture
ac.; SO as to protecs bona-fide Iandholders,
anu snen' after ap investigation, Issue
patents only 10 that extent to which they
nave met their obligations to the Govern
cooe" s.her mere asked II it were possible, in
Secieoary smiths opinion, to foreclose on
tne facifc roads without providing for
government ownership Tha Socre,srv