The record-union., 1896-05-14
SETTLEMENT OF THE RAILROAD
DEBTS.

We have already reviewed the first
portion of the report of the House Com
mittee on Pacific Railroads, which out
lined the financial history of the build
ing of the first transcontinental roads.
It was there shown that the roads have
complied with every requirement of the
Acts of Congress relative to the debt
which has been paid, as to principal,
within little over four and a half mill
ions Of dollars.
TWAS shown also, from the official
records and the laws, that the expecta-
ton of Congress that it's original pro-
vision for a sinking fund, and for serv-
ice to the Government in the way of
transportation, to meet the interest and
principal had been defeated by the ap-
probation of Government credit, and
the rapid reduction in rates of trans
portation due to construction Of other
lines, SO that while the Government was
an immense gamer in both directions
the roads were deprived of their ability
to accumulate the fund to meet the
debt, since the declination of trans
portation rates and the decrease of in
terest rate expected to be derived from
investment of the sinking fund defeated
the purpose of Congress, and that with
out any failure on the part of the roads
to comply with the law.
We now come to the second and still
more important portion Of the report,
namely, what is wise to prescribe in the
settlement of the remainder of the debt
unpaid. The committee points out that
there are three courses open: For the
Government to assume the liabilities of
the senior or prior liens and take pos
session Of and operate the roads in the
event the subsidy bonds are not paid at
maturity; to foreclose the Government
lien and order its sale with provision for
the payment Of the first mortgage
bonds, the Government to protect itself
by bidding the amount of its liens, or
sale subject to the prior nens third, ad-
justnent by extension Of time Of pay
ment, on an installment plan, and for
additional security to the Government.
The committee reaches the conclusion
positively and unqualifiedly, to which
business wisdom and ordinary caution
point, namely, that the Government
should not undertake to provide over
sixty-one and quarter millions of dol
lars to take up the first mortgage liens
and acquire ownership Of the property
and assume the responsibility Of the op-
GRAFTON Of the roads. On the contrary,
the committee advises that the right.
safe and business policy to pursue is to
provide for final settlement of the whole
matter on the basis of specific INSTALL
ment payments, based upon the earn
tngs of the property, with the lien of the
Government extended to cover the
whole property instead of as at present.
1t would have this additional security
embrace the feeders which the company
have acquired, all the branch lines and
all terminals and terminal facilities.
To this end the committee has SUBJ
mitted bill by which it is provided
pdyIutAlS Sudll De
made with interest upon unpaid por-
tfons at two per cent, and that second
mortgages shall be made by the COM
panies as additional security, embrac-
Ing not only the subsidized portions OF
the roads upon which the Government
has now a second lien, but also all the
railroads Of the company, their termi-
nails. lands and equipments to which the
Government lien does not now extend
As to the details of these provisions #
u not necessary to enlarge, since what
has been said sufficiently indicates the
plan OF adjustment to which the COM
mittee gives its judgment There Is am
pie fortifcation of this judgment by de-
tailed exploitation of the accounts be-
tween the Government and the aided
reads, and statements of the extent of
the present Government Hen. In the
casa Of the Central Pacific Railroad a