The Austin weekly statesman. (Austin, Tex.) 1883-1898, 1897-01-14

condition of the treasury? But this was
not all, he said. If the government took
the road it was an inside road,v with
out terminals. Not train could be ruE
into Omaha. The government could not
operate it without terminals 1t couitf
not sell it without terminals to advan-
tage. On an attempt to sell the prop
erty it would be at the mercy of the
owners of the terminals. The plan
which the Pacific Railway company pro-
! posed, he said, was to extinguish the re-
manning debts Of these companies by Pc
riodical payments, by a system of defer
red payments at 2 per cent interest.
protected by second mortgage bonds, ex-
ecuted by the company, which embrace
not only subsidized parts of the roads
| on which the government now has sec
| ond lien. but all of their branches, ter
minals, lands 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 tn the govern
| ment's balance of $112,0O0,0OO at 2 per
cent and for annual payments by each
| company on account of principal of $685.
| coo annually for ten years, $55O,OOO for
ten years and the balance at the rate of
! $780, 900 annually.
In reply to questions Mr.. Powers said
| the committee had calculated on $4,000
600 annually as the net earnings of the
roads
"Why do you allow 4 per cent on the
stock of the company" asked Mr.. Ia
cey (rep) of Iowa.
ITO tempt the stockholders to enter
into the arrangement. We do not ask
| them to go on with no provision for q
/ dividend"
"What is the present value Of the
- xx,lt p, Dntt IN
per CENT? asked Mr.. Moody (rep> Of
Massachusetts.
Central Pacific is worth 10; Union
Pacific is worth Sill"
Cant the companies comply?" asked
Mr.. McCreary (dem) of Kentucky.
THAT is a vital question:" replied Mr..
| Powers. We think they can. The con-
dition of the roads could not well be
worse than il has been during the last
| few years.
Figuring on the net earnings of the
| roads at $4,000,000 each year. the
charges on the first mortgage against
the Central Pacific would be $685., 800,
and against the Union Pacific, $685.,
42S.
Mr.. Powers, in replying to a question
about the additional security under the
| proposed new lien offered the govern
six years ago estimated the value of the
additional security at $92,000,000.
| The question:" said he, sis whether
| we should attempt to collect these debts
or ruthlessy throw them away. We
| should address ourselves to the govern
| ment's interests and we present this bill
as solution"
Mr.. Hubbard, who had charge of the
opposition to the bill followed Mr..
Powers. He agreed with Mr. Powers
that the question was merely to do with
He said it had cost $62,OO0,0O0 and the
roads had paid $32,OOO,0OO in dividends.
His purpose in citing these facts was to
show that those in control of the COM
| panies were strong while the corpora
ton pleaded bankruptcy and inability to
pay. He based his argument against the
bill on these points: That the Pacific
Railway company had not learned
enough of the companies so as to be able
to cope with the best plans suggested;
| that the companies made these offers
before the committee and were ready
to concede very much better terms than
those contained in the bill, and the bill
was not good or safe settlement for the
government. This he said, would net
the government 81 100000 annually in
interest, or 100000 with the $35,OOO,-
600 at maturity, or $15,000,000 in fifty
years, counting the preferred stock as
worthless. by comparison, he said the
offer the committee rejected was $4S,-
| 100000 better than the one the govern
ment would accept under the bill On
the other hand, he said, all the Califor-
mia delegation, with one exception, OPP
posed the bill that would place the Cen
| trail and Southern Pacific under the
same control The government direc-
tors. w. j. Coombs and n. II. Anderson,
had advocated foreclosure by the gov
eminent and the union of the Central
and Union Pacific Secretary of the In
terror Smith had advocated foreclosure.
Mr.. Hubbard insisted that the main lines
of the Central and Union Pacific should
be united for the support of the COM
mon security, which the government
must take on both. All admitted that
they were worth much more as q through
line than if separated. The average net
earnings of the Union Pacific for the
past ten years, he said, were $7,500,000.
yet the bill was based on earnings Of
but 100000.
Mr.. Hubbard criticised severely some
of the fnanciering of the Union Pacific,
especially in the matter of certain liens
| given and collaterals deposited. He
| went into the question of diversion of
business to the Southern Pacific. The
absolute net earnings of the Central
| from 1874 to 1884 were $52,00O,OO0, and
during that period paid $6,000,000 in
dividends. The road was then almost en-
| tirely in the hands of Huntington, Stan
| ford, Hopkins and Croker, 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.
The lease would continue under this bill.
! Under the bill the Central debt would
be extended eighty-six years, that of the
Union Pacific eighty-six years and the
stock be worthless on second mortgages.
When Mr.. Hubbard closed there was
a round of applause from the opposi-
ton to the bill
Mr.. Bell (dem.) of Texas, member
! of the Pacific railroad committee, then
took the floor, also in antagonism of the
measure. He began by saying that the
builders of the Pacific railroads were
entitled to no consideration. The suits
growing out of their manipulation were
a blot ON civilization and the age. None
of these men, he said. had the right to
ask congress to extend to them the great
privilege granted by this bill. He adj
dressed himself as to whether the gov
| aa,f had on tho roads He