The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1896-02-25
Would Like to Have the Interest
Refunded for Fifty
Years.
MAGUIRE EXPOSES THE TRICK
The Charters of the Indebted Com.
panieS Expire Before the
Time of Settlement.

the Searles estate, to-day appeared before
the House Committee on Pacific Railroads
IN connection with the affairs OF the Cen
tral Pacific Railroad. The Central Pacific
he held, TO this moment hadslived up to
It's contract with the Government notwith-
standing reports to the contrary. This be-
Ing the case, the past should not be talked
of, but If a solution of the present differ
ences we're desired the future should be
considered.
He read at length from the Anderson
Llttler commission report and report OF
Ex-Governor Pattison regarding the af-
fairs OF the roads referring especially 10
the charges of determinations and rebates
Referring to the Pattison report on land
grants and profits made from them, he
said the statements were somewhat exag-
gerated. If the same reasoning as that
taken by Governor Pattison were
applied to benefits obtained by the Gov
eminent from increased telegraph and
mail facilities, the results would be fab
ulous.
lie asked the committee in considering
matters pertaining TO the Union Pacific
to carefully consider whether or not the
company had complied with its obliga-
tions to the Government. He thought it
had, and in the light of this fact it seemed
strange to him that the company should
be continuously referred to as "insolvent
ann unreliable"
With regard to the construction of the
Pacific railroads. he said that the Govern
nent wanted them built and cid not care
to buiid them itself. In order to have pri-
vate individuals undertake the enterprise
e hoC C1r- %y,rr,
Suppose, he said, that at this time the
Government had said to these parties,
You are to do this without profit
would any one have undertaken the work :?
The position was taken by some that
those who built the roads were merely
Government agents, strictly accountable
TO the Government. AS the Central Pa
citic and the Government had both lived
up to the contract the proper way to settle
any difficulty was just as any two busi-
ness men would do.
He did not think that the Central Pacific
could carry out the obligations proposed
by the Reilly bill of last Congress. The
bill provided for the payment OF the first
mortgage bonds in cash. To do this the
road would have TO raise $28, 100000. He
did not see how this could be done without
assessing its stockholders. To do this at
present would be to extinguish the stock
30 far as the present stockholders were
concerned. They were mostly poor, the
majority of them being scattered through
Europe. The money might be raised by
getting a syndicate to take new stock.
The method suggested in the Kyle bill, he
thought could be carried out. This would
let the Government out as a bondholder
and substitute private individuals in its
place. The company could probably pay
its bonds as they matured, but could not
pay the interest.
The Central Pacific could do this, but he
could not sneak for the Union Pacific. He
promised, at the request of Mr.. Patterson
of Tennessee, to draw bill embodying his
views.
Hubbard submitted an entirely new
plan of settlement. The new proposition
is that the company shall pay the prin-
cipaI OF the Govern nment debt at once and
the balance of the interest due the Govern
ment shall be funded for fifty years at 2
per cent per annum, the sinking fund on
hand to be applied in the payment OF the
principal. He admitted, however, that
the company had not authorized HIM to
present that specific plan, and he could
not say positively that the company
would carry it out but he believed that it
would be satisfactory. He also admitted
that the reorganization committee OF the
Union Pacific Company had not agreed to
accept it.
1t was finally suggested to him by sew
eral members of the committee that he
had better submit his plan to the repre-
sentatives of both roads and see If 1t would
be acceptable to both companies. he
agreed to do so and the committee hxed
Wednesday morning next 1or 1urther
hearing on his proposition.
The burden of his argument outside OF
this proposition was that public hostility
to Pacific railroad companies and their dl-
rectors arose out of an entire mlsunuer-
standing of the relation OF the latter 10
Government The people had an IDEA that
they were trustees OF the subsidies ana
should account to the Government 1or all
assets above the cost of construction ana
operation. They regarded the directors as
thieves because they had mace large
profits out of the construction, ana Iney
should be compelled to account 10 the
Government for such profits.
That was all mistake. They were en-
titled to everything above the cost OF con-
struction, no matter whether they got IL
under contracts with themselves or dlvid-
ing it among the stockholders as diVl-
dends. It was none of the Governments
business how they divided.
Mr.. Patterson asked: 'Do you think
that if those assets which are claimed to
have been diverted. were on hand now in
IF ha
ors would have right to divioe them