The record-union., 1896-08-16
In Reply to a Letter From
Joseph StefenS.
Business Question to be Decided on
Business Principles.
The Whole Proposition Of the Funding Of the
Debts Of the Pacific Railroads Made
50 Clear That Anyone Can
Understand It.

taken place during lnc past week pe-
tween the Hon. Grove l.. Johnson, Con-
gresham from this district, and Joseph
Steffens. 1t explains itself so fully that
no comment is necessary:
SACRAMENTO, August 10, 1906
Hon. Grove L. Johnson-Dear Sir:
Much has been said, written and pub
llshed regarding the funding of the
debts due the Government from the Pa
cific railroads and the action of Con-
gress in reference thereto, but no clear
presentation of the facts connected with
the question has yet been made. Inas-
much as you are member of the Com
mittee on Pacific Railroads of the
House of Representatives and are IA
miliar with the question, 1 wish you
would give me your views regarding
the matter that the public and myself
may get proper understanding of the
subject. Very truly, yours,
JOSEPH STEFFENS.
Joseph Steffens, Esq, Sacramento
My Dear Sir: So much misrepresenta
ton has been had concerning the rail-
road funding bill that I take pleasure
in answering your request to give the
facts about the matter.
! may well premise by saying that an
elaborate attempt has been made to
thrust this funding bill into the politi-
cal campaign to the exclusion of the
legitimate issues to be decided by the
voter
This matter is, in no sense, anything
but a business question to be decided
Upon business principles
1t requires no aid from politics orpoli-
ticians, but the people are injured
whenever this question is sought to be
made a political issue.
Men may reasonably differ as to the
true course to be pursued in settling
the monetary affairs of the United
States and the Pacific railroads, be-
cause the sum involved is large and
the interests affected many and diverse.
But it does not in any manner con-
Germ any mans politics. The efforts of
partisan newspapers to advance party
candidates by an unfair presentation
of the matters involved should be dis
countenanced.
The attempt to make this whole cleo
ton turn in California on the funding
bill, now being made by certain inter-
ested parties, should and will fail.
All citizens should discuss the ques-
ton with calmness and not be blinded
by Incorporate assaults on individuals
or unfair statements.
Let US then understand the situation,
for sometimes the statement of facts
becomes almost determinative of the
case itself.
There is a first mortgage upon the
railroad, which is prior and superior to
the mortgage held by the Government,
and must be first paid or secured and
viii soon all be due.
The Government has only a second
mortgage and cannot expect one dollar
in case of foreclosure until the first
mortgage is fully paid.
In these, as in ordinary mortgages,
the law authorizes a foreclosure and a
sale of the mortgaged premises. But
unlike ordinary mortgages the holders
must look solely to the mortgaged
property for the payment of their debt
Usually when mortgaged property is
sold and fails to realize sufficient to
ray the debt, judgment for the de-
fciency is entered against the mort
gagor and any other property. real oil
personal. belonging to him can be levied
upon and sold to pay such deficiency
This cannot be done In the case of the
Pacific railroad mortgages.
The Supreme Court of the United
States has decided that the holders OF
mortgages on these Pacific railroads
can get their money only from the
property covered by the mortgages
and cannot have any deficiency judg-
ment against any of the stockholders Of
the company.
That settles the law Of the case. We
must deal with these mortgages then
as they are, not as we would wish then
to be- We must deal with facts, not
with presumptions. Therefore, in dis
cussing this funding bill it must be
remembered always that the two fac
tors that decide the question as to tn,
course to be pursued by Congress are
1. The United States has Il second
mortgage.
2 The United States can only ge
its money from the property.
L believe the United States can col
lect every dollar of its debt, principa
and interest. and shall endeavor t.
show that this can only be done by tn,
pending in Congress. This is bust
ness question and should be decided il
business manner.
During the political campaign of 1S9i
the so-called Reilly funding bill wa
before the people and was discussed b,
ALL
/ opposed the passage of that bill il
public speeches and private debate.
/ had the privilege in Congressional
Committee of voting against that bill
although bearing the name of anothe
author.
] opposed the Reilly bin, not becaus
I antagonized the principle of funding
but because that bill would have beer
disastrous in its workings to my State
The Central Pacific Railroad Com
pany could not have carried into effec
the provisions of that bill.
If the company had accepted the bill
and sought to do business under il
the inevitable result would have beer
the raising of the rates of fares ant
freights over the Central Pacific Rail
road That meant ruin for California
The managers of the Central Pacif
repeatedly so announced to Congress
They declared that they could not worl
under the bill. An examination of tn
earning capacity of the road, as pre-
sented by the sworn reports of its Off