The record-union., 1897-01-13
COLONEL CROCKER'S VIEWS.
How He Regards the Defeat Of the
Funding Bill
Declaration That Foreclosure Pro-
ceeGings Cannot be Begun
for Year.

(From the San Francisco "Chronicle.")
The defeat Of the funding bill is not
the source of any regrets to the South
ern Pacific magnates if Vice-Presi-
dent c. F. Crocker's views on the mat
ter, as he expressed them yesterday,
may be accepted.
What do 1 think of the funding bill?
] think it is dead" said Colonel Croker
with smile.
Then, in a more serious vein, he
went on to declare that he was not in
the least disturbed by the action of
Congress, and was rather pleased that
the Powers bill had not been passed.
There is no certainty" he said, that
the provisions of the Powers bill for the
refunding of the Central Pacific debt
would have met with the approval of
the Central Pacific stockholders, and
without the approval of the stock
holders the funding scheme could never
have been put into effect. the pay
ments under the Powers bill, which the
Central Pacific Railroad Company
would have to pay to the Government,
would be more than the earnings of the
company would permit. 1t should be
remembered that the earnings of the
company are not all profit, and that
the company's net earnings are limited.
The Reilly funding bill was entirely out
of the question, as it provided for an
nual payments to the Government in
amounts that greatly exceeded the
earning capacity Of the company, as
determined by an average of the COM
pany's earnings during the past six or
seven years. The annual payments
provided by the Powers bill reached the
very limit of the company's capabilities
as an Garner of revenues, and to my
mind exceeded the company's earning
capacity.
Had the bill been passed, and had
the Central Pacific stockholders given
st their approval, the Government would
be much better off than it is now. I'm
der the Powers bill the Central Pacific
would have undertaken to pay back to
the Government the total amount of
principal and interest due, amounting
60 something over $50, 200, 000, with in
terest on that amount. AS the matter
stands now the Government has two al
ternatives of affecting a settlement with
the company. 1t can forecloSe on its
lien and sell the road to the highest
bidder, or it can forecloSe and acquire
possession of the road subject to the
first mortga By either of those two
methods Of settlement, as l win show
you, the Government will fare badly in
comparison with the advantages of a
settlement by means of a funding BILL
IF, for instance, the Government in
stitutes foreclosure proceedings to &C
quire possession Of the road and operate
It as Government line, it can only Sc
cure a clear title to the property by
paying off the first mortgage which is
ia amount smaller to the Governments
second mortgage. The first mortgage
of the Central and Union Pacific rail-
roads approximates $50, 000, 900, and to
my mind, it is not likely that the Gov
eminent viii care to pay out that
amount to get the road. I might say
Furthermore that believe very few peo-
pie in the country are in favor of Gov
eminent ownership of railroads, aside
from some of our Populistic friends.
Again, if the Government under
takes foreclosure proceedings, and sells
its interest in the property to the high
est bidder, 1T will not receive more than
a small fraction of the amount which
the company would have had to pay un-'
der a funding act of Congress. To my
mind there is no syndicate that could
be organized that would be willing to
bid S20,000,000 for the property. The
amount bid would, in all probability, be
much less that that, for the reason
that the first mortgage of $27,000,000
would have to be assumed by the pur
chasers of the property.
THE funding bill was defeated
through a desire and purpose on the
part of enemies of the Southern Pacific
Company to separate the road proper
ties now managed and operated by this
Company. The newspapers, politicians
and citizens who opposed the funding
Of the debt did so without regard to
the business aspect of the matter or the
Governments interest. They opposed
the funding plan with the hope of seeins
the property on which the Government
has a lien turned over to a competing
Company. The result is that the Gov
eminent viii lose a large sum of money
which it would have collected under the
Powers bill. and at the same time there
IS no certainty that even through fore
closure proceedings the change of man
agement which the enemies of the
Southern Pacific 50 heartily desire Will
be realized The owners of the Central
Pacific and Southern Pacific have just
as good an opportunity Of forming a
syndicate for the purchase of the Gov
ernment's interest in the property as
any other railroad interests that may
have their eye on the property.
Moreover, since without the ter1ni-
nails the particular stretch OF track
which may be sold under foreclosure
would not prove Of very great value
to any otber railroad corporation, Il IS
likely that we would have the advan-
aage when it came 10 bidding for the
property. So far as I can see there IS
now only one way of Settling the Gov
eminent debt. The idea of the Govern
rnent acquiring possession Of the road
IS highly improbable The road will
doubtless be sold FOR what Il will bring.
subject Of course % the FIRST mortgage
and the Government win realize much
less than $20,000,000 in settlement OF
its claim"