Evening star., 1897-01-09
Representative Hilborn on the Pacific
Railroad Funding Bill.
PEOPLE OPPOSED 10 TEE MONOPOLY
Foreclosure of Mortgages and Sale
of Properties Advised.
T II E My R M E D Y


1T deals more generously with the rail-
roads and more harshly with the govern
ment, than any of It's predecessors. 1t is
vastly more unfavorable to the govern
ment than the Reilly bill, which was so
ignominiously defeated in the House in
the Fifty-tIlird Congress. After that re-
buff it might be expected that the advo-
Gates of funding would moderate their de-
mands rather than enlarge them.
Under the scheme proposed in the Reil-
ly bill, the railroads were to pay off the
so-called first mortgage bonds, and give
the government first lien upon the roads;
under this bill no provision is made for
the payment of the first mortgage bonds,
but on the otner hand the first lien is
nearly doubled, and the government has
the second lien to the end of the transac-
ton. Under the scheme proposed in the
Reilly bill, the debt due the government
was to bear interest at the rate of ) per
cent per annum, and the entire amount OF
debt was to be paid in fifty years; un-
der this bill, more than eighty years
will eIapse before the entire debt is paid,
and the rate of interest provided is only
per cent per annum.
This bill would not have received the
approval of the committee which brought
in the Reilly BILL for in their report they
place the seal of condemnation upon one
principal feature of this bill when they
mortgage binds has been heavy drain
upon the earnings Of these companies;
and, If said first mortgage is to be contn-
ued with priority of lien, 1t seems to your
committee that it would be futile to at
tempt any adjustment of the government 5
Indebtedness on that basis 1t appears al
SO from the report presented by Mr.. HUB
bard of the minority OF the present COM
mittee that the railroads themselves have
offered better terms. of settlement than
those contained in this bill.
One Offer.
1--WE learn from that report that the
Union Pacific proposed to give the govern
ment $S5OG0,O00 first mortgage four per
cent bonds out of an authorized issue of
$1O0.0O0,000 limited to an actual issue of
sS7, 100000. This would give the govern
ment 35-S7 of the first lien on the main
line of the Union and Kansas Pacific, in
cluding terminals, bridges, Denver extern
sion and Cheyenne division. Also $20,AEo,-
600 preferred stock out of total author
lied issue of s15,UOOO0O limited in actual is
sue at the time to S6S,00O.0OO without a
second mortgage, making the preferred
stock equivalent to q second mortgage.
This Is certainly preferable to the present
bill.
Gen. Hubbard. in behalf of the Central
Pacific, held out that his company would
with the aid of the sinking fund, pay the
principal of the subsidy bonds as they
should mature, and give a per cent in
come bond for the un-eimbursed interest
to be secured by u retention of SO much
of the government compensation annually
earned by the roads as snail be necessary
to pay the interest This proposition is
preferable to the plan proposed in the bill ~
People Opposed to the Monopoly.
Mr.. Hilburn admitted that no bill to re,-
fund the debts Of these railroads would
| meet with his approval. He said that the
people of California are opposed to any
measure that will perpetuate this moncp-
oily. 1t has stood in the way of their pros
perity in the past, he added, and they are
appalled, at the prospect of having its
power made perpetual. They want a COM
peting line of railroads. which this bill de-
MES them. He then quoted figures showing
how the government would suffer by the
feature in the bill providing for the pay
ment by the roads of annual sum in sat
isfaction of the principal of the debt. The
companies. he said, are also to pay interest
on the unpaid portion of the debt at the
rate of per cent per annum. He called
attention to the fact that the government
pays 312 per cent for the money 1t borrows
SO that in case of failure to pay the sub
Sidy bonds the government would lose in
interest the difference in the rate proposed
to be paid by the railroad and that which
the government pays. He gave a state
nent Of the practical operation of the pro-
posed funding bill as applied TO the Cen
trail Pacific read alone, which showed the
loss the government would sustain
He said that the scheme contained in
this bill is that the men who have wanton-
iy and wickedly wrecked the ship now i'm
pudently importune the owners to employ
them as Saivors, and after the ship is saved
ana the savage paid they will own the
ship. While, he said, the Congress of 1861
has been censured for legislation which
has been proved to be more generous to the
railroads than was necessary as that Com
gress loaned these roads about $6l 900 900
and permitted them to place another mort
gage OF like amount ahead of the govern
ment lien, now he added, the Congress of
lS'I proposes to loan these roads Sill 600 COO
with prior lien of $107 600 900 ahead of the
government lien. He pointed out the diff
ference in the circumstances of the two
periods, and said that in 1864 a trans
continental railroad was of great advant-
age to the government. and also that the
character of the corporations i'm question
was unknown. Now, however, there are
several transcontinental railroads. and ac-
cording to reports to Congress- the cor
porations have violated nearly every obli-
cation which they have assumed, and every
precaution taken by Congress for the proper
management of these great properties ha s
failed of its purpose.
The speaker stated that no officer of the
United States whose duty 1t is to advise
Congress in relation to these roads nov
advises this legislation. No popular senti-
ment calls for this legislation No stale
legislature, no political party in any state
has declared In favor of the funding meas
ure, while, on the contrary, the legislatu
OF California has sent a strong protest and
all the political parties of California have
condemned this bill. In regard to the cla,m
that the innocent stockholders of these
roads should be protected, the speaker said
that the great bulk of the stock of the
Central Pacific is held by people who fear
to VOW their ownership lest they be held
responsible for its debts. The stockhold-
ers of these corporations. he said, pur-
chased with full knowledge of these facts
He asked whether the speculators who pur-
chased this stock, or the farmers and pro-
ducers of the west who pay the tolls to
support these roads. have the best right to
protection. . AZ
The Plain Remedy.
The speaker declared that the plain REM
edy for the recovery of the money due the
United States from these companies Is the
foreclosure Of the mortgages and the sale
of the properties, and II any deficiency
arises, an action against the guilty direc-
tors or their representatives for the resto-
ration of the funds misappropriated by
thenl The speaker also claimed that the
questions involved in any settlement be-
tween the government end the railroads are
judicial questions, and should be settled by
tie courts and not by Congress. The courts
should be called upon to adjudicate the
question as to whether the so-called first