The record-union., 1896-06-20


Nevada ranges. The lien of the Govern
ment also attaches TO 394 miles of the
Union Pacific, Kansas division, from the
Kansas Missouri State line westward.
About $50 miles of the Union Pacific
Railway are not covered by the lien of
the Government. Neither are the ex
tensive lateral properties of the Central
Pacific nor the branches remaining in
the control of the Union Pacific Com
pany embraced in this lien The Govern
ment aided parts of these systems are
incomplete as to outlets, and practi-
caIly without terminals and other in
d!spensable adjuncts. These could not
be embraced or controlled in proceed
ings for the foreclosure of the Govern
ment's lien, and could only be availed
OF, to complete the lines which might
be acquired by the Government under
foreclosure by the outlay of large sums
of money, in addition to those which
would be required to discharge the prior
liens upon the aided lines.
Foreclosure of the Governments lien
would Of course involve the necessity
of providing for the retirement of the
first mortgage debt upon the aided parts
Of the property; but under such foreclos-
ure the Government could only acquire
fractional parts of the systems, to the
successful operation of which other
lines and terminals wholly unaffected by
the Government lien are essential.
Noforeclosurecf the Governments lien
should be undertaken without full pro-
vision previously made by Congress for
the discharge of superior liens, and for
the acquisition of the other important
and valuable properties which must be
acquired in order to make possible any
successful operation OF the aided parts
| of the systems. 1t is estimated by this
committee that at least $50, ,000, 900, ex-
elusive of the amounts held in the
United States sinkind funds, would be
requisite for this purpose. Any proposed
appropriation of SO large an amount Of
money, or issue of the securities of the
United States to provide such a sum,
for the purpose of making such an ex-
| pertinent seems to this committee to be
little less than preposterous.
| The first mortgage upon the aided
| Union division of the Union Pacific Rail-
way is at the rate of more than S26, 5000
| per mile. The first mortgages upon the
aided parts of the Kansas division are
at the rate of SIC 900 per mile. The first
mortgage upon the aided parts of the
| Central Pacific Railroad is at the rate
OF more than $50, 900 per mile. The Gov
ernment's lien is in all cases subordinate
to these mortgages. This committee
finds no occasion to differ with the con-
clusions of the Pacific Railroad Com
nlissioners, appointed under the Act of
| Ma rch 2 1897 fn the effect that an an
| forcement of the statutory lien of the
Government would result in a sale at
which it could hardly be expected that
| any bid in excess Of the amount due
on the first mortgage bonds would be
| made. The Government could have no
| reasonable expectation at such a sale
Of realizing anything but the property
itself, the acquisition of which would
| necessarily involve the Government
making full provisions for the prior
liens upon the aided parts, and acquir-
| ing considerable portions, at least, Of
the non-aided railways and terminal
properties.
EXTENSION OF THE DEBT DUE
THE GOVERNMENT.
| The committee is satisfied that the
| solution of the existing questions af-
fecting the relations between the United
| States and the Pacific railroad COM
panies is to be found in an extension
OF the debts due to the United States
upon the conditions which are embod-
| led in the bill reported herewith.
| The fundamental principles upon
which this bill has been prepared are:
First-That the security for the debts
| due to the United States shall be ex-
| tended so as to include and cover all
the properties of the companies, includ-
| ing the non-aided lines and the ex-
| tensive terminal properties which are
not covered by the lien now existing.
| The result will be that the debt will
in the future be secured upon completed
railroad properties, continuous and con-
nected, with adequate and sufficient
terminals for the transaction of their
business, instead of upon detached
properties substantially without term
inals and wholly dependent upon out
side properties for all that is most es-
sential to independent and sef-support-
| ing railroad systems.
Second. That the railroad companies
shall pay fixed sums at prescribed dates,
which shall reduce the debts to the Gov
|
shall in the meantime pay interest at as
high rate as the earnings of the prop
erty will suffice to pay upon all the debt
| which shall from time to time remain
unpaid.
| In prescribing the amounts to be paid
| by the companies the committee has
fixed amounts as large as could, in it's
| judgment, be expected to be paid out Of
the reasonably anticipated earnings of
the companies. We have not desired to
| fix amounts in excess of the earning ca
pacity of the properties, as we have
| considered it desirable and in the high
est degree important that the arrange
| ment made now should be a final one,
but the amounts have been determined
according to the best estimates which
could be made of the earning capacity
| of the properties, and, While we believe
! that the amounts required by this bill
| can be met and borne, we are satisfied
that these amounts could not be materi-
| ally increased without exceeding the
! limits of reasonable safety.
| The committee has, however made in
the case of the Central Pacific Railroad
| Company the special requirement that
| the lease of it's properties to the South
ern Pacific Company should be so modi-
| fed as to provide as follows:
| First That the Southern Pacific Com
| pany shall guarantee the payment, dur
ing the continuance of the lease, Of the
amounts payable under the bill.
! Second That in case the Southern
Pacific Company should consent to the
| termination of the lease before the ma
turity of all amounts payable under the
| bill it shall guarantee the payment of
all such amounts thereafter to mature