The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1897-01-06
A PERPETUAL PROBLEM

The argument against a government
administration of railroads, against any
connection between the government
and private enterprises. and especially
against all forms of subsidy giving.
finds the. strongest possible conffr1na-
ton in the present condition of the
Pacific railroads. whose bonds were
guaranteed by the United States. For
years and years this question has been
dealt with by the politicians for party
purposes, without the appearance of
the slightest mixture of business ability
or ordinary common sense. 1t has been
our perpetual problem, out of which
have arisen controversies and heart
burnfngs and charges of malfeasance,
and which is today more hopelessly in
volved than ever before
According to the latest report of the
commissioner of railroads, the balance
due to the United States on the Goth dav
of last June from the Union Pacific road
was 1852, 0OO,O0 The balance due from
the Central Pacific was $58, 200, 900. Be
sides this there was a little less than
$SO00,000 due from the Sioux City Pa
cific and the Central Branch Union
Pacific, both of which had received
FEDERAL aid. This makes a total Of
nearly $120, 900, 900, at that time. owing
to the United States government by
these great corporations. which are un-
q. fhpU olIryax h0o
willing, to pay. AS originally proposed.
the subsidy bonds were a first lien on
the property In 1864, an act was put
through congress by which the security
of the people was set aside. and the
nrst mortgage bonds sold TO private or
corporate holders were constituted
prior lien. Under this provision nearly
$65,O0O0O0 of first mortgage bonds were
issued and are now outstanding. hav
ing the first right to the proceeds of a
sale of the property, and the com
panies have likewise defaulted upon
them
Now, to any ordinary business man
the treatment Of this situation would
have involved no particular difficulty.
The government, by the outrageous act
OF congress-, is the holder of a second
mortgage. Its guarantee is subject to
the payment of the first mortgage
upon the property until that indebted
ness has been discharged. Plan after
plan has been proposed some in the
interest of the companies, and prepared
by their attorneys, and some in the in
terest of the public, for the refunding
Of the whole debt into low rate and
long time bonds, by which the prop
critics could, 1t was thought work out
their Indebtedness. In every Instance
somebody raised the cry that this was
only another scheme of the railroads to
avoid payment altogether Partisan
recklessness on one side and corporate
greed on the other have combined to
defeat any adjustment Of the debt, and
it stands today where it has stood for
the last thirty years, except that the
emergency is now at hand when some
thing must be done OF these subsidy
bonds, for which the government Is
responsible, $11 900, 900 worth have al
ready matured, and others are to be-
come due.
What now shall be the course of the
government in the matter? Even If
we were willing to daily along as we
have done in the past, the first mort
gage bonds held by other parties and
a. lien upon the whole property are
now falling in. The owners do not
propose to wait for their money. They
will presently foreclose and seize the
property, which must then be sold for