The record-union., 1897-01-08

compelled to pay the interest on the
bonds until the principal became due,
and therefore the accumulation of debt.
In 1873 the Thurman Act was passed,
in the hope and expectation that it
would secure the repayment of the
Government debt, but the reasons
which operated to prevent the success
ful working of the plan for repayment
of the debt proposed in the charter
Acts prevailed to set ait naught the
scheme so elaborately wrought by Sen
ator Thurman. They were the division
Of the Governments own business be-
tween the existing lines, instead of CIV
ing it all to the line which it had
nourished.
Roatner of Louisiana asked Powers
if he maintained that the companies
had paid all to the Government that
an honest and capable management
would have permitted them to do.
Powers replied that he did. He de-
clared his own opinion to be that the
railroad companies had discharged ev-
cry obligation imposed upon them by
the Government; they had fulfilled ev-
cry contract made by Congress.
Turning from the historical to the ac-
tual features of the case, Powers said
that on the first of July next, to which
date the bill was to apply, the Central
Pacific would owe the Government
S31 ,9O4, III, and the Union Pacific $53,-
2S9, ,o93. Some of the bonds were over
due, and the question before Congress
was what was best to be done. Should
the Government forecloSe the mort
gage, which meant long litigation and
an increase of the Government by be-
tween sixty and seventy millions to
pay off the underlying first mortgage,
in order to enter upon the very doubt
full experiment of operating the roads
upon Government account. The wiser
method would be for the creditor to de-
termine the debt-paying ability of his
debtor, and make a settlement with
bill proposed to do.
Asked why the committee had in
creased the first mortgage of the Cen
trail Pacific by about S21 100000, and
that of the Union Pacific by about $23,
200, Powers replied that it was be-
cause the Government got 50 for 81 of
additional security. If Congress should
seize the roads or undertake to fore
close the mortgage by judicial process
and sale, it would find itself in pos
Sc ssion Of a line without terminals or
branch roads to give it business, or
would force a sale at which no one ex-
cept the men now being criticised could
afford to bid. The principal advantage
gained by the Government was that it
secured a second mortgage upon the
entire property of the railroad COM
pany, whereas now it had a Lien only
upon a link in the road. The railroad
&C mpany would be permitted to make
a first mortgage upon the property
equal to the face of the existing first
mortgages The Government mortgage
was to be extended at per cent.
Fairchild (R.) of New York asked as
to the identity of the men who were
benefited or affected by the bill, whether
or not the Central and Southern Pacific
Companies were composed of practical
IL the same individuals.
Powers replied that the individuals
We're the same He further stated that
the bill was not acceptable to the cor
porationS.
Mcguire CD of California-All they
have to do is to reject them.
Powers-There is no certainty that
the companies will take it. We have to
force the pill down them.
To Smith (R) of Michigan, Powers
said he knew of no diversion of traffic
from the Union Pacific road which
ought to have been retained by or for
it. The statement would be made in the
course of the debate that the Southern
Pacific, upon whose property the Gov
ernment held notes, could not have a
lien, absorbed the revenues of the Cen
trail Pacific. He would not stop now, he
said, to demonstrate that that assertion
was untrue, but would SO state to-
morrow.
Lacey (R.) of Iowa asked why div
idend of 4 per cent. was allowed ON the
stock when the Government was to get
but 2 per cent. for it's bonds, which
were ahead of the stock
Because" answered Powers, 1--WE
want the stockholders to undertake this
obligation, and they won't do it unless
they are assured of a reasonable return
upon their money"
At present, Powers said, Central Pa
cific stock was quoted at about SIS, and
Union Pacific was worth nothing. The
reorganization committees had issued
certificates to stockholders liable to an
assessment of SO share, which had
been quoted at about SO. The commit
tee had earnestly endeavored to make
the rate of interest on the Governments
debt 8 per cent, but after thorough In
Vestigation it had been compelled to fix
the rate at 2 per cent The committee
ply with the requirements of the bill.
The Central Pacific would have to pay
SO. S25. 900 per year fixed charges. the
Union Pacific s., 62S, 900 a year. Upon
the basis of the earnings of the COM
panies for a period of years past, it was
estimated that they could be depended
upon to earn a net revenue of $1,000, 600
a year Indeed, it was inconceivable
that the roads could ever again pass
through such a period of depression as
they have for the past three years.
Asked what estimate the committee
placed upon the additional property to
be brought within the new mortgage
Powers said it was difficult to state A
Senate committee in 1890 fixed the
value at S92, 900, 600. The Division Sup
erintendent of the road said that the
Denver terminals alone could not be
duplicated for less than $4,000, 900,
while the Union Pacifics coal lands
were estimated to be worth as much as
the total amount of the Government
debt.
To Perkins (R.) of Iowa. Powers
stated that the pending bill did not in
clude within its provisions the Sioux
City and Pacific or the Central branch in
Kansas. neither of which was a part OF
the Union Pacific