Evening star. [volume] (Washington, D.C.) 1854-1972, 1896-02-26
Mr.. Hubbard Completes His State
meut in Behalf of the Road.
HOUSE COMMITTEE HEARING
What He Says as to |mprovdent
Dividends Paid.
Z H e FUN NDING Bill

Mr.. Hubbard, attorney for the Central
Pacific, appeared before the House Pacific
railroad committee this morning to COM
plete his statement In behalf of the road.
He took up the question Of whether the
Central Pacific Company had diverted
funds or property. He said that property
to be converted must be owned by some
one other than the one making disposition
Of 1t. The property which is said to be di-
vcrted, he declared did not belong to the
United States
Money Made by Promoters.
AS to the question OF vast amounts of
money being made by the promoters Of the
Central Pacific, he said that he did not
know how much money had been made.
He wanted to call the attention Of the
committee to the fact that the Canadian
Pacific road had been given outright by
that government. vastly more than thls
government loaned the Central and Union
Pacific He said he did not want to con-
trast the liberality Of the two govern
ments. but wanted to impress the commit
tee with the appreciation which the Cana
dian government had OF the dinlcnity OF
the construction of such a road, when they,
after the Union Pacific and Central had
been built, gave a much larger sum of mon
ey to aid the construction Of the Canadian
Pacific.
Mr. Roatner asked: WAS not this after
it became absolutely necessary. by reason
of the construction of the Union and Cen
trail Pacific, to construct the Canadian
Pacific in order to hold the commerce."
Mr.. Hubbard said he did not think SO. The
Canadian Pacific did divert commerce from
. the Union and Central Pacific in certain
lines of trade and thereby lessened the
earnings of the American roads.
As to lmprovident Dividends.
AS to the .improvident dividends" Mr..
Hubbard declared that, after complying
with tho requirements of the law, the COM
pany was not justified In withholding divi-
deEds against possible contingency. He
argued that the company was not required
to make provisions for the settlement Of the
bonds and interest.
Mr. Boatner asked II 1t was not true that
If these bonds had been held by private par
ties the company would have made pro-
visions to meet these obligations.
Mr.. Hubbard said he did not think SO, ard
added that the stockholders would have
right to object TO such course. The road
had right to rely upon new issue Of
bonds to meet the obligations Of the old.
Mr. Boatner pressed the question in an
other FORM He asked il when the company
knew that the sinking fund provided for by
law was not sufficient, was 1t not their duty
to make further provisions.
What a Sensitive Conscience Would
Do.
Mr.. Hubbard said that If he wanted to
kLow what man of sensitive conscience
would do under such circumstances he
would reply that he might make further
provisions for the debt, as suggested; but
IL the matter was put as business propo-
sition he would say that there was no re-
qulrement tnat such a policy should be
followed. He did not think the company
were called urOn to do more than the law
lequired. Ha wished that they had made
yfSin l,,t int, 4
that they had done their duty in comply
ing with the letter of the law. The road
had right to act upon the theory that
their earnings would grow. On the general
question of the relations between this gov-
ernment and the roads, he called the at
tention of the committee to the liberallty
of other governments toward railroads. He
also made comparison of rat tes and de-
clared that the American rates were more
reasonable than foreign rates.
The Funding Measures.
Speaking Of the funding measures, he
said that the Frye and Smith bill had some
things to recommend it. This was much like
the Andersen and Little bill, but that it was
better in being on the basis of 100 years ex-
tension, instead CT fifty. One advantage of
this Frye-Sm.sh bill was that it gave no
profits to bankers. Another advantage was
that the government coulds raise the cash
on these extended bonds-S6O, ,UuU,0OO-by In
dorSlng them.
The better plan, he thought, was to let
the principal and interest run on until the
principal falls due.
In response to question, he said that the
bonds that had fallen due had not been TAX
en- up yet, though they could be paid out
Of the sinking fund. He thought the sinking
fund might be applied to the payment of the
government debt, and, the government
bonds became due, the company should ex-
tend its first mortgage bonds to a sufficient
a mont fGa
then DUE and then should provide for the
interest due by the issuance to the govern
ment Of fifty-year bonds at per cent. In
other words he would extend the first
mortgage to meet the second mortgage held
by the government. In answer to ques-
ton by the chairman as to whether the third
mortgage bonds would be prejIdiced, he
said that the first and second mortgage
bonds might be extended If the amount was
not increased, without prejudice to the third
mortgage.
Application of the Sinking Fund.
The sinking fund, he said, it was contem-
plated by his plan should be applied to the
payment of the bonded debt to the govern
ment. He said that the interest on the ex-
tended debt, representing interest, would
meet all the charges against the govern
ment for transportation and carrying of
mails.
The committee then adjourned until 1880
tomorrow to hear Mr.. Stubbs general traf-
f1c manager. on the subject of discrimina-
tiOns of rates. etc.