Omaha daily bee., 1897-01-08
PACIFIC ROADS FUNDING BILL
Measure Comes Up for Consideration in
the House.
ABLE ARGUMENTS ARE PRESENTED
Powers Heads the Debate I'm Favor ol
the Pending Biii--Other speak,
crs Are Hubbard, Bcll
and Grow.

sion, came up today In the house under q
special order which allows two days for gen
eral debate and one day for amendments
and debate under the fve-minute rule with
provision for a final vote ON Monday next.
Representative Powers made a long speech
in favor OF the bill, thoroughly reviewing
the situation from business view. To q
question whether he regards the bill as q
| judicious and proper arrangement, he re-
piled with a decided affirmative. The gov
ernment, he said, must acc II 1t took the
road, 1t would have to pay off over SCI, ,000,-
900 of first mortgages and would get only
an inside road" without terminals. Not a
! train could get into Omaha. The property
would be at the mercy Of the owners of the
| terminals. If the present bill passed, the
| government would get its money out of
the roads and If obliged eventually to take
| it. would get a railroad and not part of
one. The committee bill squeezed the roads
| to the last cent. The question was whether
| the government should undertake to col
| ect its debts or throw them away and not
one of a fight between Huntington and
| Sutro"
| He explained the elements which reduced
| the estimated earnings of the roads and made
| it unlikely that they could meet the bonds
| when they became due. The governments
| interests in 1862 were estimated at $3S92, 900.
| At that time the army and navy transporta-
| tion and the postal service to the Pacific
coast cost the government 81 1857 ,731. Yet
notwithstanding the vast increase in the
government transportation to the Pacific
coast the rates of compensation paid by the
government to the companies were reduced
so low that instead of receiving an amount
double or even equal to the interest on the
subsidy bonds they were left debtors an
n ha int Mt In 1ar
sum.
He gave a computation Of the present in
debtedness Of the roads on January /, 1897
at S5S, u.s. ,iOS on the Union Pacific and Kan
sas Pacific, and ,514 on the Central
Pacific and Western Pacific
The bill provides for the issue of the
companies bonds for the governments bal
ance of SIP. .000,0 900 at 2 per cent, and for
payments by each company on account
of principals of $S65,000 annually for ten
years, $55O,OOO for ten years and the balance
at the rate Of S750,000 annually.
Figuring net earnings of the roads at
S,OOO,GOO each the charges, allowing for in
teiest on first mortgages against the Cen
tral Pacific would be $3,S25, $50 and against
the Union Pacific S3,62S,54S.
Mr.. Powers, in reply to question about
the additional security offered the govern
ment under the proposed new lien said the
Pacific railroad commission six years ago
estimated the value OF the additional secu-
rity at $92OO0000. He also said to Mr.. Por-
kins, republican of Iowa, that the bill in
no way affected the Sioux road or the Cen
tral branch of the Union Pacific. In con-
clusion, Mr.. Powers said the Pacific railway
commission had offered a plan which had
been sanctioned by every committee of the
mouse or senate that had investigated the
subject They had squeezed the roads to the
last cent and reached the verge of the ability
of the roads to pay
HITBRARD REPLIES
Mr.. Hubbard, republican of Missouri, who
had charge of the opposition to the measure,
followed Mir. Powers with an extended argu-
ment He plunged at once into the subject.
He based his argument against the bill on
three points That the Pacific railroad COM
mittee had not learned enough of the condi-
tion OF the companies TO be able to tell the
house what is best to do; that the companies
made offers before the committee and are
ready to concede terms very much better for
the government than those embodied in the
Dill and that the propositions in the bill are
neither a good safe settlement for the
government. This, he said, would net the
government $1,400.000 annually in interest or
$4,000, 900, with the $4,000, 900 at maturity,
or SlO5.OOOO0O in fifty years, counting the
preferred stock as worthless. By processes
of comparison he said the offer the COM
mittee rejected was $4S 900 900 better than
the one the government would accept under
the bill.
Mr.. Hubbard criticised severely some of
the financiering of the Union Pacific espe-
cially in the matter of certain liens given
and collaterals deposited. He went into the
question of the diversion of business to the
Southern Pacific. TIE absolute net earnings
of the Central Pacific from 1874 to 1884 were
$4,000 600, and during that period it paid
$34OOO,OO0 in dividends The road was then
almost entirely in the hands of Stanford,
Huntington, Hopkins and Crocker so that
they received practically all the dividends
When they had unloaded the Southern was
built. which leased the Central and then the
latter stopped paying dividends. This lease
would continue under this bill. Under the
bill the Central Pacific debt would be ex-
tended eighty-siX years, that of the Union |
Pacific eighty-three years and the govern |
ment get a worthless second mortgage.
Mr. Bell, democrat of Texas, member of |
the Pacific railroad committee. then took the !
floor, also in antagonism to the measure. He |
began by saying the builders of the Pacific /
roads were entitled to no consideration. The |
scandals growing out of their manipulations |
We're q blot on the civilization of the age. |
None Of those men, he said, had a right to |
ask congress to extend to them the great |
privilege granted by this bill. He addressed |
himself to the question as to whether the |
government held a lien on the terminals. |
lie insisted that the government did, and
that by express provision in the original act |
and confirmed by the ninth section of the
Thurman act. He admitted that the roads
had not been making satisfactory earnings
for years.
WRONG IN THEORY.
Mr.. Bell said the pending bill proceeded on
the wrong theory. The present earnings
were figures and the bill made to conform
to the present earnings. He said the guar
antee in the bill of the Southern Pacific for
SCI 900 900 was made much of. But the
Southern Pacific of Kentucky was one thing
and the Southern Pacific OF California an
other. The former made the guarantee in
the bill; the after was the railroad. The
Southern OF Kentucky was mere corpora
ton to operate railroads, not to own them.
It leased the Southern and other roads. Did
any one believe. he asked. that that corpora
ton would not wind up its business rather
han pay $2l 900 900?
Mr. Bell then explained the substitute he
had proposed, which provided that II the
roads would make the United States secure
by paying off the first mortgage bonds, the
government would extend the debt any rea-
sonable period at 3 per cent. These roads
,ould do this
Mr., Grow. republican of Pennsylvania. oc-
,upied the remainder of the day to the hour
)f adjournment in favor OF the bill. He ar
sued that the government, holding, as 1t
lid, a junior mortgage, was in position
where 1t had to make sacrifices in a reduc-
ion OF the rate of interest and an extension
II the principal OF the debt, in order to
protect it's interest. What the road could
1ay depended upon fits net earnings, and
he scheme OF this bill was based on the net