The herald., 1897-01-08

cific coast cost the government %',o'',-
ISL Yet, Notwithstanding the vast m
crease in the government transportation
to the Pacific coast, the rates OF COM
pensation paid by the government to the
companies We're reduced so low that
instead of receiving an amount couble
or even equal to the interest on the
subsidy bonds they were left debtors
annually TO the interest account in
large amounts.
"Do YOU claim this bill is a judicious
and proper arrangement with those VINO
have done what. they could to discharge
their obligations to the government
asked Mr.. Boatner of Louisiana, Demo-
crat.
I do" replied Mr.. Powers. He pro-
ceeded to say that he knew ~. Boatner
regarded the Pacific railroad projectors
as set of rascals because they had
gotten rich. But he asserted that II they
had discharged all their obligations to
the government and gotten rich in other
ways it was nobody's business. This he
said they had done. He gave compu-
tation of the present Indebtedness of the
roads on January 1, 1897. at S53, 1l4,40S
on the Union Pacific and Kansas Pa
cific. and S57.6S1 514 on the Central Pa
cific and Western Pacific
The time had come he said, when the
government must act The roads had
defaulted The government could fore
close or it couJ1i seize the roads under
the law. If either of these courses were
pursued the government would be oblig-
ed to Immediately pay the outstanding
first mortgage bonds. amounting in the
aggregate to S61. .3S5.000. Was this ad-
visable with the present condition of
the treasury? But this was not all. he
said. If the government took the roads
it would have an "inside road" without
terminals Not a train could be run
into Omaha. The government could
not operate 1t without terminals; it
could not sell 1t to advantage without
terminals. In case of an attempt to sell
the property would be at the mercy of
the owners of the terminals. The plan
which the Pacific railway commission
proposed, he said, was to eXtinguish
the remaining debts of these companies
by periodical payments, with interest
upon the deferred payments at two per
cent.
These debts, he said. should be Sc
cured by second mortgages made by
the companies, which should embrace
not only subsidized parts of the roads.
on which the government has now a
second lien. but also on all their branch
es, terminals. land and equipments to
which the lien Of the government does
not now extend.
The bill provides for the issue of the
company's bonds for the governments s
balance of $112, 900 900 at . per cent, and
for annual payments by each company
on account cf principal 1866 900 annually
for ten years: s55J000 for ten years and
the balance at the rate of S150000 an
nually II this bill passed and the gov
ernment should eventually be obliged
10 take the roads, Mr.. Powers said it
would then have a railroad to operate,
not a portion of railroad. He said the
bill was Objectionable to both roads,
and he did not know whether they
would accept its provisions.
In reply to questions. Mr.. Powers said
the committee had calculated on $4,000
900 annually as the net earnings of the
roads.
why do you allow per cent on the
stock of the company" asked Mr.. Lacey
Gowa, Rep)
ITO tempt the stockholders to enter
into the arrangement. We could not
ask them to so on with no prospect of
a dividend"
What is the present value of the
stock on which you propose per cent?"
asked Mr.. Moody (Mass.. Rep)
Central Pacific is worth 10; Union
Pacific is nil"
Can the companies comply?" asked
Mr.. McCreary. G<y., Dem)
THAT is the vital question" replied
Mr.. Powers. I'VE think. they can. The
condition of the roads could not we'll
be worse than it has been during the
last few years
Figuring net earnings of the roads at
$400.09O000 each the charges allowing
for interest on first mortgages against
the Central Pacific would be S3,S25,SS0
and against the Union Pacific SO, 62S. 54S
Mr., Powers, in reply to a question about
the additional security offered the gov
eminent under the proposed new lien,
said the Pacific railway commission six
years ago estimated the value of the
additional security at $92 600, 600. He
also said to Mr.. Perkins GoWa, Rep)
that the bill in no wise affected the Sioux
City road or the Central branch of the
Union Pacific. In conclusion. Mr.. Pow
ers said that the Pacific railroad COM
mission had offered a plan which had
been sanctioned by every committee of
the house and senate. that had investi-
gated the subject. They had squeezed
the roads to the last cent and reached
the verge Of the ability of the roads TO
pay.
"The question is" said he, "Shall we
undertake to collect those debts or
ruthlessly throw them away? You will
be regaled with bitter attacks on indi-
Viduals. l have tried to- forfend against
this. We have nothing to do with the
fight between c. p. Huntington and
Mayor Sutro. We must address our
selves to the protection of the govern
ment's interest and we present this bill
as the best possible plan
MI Hubbard (NIo., Rep) who had
charge of the opposition to the measure,
followed Mr.. Powers with an extended
argument He plunged at once into the
subject. He agreed with Mr.. Powers
that the question was purely one OF
business. The constructors of the Pa
citic roads he said. had earned profits
of $62 900, 900 and the roads had paid
$43 000, ,000 in dividends His purpose il
citing these facts was to SHOW that those
in control of the companies were strong
while the corporations pleaded bank
ruptcy and inability to pay. He baseC
his argument against the bill on thu et
points: That the Pacific railroad com
mission had not learned enough of tht
condition Of the companies to be able L
tell the house what is best to do; thai
the companies made offers before the
committee and are ready to concede
terms very much better for the govern
ment than those embodied in the biz
and that the propositions in the bill are
neither just nor safe settlement for the
government.
This, he said. would net the govern
ment 81 400, 600 annually on interest OF
$10,000,00 with $50 900 600 at maturity
or $l05. 600 0G0 more in ilfty years, count
ing the preferred stock as worthless
By process Of comparison. he said. the
offer the committee rejected was $4S, ,OG0,
GG0 better than the government would
accept under the bill.