The record-union., 1896-08-16
Hon. GROVE l. JOHNSON
EXPLAINS THE FUNDING BILL

statements were and are correct.
The Reilly funding bill required, as a
condition precedent to it's acceptance by
the company, that the first mortgage
debt on the road should be paid, or ar
ranged in some manner by the COM
pany, and the Government mortgage
made a first lien. This could not have
been done. No financier would loan
them enough cash with which to pay a
twenty-eight million dollar first mort
gage, and take as security for his cash
| a second mortgage on the same prop
erty, encumbered with another first
mortgage of $57, 100000.
Even if by some miracle this could
have been done, the annual payments
required of the company were far in ex-
cess of it's earnings, and could not have
been made (as before stated) except by
a material increase in the rates of fare
and freight. This was demonstrated
very clearly in the speeches made and
tables and figures published during the
campaign of 1894.
Therefore, we all opposed the Reilly
bill, not because of opposition to fund
ing and extending the debt, but because
the provisions of that bill were too oner-
Gus upon the railroad company and Cal
ifornia alike.
The present bill differs very material
ly from the Reilly bill, in that it pro-
vides for the payment in full of the debt
due the United States from the railroad
company upon terms equitable to both
parties to the contract, and that will
not raise the rates of railroad fares or
frai oh in, G,If M
their reduction.
| believe that the proper method in
which to treat these railroad corpora
tions is to act toward them as though
they and the United States were indi-
| vidualS
If so treated no one could complain.
Let us suppose case:
| A bank holds a second mortgage on a
farm and finds that the debtor cannot
| pay his debt as it becomes due.
| The duty of its Board of Directors is
plain, viz: to send for that debtor and
ascertain why he does not pay, and
| what he proposes to do. No bank fore
closes it's mortgage without giving its
debtor such a chance.
| The bank does not want the farm
neither does the Government want the
Pacific Railroads.
Both want their money.
When the debtor appears, he says: 81
cannot pay now. My property will not
| sell for more than enough to pay the
| first mortgage. Give me time and
will give you additional security OF
great value and will pay you in full, pay
my first mortgage and save my farm;
| b11f If will III
me lose my farm, you will lose your
debt and you cannot have any deficiency
| judgment against me-
What would any individual do?
| He would not foreclose. He would
| Immediately institute a careful investi-
| cation into the assets and revenues and
expenditures of his debtor, into the
value and productiveness of his farm
and the nature and value of the addi-
tional security offered, and would be
| guided in his decision by the result OF
| such Investigations.
| That is exactly what the Committees
on Pacific Railroads of Congress did re-
garding the mortgage debt due the
United States by the Central Pacific
Railroad Company.
No sensible Individual or solvent
| bank would order foreclosure until such
| investigation was had even if much
clamor was heard from uninterested
| persons.
| No good citizen would wish the Gov
ernment mortgage foreclosed until such
| investigation was had
| The committees made the investiga-
tion and they all, except two members
| In tIoa too ~ ~
agreed that the only way to secure tht
Government and obtain payment in full
was to give the company such reason
| able time in which to pay their debt:
due the United States as will at once Sc
cure the Government against loss, ths
| company from ruin and the people from
| increased rates. We must remembel
| that the stockholders of this company
| have rights and are entitled to protec
ton.
These objects will be accomplished b,
the passage of the proposed fundint
bill.
Hence / say the committees hav'
treated the railroad companies exactl.
as one individual would treat anothe
under the circumstances.
The testimony taken by the commit
tees was voluminous, and covered ever,
phase of the question from the com
| mencement of the agitation for Pa
cific railroad down to the present date
/ will not take up time now in discuss
ing the early history of this creates
achievement of the nineteenth century
although it is at once very interestin,
and instructive.
iii Of
the land grants given to the road
which have been so magnified by som
speakers and writer's, and show, as tn
facts do, their insignificance as com
pared with donations to other roads.
1t may be my privilege on some othe
occasion to explain these as well a
many other of the transactions of tn
United States and its people with thes
Pacific railroads, but now 1 have not tn
time.
/ wish, however, to impress upon yo
these facts, that impartial histor
shows, first, that all the Pacific railroa
legislation of Congress was taken no
at the request of the railroad compa
MES. nor of their promoters, but at tn
demand of the people; and, second, tha
the lands granted We're not worth on
dollar without the building of the rail
road
/ will in this letter speak only of tn
bonds granted the company.
These bonds were all granted by tn
: terms of the Acts of Congress of Jul
/, 1862, and July ,, 1864.
/ From the testimony taken by the com
mittees it appears that according to tn
treasury reports the total amount @
subsidy bonds given the Central Pa
cific and the Western Pacific is S27,