The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1897-01-15
THE PACIFIC FUNDING BILL

In is interesting to know something
just at this time of the Pacific railway
funding bill, which has been under con-
sideration in the house for some time,
and the final vote was defeated
Thirty years ago when the two trans
continental Pacific railroads.&c. Union
Pacific and the Central Pacifc-were
constructed, the government under
wrote their bonds to the amount of
SCI, 800, 600 and gave each a land grant
besides.
The Union Pacific received s33, $50. 900,
which sum it has returned, and about
IS, 900 more. The Central Pacific
which received $27, 1855, 900, has returned
all of that sum save about $1O,000 600.
But the interest on the bonds has not
been paid, and therefore the total debt
of the two companies to the govern
ment January 1, this year, amounted to
Bill, 600, 900, of which S5S, 900 900 is due
from the Central Pacific and $54 600, 900
from the Union Pacific. The debt is
secured by second mortgage lien upon
the main lines of the two roads. The
governments security, however, does
not extend to the branches built with
out aid from the United States, nor to
valuable terminals in Omaha, Denver
and other cities.
Some of these bonds are now due and
the government has to pay them. Pres
ident Cleveland has declared his inten-
ton to fOreclOse the mortgage unless
congress provides some other means of
settlement For the matter to drift
along in it's present shape would mean
for the debts of the roads to the gov
eminent to increase and pile up interest
at an enormous rate.
The funding bill which was defeated
proposed to reduce the rate of interest
on the debt to per cent, to permit the
companies to pay back the principal in
installments, meanwhile keeping the
interest paid up, and for the govern
ment to take a second mortgage COW
ering the branches, terminals, etc, not
included in the prior mortgage.
The opponents of the measure have
pointed out the fact that the govern
ment could better afford to give the
companies the whole debt outright
than to enter upon this extension. For
instance, the debt of the Central Pacific
is now il round figures SIS, 900, O00 In
asmuch as the government has to pay
31A per cent interest on money which it
borrows, its interest account on this
$5S, 600, 600 would in IS years amount to
$171, 100000, not counting interest on in
terest. Principal and interest charges
together would be 1929, 000, 900. During
IS years the Central Pacific would only
pay in. $110. 0O0. 900. The same thing
would apply to the Union Pacific. Dis
interested experts, it is further assert
ed, declare that on this basis it would
cost the government not less than S125-
000,0 after making all deductions for
payments by the companies, to carry
the extension through the proposed
period.
1t is not to be wondered at that in the
face of these facts and figures the fund
ing bill was defeated. To have passed
it, as one congressman declared, would
have amounted to the government Civ
ing the Pacific railroads millions of dol
lars more instead of simply being re-
paid by them the sums they now owe
1t is therefore, not surprising that Col
lis P. Huntington had a strong lobby
headed by himself in person, at Wash
ing to urge favorable action on the
measure.