The record-union., 1896-05-09

which produce net revenues largely IN
excess of the reduced interest charge
obtained under this substitution of
bonds.
In the case of the Central Pacific the
Government lien is extended SO as to
include within the properties mort
gagged as security for the new bonds the
non-aided line extending from Niles to
Oakland ION the bay of San Francisco),
together with the local lines, terminal
properties and real estate in San Fran
CISCO Oakland and Alameda, steamers,
ferryboats and equipment of ferries.
which constitute the great terminals OF
the Central Pacific Company in and
near San Francisco, so as to include the
great feeders and distributors for the
main line of road-that is to say, the
line extending northerly from the main
line at Roseville to the Oregon bound
ary, about 296 miles in length, and the
line extending southerly from Lathrop
to Goshen, about 146 miles in length,
and also the interest of the Central Pa
cific Railroad Company in its land
grant under the Acts of 1862 and 1864
The provisions of the bill will thus sub
stitute a lien upon the complete and
finished road with all its terminal ia
cilities and it's great feeders and dis
tributers north and south of the main
line for the existing lien, which rests
only upon a headless and armless
trunk extending from point near Og-
den to San Jose.
OBLIGATIONS TO BE ASSUMED BY
SOUTHERN PACIFIC COMPANY.
AS the average of the net earnings of
the Central Pacific property is less than
the amount imposed by this bill, the
committee has required, as one of the
terms of the settlement, that the lease
of the Central Pacific Railroad to the
Southern Pacific Company should be
so modified as to require, first, that the
Southern Pacific Company should guar
antee the full payment of the require
mentS imposed upon the Central Pa
cific under this Act SO long as 1T should
remain lessee of the property; and, sec
ond, that if the Southern Pacific Com
pany should consent to the termination
of the lease before the maturity of all
installments payable under the Act, 1t
should in that event guarantee the pay
n.ent by the Central Pacific Railroad
Company of all requirements imposed
upon it by the Act, and has provided
that in case of any abrOgation or ter
mination of the lease the principal OF
all the bonds issued under the Act
should, at the option of the President of
the United States, Immediately mature.
The bill also requires the consent of
the Southern Pacific Company to the
appropriation for payment of Central
Pacific bonds issued under the bill of
the sum of $2,4O9, ,S1S 20, which stands
credited ON the books of the United
States Treausry to the Central Pacific
Railroad Company for services on nom
aided lines, but considerable portion
of which upward Of $1,3OO,OOO has
been adjudged by the Court Of Claims
to be due to the Southern Pacific Com
pany, which performed the services for
which the amounts were credited.
The payments, therefore, on behalf of
the Central Pacific Railroad Company
under this bill will for the firstryear
amount to:
Interest on bonds to United States 81 $50 %
Installment of ipal....--.....-.. 36o,OOO w
Compensation for services on nom
aided lines to be applied with
consent of Southern Pacific Com
pany) to the extinguishment OF
Z4V9,olo ~
Total ,92s, ,44s 4s
The payments by the Union Pacific
for the first year are:
Interest on bonds to United States 81 074, ,3OS OF
Instailrnent of ipal.......... $4,000 %
Total ............S1,4 s., ,439, 1903 OF
Thus the Government will receive
from both roads annually, for the first
decade, for principal and interest, near
ly 100000, and this amount is in
creased at the second and subsequent
decades.
EARNING CAPACITY OF THE
ROADS.
The committee has given much study
to the question of the ability of the
companies to meet the demands Of the
bill proposed. 1t is obvious that the
payment of the Government debt must
come out of the earnings. 1t would be
folly to exact more each year than the
income Of that year could discharge
1t is wiser, in dealing with an insolvent
debtor to adjust his burden so that it
can be carried safely through to the
journeys end, than to overload him so
that he must soon lay it down. From
g. conservative estimate Of the earnings
of the roads, the committee finds that
81 000,00 is a fair average of their an
nual earnings that can be used as a
basis of calculations in determining
the amount of the Governments annual
requirement. On this basis the Cen
trail Pacific will pay fixed charges as
follows, each year:
Interest at per cent. on first mort
gage, entire ,260 81
Interest on Government debit. l. l53, $50 %
Interest of principal. 365,000 90
Total so %
And on the same basis the Union Pa
cific will pay fixed charges each year,
as follows:
Interest at per cent. on first mort
gage lS9 24O 90
Interest on Government debt I074'30S II
InstallmeDt of principal l............ $4,000 90
Total 62s, ,548 IL
In each case small margin is left to
cover unexpected contingencies.
TRANSPORTATION CHARGES.
AS additional security for the per-
formance of the annual requirements
made under the BILL it is provided that
the charges due the companies from the
Government for transportation of
mails, supplies, etc, shall be withheld
by the Government if default is made
in any years payment. These charges
alone will nearly meet the annual in
terest charges.
THE NEW MORTGAGES.
The bill authorizes the Union Pacific
Company to issue a new per cent.
mortgage covering its entire property
for the exact amount of it's existing