The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1897-01-10

Government claim.
"The majority of the committee has not
stated what the properties constituting
those additional securities are-haS not
stated what title the mpanies have to
any of them-has not stated what are the
membranes now upon them, and has
not stated whether any OF these lncum-
ORANGES overlap the aided portions of the
road and are now subordinate to the
Government lien. The only excuse for
this is that the committee has no knowl-
edge of the subject sufficient to give the
information. The tact is, that there is
now $16.000,000 blanket mortgage resting
on the Central Pacific system, which is q
first mortgage on the Oakl4nd mole-the
western terminus, SO far as the proposition
before the House is concerned, OF the
Central Pacific Railroad. 1t is a third
mortgage on the remainder of the system
and is now subordinate to the present
Government lien. Under the Powers bill
it will all be included in the first mortgage
and become prior to the Government lien.
Now. the Oakland mole is not worth more
than 50, 600, 600 or $3,000.000 and at least
$13, 600, 900 OF the mortgage now subor-
dinate to the Government lien is to be
made prior to it. In that item alone the
Government is made $13, 900, 900 worse off,
with res pect to its security than 1t Is to-
day.
every other piece of so-called additional
security is mortgaged beyond its value.
first mortgage resting upon IL, which
amounts to 81, 100000 more than the road
is worth. The other feeders of the Gen.
trail Pacific are mortgeged, every one of
them, to the amount OF not less than
$40, 900 mile-how much more none of
US know. This com mittee does not know
enough about those propertiest or the
4 . l. 11ats
of the lines to each other to advise this
House what it should do with pect to
them. Not a word of testimony was
taken before the committee, not wit
ness before it made his statement under
oath. The committee invited gentlemen
to come before it and make voluntary IN
sworn statements, the statements OF in
terested parties and their agents, who for
thirty years have been lying to Congress
and to all others who have had to deal
with the interests of the Government in
these matters.
"The surviving partner of Leland STAN
ford made an unsworn statement, which
is accepted as gospel truth by the commit
tee, about matters concerning which Mr..
Stanford refused to testify before the Pa
cifc Railway Com mission and was re-
leased from the obligation TO testify by
the United States Circuit Court on the
pointment OF the com mission did not JUS
tify its attempt to force him to testify.
This failure of evidence to establish any
of the facts essential in this settlement
should itself cause the House to reject this
bill. have repeatedly called the atten-
ton of the House and the chairman of the
committee to this glaring and fatal defect
in their showing. They do not deny 1t.
They cannot deny 1t. Yet, with amazing
pertinacity, they still ask the House to- be
satisfied and pass the bill l say to you
that this House will never be In position
to legislate for a settlement OF these
claims until a court of competent lurlS-
diction shall have tried and determined
all questions relating to the validity OF all
alleged liens aud the relation of all valid
liens to each other. Such decree is abb
solutely necessary as a basis for legis-
lative action, if any legislative action
shall then seem wise or necessary; but to
Iegislate now in the dark, in utter ignor-
ance, on a question OF such Importance
would be monstrouS.
"The interests OF the Government are
not in any danger. The Government will
not have payments to make on the first
mortgages until foreclosure nor after fore
closure unless it becomes the purchaser at
the sale. The Government must pay its
subsidy bonds, no matter whether the
ebts are funded or not, and nothing more
except the expenses of the litigation need
bepa id at any time unless the Government
buys the roads. The Attorney General
has suggested certain amendments 10 the
Thurman act in mere matters of pro-
cedure which should be made and let fore
closure proceed. Why, sir. for twenty-five
years the validity of large proportion Of
the so-called first mortgage bones of the
Central Pacific Railroad has been in issue.
To the extent of several millions of dollars
thew were issued contrary to law and not
for the purpose of constructing the road.
The Thurman act expressly reserved the
question of their validity. This question
was submitted to the Committee on Pacific
Railroads on an able brief prepared by
Mr.. John T. Doyle OF San Francisco.
1.-THE committee has made no report on
that question. but by its bill it valves the
rights of the United States in this behalf,
reserved by the Thurman act. l raised
this question on the discussion of the
Reilly bill two years ago, and then insisted
that the reservation IN the Thurman act
must have been MADE adVisedly and for
substantial reasons. Mem bers of the com &.
mittee then assured the House that the
reservation was due merely to Senator
Thurman's cautious methods OF drafting
bills, and had no definite purpose. | have
since examined the record of that debate
and find that in answer to a ques-
ton asked of him by Senator Sargent
while the bill was under consideration,
Senator Thurman stated that the reserva-
ton was made and must be retained be-
cause of the certain invaIidity of the first
mortgage bonds and the alleged invalidity
OF a great number of them. This reserva-
ton means several million dollars to the
Government and should not be waived.
-Four million dollars and upward have
been unlawfully paid by csc two COM
panies to the Pacific Mail Steamship Com
pany as a subsidy to keep up freight rates,
ing expenses of the roads. These expendi-
lures can be recovered for the Govern
ment in the courts, but this bill will waive
its right"
Judge Mcguire showed that the result Of
funding will be to lose 62L per cent of the
Governments present claim. The South
ern Pacific Company, although powerful
corporation, is worthless as a surety for
these debts. The Central Pacific Railroad
Con tract beyond that date. He also re-
ferred to tn Contract and Finance Com
pany and Credit Mobilier frauds.
Hepburn (R.) of Iowa made good his
notice given earlier in the session by OBJ
jecting to permitting Mcguire to continue
in general discussion OF the subject after
his five minutes had been exhausted.
Henderson (R.) of Iowa advocated the
passage of the bill because if nothing were
done foreclosure must follow, with total
loss of the Governments claim. This was
at least an effort 10 save it, and that much
it was the duty of Congress to do.
McLachlan (R.) of California opposed
the bill, referring in the course of his re-
marks to the assertion that the managers
of the Central Pacific had burdened the
people of California with unjust raIes for
transportation.