The San Francisco Call. Newspaper, January 8, 1897, Page 3

THE SAN FRANCISCO CALL, FRIDAY, JANUARY 8, 189 POERS PO0R PLEA | P { | Advocates the Passage of Huntington's Refund- ng,.Scheme, TALKS FOR THE PACIFIC RAILROADS. Declares That Collis and His Crowd Were Benefactors of the Country. OTHER CONGRESSMEN OPPOSE THE MEASURE. Hubbard and Bell Say the Roads Should Not Be Permitted to Dodge Their Debts WASHINGTON, D. C., Jan. 7.— The debate upon the proposition to refund the indebtedness of the Pacific railroad com- panies to the Government was begun in the House to-day under an order adopted last month, which set apart the rest of this week for that purpose. Preliminary thereto an immense wall map showing the routes of the road was elevated in front of the Speaker's desk to aid the members in arriving at a clear under- 8 ding of the question. Interest in the debate was neither deep nor extensive. Before entering on the execution of the ’s order a bill was agreed to providing for the appointment of a Surveyor-General for Alaska at a salary of $2000. The Speaker laid belore the House the e overnor Morton of New nation of Frank S. Black resentative in Congress from that g been elected Governor to 0 the commit- ne (R.) of New York s called to the chair. Powers (R.)of at, chairman of the Committee on 1 reporting the bill, t the time for general debate ally divided Letween friends ents of the measure and to be himself and Hubbard (R.) . which arrangement was con- tne committe, and Powers case for the bill. He said it ess proposition that the reported, and it was in- al only to the good busi- ouse. sed himself to a history road en rises and the in reference thereto, which had ng in the act of July 1,1862. It the States of the Pa- ileziance to the Union. rred to the projectors of the f the construction of a ad from the M o River, in C ia, were as enabled them to pusn forwsra enterprise and finally to see the n of their hopes in the accom- ment of the task. This aid was of nd grant and a bond sub- Iatter ranging from $16,000 a 1 ground to $32,000 a mile on ying between the Rocky and fe ranges of mountains, and to a mile over the 1gh itnow seemed comparatively hing, said Powers, to construct oad, in 1862 it was deemed antic enterprise, chimerical in e and prospects, and private capi- not be enlisted in its support r the ovisions of the act of 18 ss waived its first lien y in favor of the holders d sold by the compa- money with which to enterprise. These two a ie charters of the Pacific rail- reme Court had de- 1 of the Government 1es of the com panies been aided by bonas n the proper bonds issued a to secure the secute the 4B om0 vhich had ac or lands. The consequence of this decision was greatly to redtce the value of the security. Further, the line of the Union Pacific Railroad, owing to the controversy among on the Missou e of being the ea n at the one hun er for the privi- ern terminus, was redth meridian of tude, with branc es to Omaha and as City. The effect of this legislation vas to take the terminals at these two ces from under the Gove ent lien. Le Union and Central companies then ntered into a strugg'e of construction to re the largest possible land grant and ubsidy. This race of diligence led ion of nearly eighty miles of he point of connection, and the he junction point had to be Corgress. This enabled the s to consiruct tbe entire ot road to the acceptance of the y the 10th of May, 1869, four Go years after the first snadeful of earth had been thrown and more than six years before the expiration of the limit within which it t complete the work. The benefits accruing to the Government and to the people from the gonstruction of the roads w raphically sketched by Powers. If the Government should de- sire every dollar it had advanced to the companies, it could credit itself with ten times as much in the material advance- ment and progress and development which had resuited to the country from the opening of the territory. o he said, *if it had not been for the building of these railroads we should never have beard of a silver party. But (reflectively) I don’t think that is any argument in favor of the passage of the bill.”” [Laughter.] One of the provisions ol the chartar act was that the companies should pay into the United States treasury 5 per cent of the net earnings as a sinking fund to meet the bonds issucd by the Government, to- getber with all transportation charges against the Government. In 1864 it was enacted that only half the transportation charges should be retained. Later the Bupreme Court decided that the com- panies could not be compelled to pay the intereston the bonds until the principal became due, and therefore the accumula- tion of debt. In 1878 the Thurman act was passed in _|in the charter acts prevailed to set at e mountsins proper. | °|and the Union Pacific * | of the bonds were overdua EASANT WORK FOR THE BROOMS! PL WA { { | | | DA - L iVl it 7, Yl Z Z \JREP If yow want to gdet an idea what effect brooms have upon trade just step into the big store to-day. We're sweeping out Over- coats, not selling ’em the ordinary way, not making a few cents’ cut like some stores and crying as thoush bled, in the newspapers, with big bardains. We ain’t buwilt that way. [CO00C0CO0] We're sweeping out Over- coats ; malke no bones about it, but do real, senuine, Si- mon-pure sweeping, clos- ing our eyes to profit, clos- ing our eyesto gain, closing our eyes to loss. Some remarkably clever Overcoats, as yow see in picture on side being swept out, and we’ll continue to sweep ‘em out till closing time Saturday night at 50.90. NEW TD-DAY“C’-OTHIH}}; LI (5 VELY SWEEPING! THE Dwep The way Overcoats are melting down on our count- ers shows that the brooms are doing effective work. You would think so if yow were on our second floor yesterday. To-day the busy scenes will be re-enacted. Some remarkably clever Aurora Melton Overcoats in Oxford gray, with velvet collar, coats that other stores are detting $8.50 and $10 for, in the sweep to-day at D30, INCORPORATHD). - RAPHAEL’S KING-PINS FOR OVERCOATS. the hope and expectation that it would secure the repayment of the Government’s debt, but the reasons which overated to prevent the successful working of the vlan for repayment of the debt proposed haught the scheme so elaborately wrought by Senator Thurman. They were the division of the Government's business be- | tween the existing lines instead of giving | it ll to the line which it should nourish and encourage. Boatner (D.) of Louisiana asked Powers if he maintained that the companies had paid all to the Government that an honest and capable management would have permitted them to do. f Powers repliea that he did. He de- clared bis own opinion to be that the rail- | road companies had discharged every | | obligation imposed on them by the { Government; they bad fuifilled every | contract made by Congress. Turning from the historical to the ac- tual features of the case Powers said that | on the 1st of July next, to which date the | bill was to apply, the Central Pacific | | would owe the Government $57,904,177 | 289,593, Some | and the ques- | | tion before Congress was what was best to | be done. Should the Government fore- | close the mortgage which meant long liti- gation and an increase of the debt of the | Government by between sixty and seventy miliions to pay oif the underlying first mortgage in order 1o enter upon the very doubtiul experiment of operating the road upon Government account? The wiser | method would be for the creditor to deter- mine the debt-paying ability of his debtor and make a settlement with him on that basis. That was what the bill proposed to do. Asked why the committee had increased | the first mortgage of the Central Pacific | by about $21,000.000 and that of the Union | Pecific by about $23,000,000, Powers replied | that it was because the Government got $2 for $1 of additional security. If Congress suould seize the roads or undertake to foreclose the mortgage by judicial process and sale, it would find | itself in possession of a line without ter- | minals or branch roads to give it busi- ness, or would force a sale at which no one except the man now being criticized could affurd to buy. The principal ad- vantage to be gained by the Government | was that it gained a second mortgage on | | the entire property of the roads, whereas | |itnow had a lien only upon a link of | | the road. The railroad company would | | be permitted to make a first mortgage upcn the property equal to the face of the existing first mortzages. The Govern- | ment mortgage was to be extended at 2 per cent. Fairchild (R.) of New York asked as to | the identity of the men who were bene- { fited or affected by the bill; whether or | not the Central and Union Pacific com- panies were composed of practically the same individuals. Powers replied that the individuals were the sgme. He further stated that the bill was not acceptable to the corpora- tions. Maguire (D.) of California—All they have.to do is to reject then. Powers—There is no certainty that the companies will take it. We have to force the pill down them. To Smith (R.) of Michigan Powers said he knew of no diversion of traffic from the Union Pacific road which ought o have been retained by or for it. The state- ment would be made in the course of the debate that the Southern Pacific, upon whose property the Government beld notes and could not have a lien, absorbed the revenues of the Central Pacific. He would not stop now, he said, to demon- strate that that assertion was untrue, but would s0 state to-morrow. Lacey (K.) of Iowa asked why a divi- dend of 4 per cext was allowed on the stock when the Government was to get but 2 pei cent for its bonds, which were ahead of the stock. ‘“‘Because,”” replied Powers, ‘‘we want the stockholders to undertake this obliga- tion and they won’t do it unless they are assured of a reasonable return upon their money.” At present, Powers said, Central Pacific stock was quoted at about 15 and Union Pacific was worth nothing. The reorgani- zation committee had issued certificates to stockholders liable to an assessment of $15 a share which had been quoted at about 10. The committee had endeavorea 10 make the rate of interest to.the Govern- ment at 3 per cent, but had been com- pelled to fix the rate at 2 per cent. The committees believed that the companies could comply with the requirements of the bill. The Central Pacific would have to pny §3,825,000 per year, fixed charges; the Union Pac.fic $3,628,000 a year. Upon the basis of thie earnings of the companies for a period of years past it was estimated that they could be depended upon to earn 2 net revenue of $4,000,000 a year. In- deed, it was inconceivable that the roads could ever again pass through such a veriod of depression as they have for the past three years. Asked what estimate the committee placed upon the additional property to be brought within the new mortgage Pow- ers said it was difficult to state. A Senate committee i 1890 fixed the value at §92,000,000. The division superintend- ent of the road said that the Denver ter- minals alone could not be duplicated for less than $10,000,000, while the Union Pa- cific’s coal lands were estimated to be worth as mucn as the total amount of the Government debt. To Perkins (R.) of Iowa Powers stated that the pending bill did notinclude with- in its provisions the Sioux City and Pacific or the central branch in Kansas, neither of which was a part of the Univn Pacific. In conclusion Powers said the commit- tee, in its conclusions embodied in the bill, was entirely in harmony with the recommendations of the Kailway Commit- tee. The House had no business with the quarrels between the Central Pacific and Mayor Sutro of 8an Francisco. [ts busi- ness was to provide for the payment of a debt due the Government—a plan for doing that the committee submitted to the good sense of the members, The attack on the bill was opened by Hubbard (R.) of Missouri, who prepared the views of the minority of the commit- tee. He said that, following Powers’ his- tory of the legislation relating to the Union and Central Pacific roads, he de- sired to call the attention of the commit- tee to the provision of the law of 1862, which required that all the capital stock of the corporations should be paid in cash. The facts were that the Union Pa- cific was capitalized at $60,800,000, of which but 16 per cent was paid in; the Cen- tral Pacific at $68,000,000, of which 10 per cent was paid in; the Western Pacific at $7,900,000, of which 234 per cent was paid in, and the Kansas Pacific at $9,600,000, of which not a cent was paid in. In the construction of the Union and Central Pacific roads, Hubbard stated, there ac- crued to those in charge a protit of sixty- two millions; and there had been paid in dividends on the Union Pacific, includ- ing the Kansas Pacific, $28,000,000. “I do not state these facts,” said Hub- bard, “in any sense of antagonism to the gentlemen who received these profits and dividends. - If they Lave violated any law | RAPHAEL’S INCORPORATED), 0,11,13 and 15 Kearny Street. KING-PINS FOR OVERCOATS. the proper officers will attend to them; if they have paid the Government fairly and in accordance with law neither you nor 1 have any reason to complain.” Hubbard reviewed Powers’ assertion that the companies could carry out the provisions of the committee’s bill, From the statements made to the committee by Mr. Tweed and the report of the United States Commissioner of Railroads Hub- bard showed that instead of the company earning about $4,000,000 a year net it ran in debt to the amount of nearly $1,000,000 on the operations of 1895, while for the previous few years the net earnings had not exceeded $2,144,000, in 1891, which was a phenomenal year. On the other hand Poor’s Manual, a railroad authority, gave the net earnings at about the figures given by Powers, and, analyzing the report of the Railroad Comn.issioners, Hubbard reached the conclusion that the Central Pacific did earn about $4,000,000 net over and above operating expenses and taxes. The other expenditures tabulated by the Railroad Commissioner either needed ex- planation or were to be offset by items not considered. Thebill of the committee was satisfactory to the railroad officials, the assertion of the gentleman from Vermont (Powers) to'the contrary notwithstanding. In this connection Hubbard relatea at some length the various propositions for | the settlement of the debt, in support of his claim that the provisions of the pena- ing bill were not the best offers made by the companies. He gave it as his opinion that the cor- porations were financially able to do bet- ter than the bill had proposed and that the Union Pacific was much stronger than the Central Pacific. The proposition con- tained in the bill was not so good for the Government as the requirement of the present law. The Union Pacific was now paying $1.500,000 8 year. By the terms of the bill its payments would amount to but $1,350,000 a year, running over a period of eighty-three years. 1t was useless to ex- pect any one to raise the money required by the bill to make it effective. The prob- abilities of the future were too uncertain to make the security of the Government stable. It depended altogether upon the indissolubiljty of the tie between the Cen- tral ‘and Union Pacific companies. The failure of one or the other in the future, and that could easily be brought about, would absolutely desiroy the security of the Government under the pending bill. The fatal point in the bill was the failure to make a continuous mortgage upon the property of both lines from the Missouri River to the Pacific Ocean. That ought to be done and could be done, because the Government owned the controlling mort- gage. Watson (R.) of Ohio—What does the gentleman mean by ‘‘controlling mort- gage’' ? Hubbard — The largest mortgage. A man who has the gieatest amount in- vested in a propirty controls it because he won’t let it go for less than that. Continuing Hubbard said that all the roads indebted to the Government should have been broughtinto court and the mort- gage foreclosed. By the expenditure of less than $30,000,000 the Government could at foreclosure gain possession of either property, terminals and all, of both the Union and Central Pacific roads. Ellery Anderson, 8 Government director, had recommended that the mortgages be fore- closed and the Central and Union Pacific consolidated. No Government ownership was involved in that preceeding, for such a property cleared of debt would attract bidders who would take it off the Govern- ment’s hands at a profit. Discussing the matter of his objection consolidation or combination of the two roads Hubbard asserted that the mortgage of the Government did extend over the terminals of the Unlon Pacific, including the Omaba bridge, the Supreme Court having decided in the case of Hall versus the railroad company that the Union Pa- cific began at Council Bluffs and ended at a point five miles west of Ogden, Utah. This, he said, overthrew the position of Powers and those who held with him. Hubbard went with much detail into some of the mortgage transactions of the Union Pacific Company, which he said showed some strange things. It might be that they were intended to hide or cover up something, but he could not assert it, for it was almost practicaily im- possible to get information regarding the operations. They did give weight to the charge that the company was arranging to settle with the company. Powers, he said, had been asked a pertinent question as to why the bill daid not require the Union Pacific Company to mortgage its bonds, stocks and other securities as it did require the Central Pacific to do, and he had re- sponded that the requirements upon the ! two companies wers the same. Hubbard denied that statement. The bill required the Central Pacific only to mortgage its bonds and stocks. As a matter of fact, it never did have a dollar of such securities in its possession, while the Union Pacific, holding about $90,000,000 of these securi- ties, is absolved from pledging them to the Gbvernment. The bill would not re- sult in any practical benefit to the Govern- ment. It would simply extend for eighty- three years the period within which the companies could escape paying their debts. Bell (D.) of Texas, who also printed some views dissenting from the report of the committee, followed in opposition to the bill. He said the stockholaers of these corporations were not in a position to come to Congress and ask for any consid- eration whatever, much less ask the granting of such important concessions. He knew that there was no one in the United States who believed that the men who built the railroads and were now stockholders had dealt fairly or honestly with the Government. Every proposition looking to the establishment of a sinking fund had been defeated by one means or another. After the Thurman act was enacted the Central Pacific was leased to the Southern Pacific, so that there was no 25 per cent of net earnings left to pay into the treas- ury.. The roads had not been operated so as to make money for the owners, and therefore it Was safe to assume that the corporations were insolvent and unable to pay their debts. He thought it was preposterous to propose such a settlement as that provided in toe bill. The Govern- ment was asked 10 practically give them the use of 3 per cent upon the total debt of $112,000,000, the roads not being re- quired to do a thing in return. ©Oh, no,” said Bell; “if the companies want any such favor as asked for let them go down into their pockets, sell some of the ill-gotten gains, securities and other property and make the Government se- cure and then we will treat with them.” [Applause]. . Bell doubted the statement that the ad- ditional security 1o be given the Govern- ment under the bill for increasing the face of the mortgazes was sufficient reason for making the increase. One of the items ! was the land grant still unsold. The lands were assessed at $3 an acre, but they had been offered for sale for years at that figure or less without finding purchasers. The security offered for the Central Pa- that the pending bill did not provide for,| cific debt, that of the Southern Pacific Railroad .of Kentucky, Bell said, was far | from satisfactory. 1t had little or no property, he understood, and it was no improbable thing to anticipate that the company, finding itself burdened with the proposed liability, would simply drop out | and be succeeded by some other corpora- tion not bound by the bill. The accumulation of wealth by the pro- jectors of these enterprises and the owners, Bell vehemently asserted, was a matter of interest to the public, and he denied the statement of the gentleman from Ver- mont that it was none of the public’s business. “If a man by watering the stock and adding to the burdens of the people gains great richness, he is an enemy to the pub- lic, and ought to have no friend stand up here for him, anda has no right to come to | Congress and ask for great and substantial benefits.”” [Applause.] The matter, however, was a business one purely, Bell said, ashad been stated by Powers. There were three propositions under consideration. One was to take the roads under the mortgage and operate them. This he found objectionable, as he did also the second, which was tosell the property and pocket the loss if sny oc- curred. He particularly opposed the idea of Government ownership or operation of railroads; and if the Government was going into that business he did not want to experiment with these roads in a thinly populated part of the country. He re- pudiated so much of the language of the act of 1862 as imputed to Congress an as- sumption of the doctrine of ownership. [Applause.] The third proposition was one he recom- mended as an amendment of the commit- tee’s bill—to extend theindebtedness of the companies for a reasonable period at 3 per cent interest, the corporations to give the Government a first morigage instead of a second. Grow (R.) of Pennsylvania addressed himself briefly to the proposition ad- vanted by Bell, declaring it impractical. The committee then rose and Bell pre- sented a substitute for the committee bill, in accordance with the plan outlined in his remarks, and it was ordered printed. A substitute was also presented by Har- rison (D.) of Alabama, also to be printed. At 5:10 o'clock the House adjourned until to-morrow. CALIFORNIAMS HOPEFUL. They Think the Powers Bill Will Be Beaten in the House. WASHINGTON, D. C., Jan. 7.—Mem- bers of the California delegation are hope- ful that the Powers refunding bill will be beaten in the House. The sentiment of the House seems to be adverse to the bill. The speakers opposed to the refunding bill were heartily appiauded to-day, while those who advocated the bill were given a “frost.” Judge Maguire said to THE CALL corre- spondent to-night: *“The indications are encouraging, and although the railroad people are claiming that they will pass the bill I do not believe it. "I think that to-day’s proceedincs demonstrated that a majority of the members present in the House of Representatives sympathized with the opposition.”’ Representative Blue of Kansas, one of the ablest and most influential Represen- tatives, said to-night: ““I have not given the question the consideration which I will give it before voting, but I believe the bill will be beaten in the House. The Government ought to do something with this matier. Itseems to me that the pass- age of this bill will be temporizing with the question. It will have to be handled later.” 7 2] | Representative Tracey said: “I don’t think this bill will become a law.” The letter of Secretary Carlisle to the Senate yesterday, declaring that a certain statement of the account against the Pa- cific railroads could not be found, was commented upon freely by some of the Senators to-day. The information was requested in a Senate resolution, and now that the Treasury Department cannot fur- nish the figures desirea the Interior De- partment will be called upon. Regarding the alleged disappearance of Government accounts against the rail- roads, Senator Morgan this afternoon said that the whole thing was very sur- prising to him. He had never heard, he said, of such a thing as a secretary of a department being unable to find accounts on file. He eaid that if the full facts about the matter could be ascertaincd he would certainly attempt to find them out. Senator Pettigrew said that in 1876 the amount due the Government in this par- ticular was $1,700,000, and that it had probably swelled to $4,000,000 by now. He also proposes to investigate the matter thoroughly and to do all ke can to probe it to the bottom. E. M. Wardall, State chairman of the People’s party of Californis, takes much interest in the Pacific Railroad funding bill. “‘The people of the Pacific Const,” said Mr. Wardall, “‘are opposed to funding and NEW TO-DAY. s And all kinds of thor- ough tests have proven the value of the BLUE FLAME COOKER — the sim- plest, cheapest and quickest cooker doing kitchen duty. Burns | ordinary kerosene, and we all know that 18 the cheapest fuel in existence. Has oven and all the con- veniences of the usu- al range. Will heat immediately. MYERS' OIL HEATER is the great heat producer for the home or office. ———— JOHN F. MYERS GO, 947 MARKET STREET, S. F. . NEXT TO HALE'S,