The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1897-10-15

and maid interest on these bonds for
thirty Years, with the understanding
that when the bonds matured the COM
many would reimburse the government
for its advance.
The principal of that bonded debt to
the United States, after deducunS TOT
government transportation and oth'r
novments made during the interval,
now reaches $40, TIT ,40S, and the govern
ment holds in the sinking fund Sl1o6Z'-
| 600. so that the net debt of the Union
| Pacific Railroad Company to the gov
eminent is 500, 715, 40S. When these loans
were made by the government IN 1904
the men who then controlled the prop
erty paid, through II. G. Durant So2o,-
900 to corrupt Congressman and to a.
mend the original act so that the gov
ernment would accept a second mort
gage for its advances on the road.
The first mortgage money and the pro-
ceeds of the land grant and income
bonds and of the stock amounting to
SS4 100000 were put in the pockets of
the promoters. From that time to the
present the Union Pacific Company has
been wastefully msmanaged. The gov
ernment's rights as a creditor have been
entirely ignored; $112,000,000 have been
wrongfully taken from its Treasury,
and finally in 1894, in anticipation of the
maturity of the governments claim,
this magnificent property, comprising
1851 miles of railroads and terminals,
was wrecked. A group of bankers how
cred over it's carcass wherein they saw
a profit of 100000. They organized
so-called reorganization syndicate which
undertook
First-To buy up, or acquire, or dissi-
pate all liens prior to that of the govern
ment.
Second-To settle the governments
claim.
Third-To readjust the equities of the
junior security holders and to reorganize
the Union Pacific finances.
This reorganization committee acquir-
ed control practically of all the bonds
and stock of the road, a large part of it
through ownership and a part through
deposit by owners who took certificates
of deposit from the pool.
Meanwhile there had been considerable
discussion in Congress upon various
propositions relative to the disposition Of
the governments claim. Francis Lynde
Stetson, President Cleveland's former
partner, appeared before Congressional
committee and haunted the halls of Con
gress to urge an extension of the debt.
SO also did Coils p. Huntington. the
head of the Central Pacific Railroad,
whose line was in like default to the
government.
The advocates of the Central Pacific
Railroad, running from Ogden to San
Francisco $3.50 miles,, which had de-
frauded the government in like manner.
urged Congress to extend the debt of
both roads on 2 per cent bonds. Other
Congressman. who were independent Of
railroad affiliations. wanted the gov
eminent to pay off all liens prior to that
of the second mortgage and acquire
ownership of the two lines which make
the shortest and best route to the Pacific
coast. Congress adjourned without TAX
ing action upon either proposition. Then
the bankers committee undertook to
meet the governments claim and pro-
posed to the Cleveland administration
to pay a sum of SOS. 691, 1886 in cash in
full settlement, thereby involving a sac
rifce by the government of S25, 100000.
Early in 1896 it became evident that
this deal could not be consummated I'M
til the new administration had been in
stalled, so the progress of the Presiden-
tial election was anxiously awaited.