196 



CONGRESS. (PACIFIC RAILBOAD INVESTIGATION.) 



antagonistic local or State legislation. Also to in- 

 quire it' the United States, since the Union and Cen- 

 tral Pacific Railroad Companies accepted the terms 

 proposed by Congress for the construction of the Pa- 

 cific Railroad, has granted aid in land for building 

 competing parallel roads to the said Pacific Railroad, 

 and, if so, how many such roads, and to what extent 

 such competing^ lines, have impaired the earning 

 capacity of the Pacific Railroads. 



Also to inquire if the United States have contracts 

 with the branch roads controlled by either of said 

 Pacific roads for carrying United States mails, and, if 

 so, what service has been performed by them, and 

 what money, if any, has been paid for said service, 

 and what remains due and unpaid, and if the United 

 States, by failing to pay for said mail service, has 

 embarrassed said railroad companies or either of them 

 in paying their indebtedness to the United States. 



Also to inquire if the several Pacific Railroad com- 

 panies have complied with the provisions of the act 

 " to alter and amend an act entitled ' An act to aid in 

 the construction of a railroad and telegraph line from 

 the Missouri River to the Pacific Ocean, and to secure 

 to the Government the use of the same for postal, 

 military, and other purposes,' approved July 1, 1862: 

 also to alter and amena an act or Congress approved 

 July 2, 1864, in amendment of the said first-named 

 act," commonly known as the Thurman act, and, if 

 not, in what particulars they have failed to comply. 

 Also to inquire what sums the Pacific Railroads and 

 their branches can severally pay annually on account 

 of their indebtedness to the Lnited States without im- 

 posing such burdens upon the people, and particularly 

 upon the localities through wnich the roads pass, as 

 to retard the development of the countiy. 



On motion of Mr. Plumb, of Kansas, the fol- 

 lowing clause was inserted in the same sec- 

 tion: 



Said commission shall also inquire into and report 

 upon the relations of said railroads to the interests of 

 the communities through which they pass, and all 

 questions concerning the payment of taxes, especially 

 upon lands granted by Congress, and the delay of said 

 companies in taking out patents for such lands, the 

 rates of fare and freight charged, discrimination, dif- 

 ferential pools, and other devices, and the facilities 

 and accommodations furnished to the patrons of such, 

 roads, and their report shall embrace a consideration 

 of the interests and rights of said communities as ef- 

 fected by whatever plan of settlement the payment of 

 the existing debt may be proposed. 



In the course of the debate on the measure, 

 Mr. Sherman, of Ohio, said of section 4: 



" This proposes to place in the hands of a Pres- 

 ident of the United States to be elected eight or 

 ten years hence the enormous power of assum- 

 ing the payment of $65,000.000 indebtedness. 

 It does not invest him with the power to take 

 the money from the Treasury, because the criti- 

 cism made by the Senator from Massachusetts 

 (Mr. Dawes) is perfectly just. You may im- 

 pose a duty upon the President of the United 

 States, whatever it may be, and yet he can not 

 take one dollar from the Treasury, except in 

 pursuance of an appropriation made by express 

 law. That appropriation can only be expressed 

 in such words as these, that so much money be 

 appropriated out of any money in the Treasury 

 not otherwise appropriated. Consequently, this 

 is mere brutum fulmen ; it does not amount to 

 anything, except that it confers, nominally at 

 least, a very dangerous power long years in 

 advance of the time for its exercise. 



"The Senator from New Jersey suggested 



that these companies might default in their in- 

 terest. They have never thought of such a 

 thing. Such a thing is not to be conceived of 

 as possible. That interest must be paid and is 

 paid as promptly and as regularly as the inter- 

 est on the bonds of the United States, because 

 it is a primary lien on all these roads. That 

 is, therefore, a contingency which need not be 

 provided for by law. 



"This is an intimation that these railroad 

 companies intend to commit an act of bank- 

 ruptcy, when there is no such disposition and 

 no sign of such an act. It is to suggest a state 

 of things that has not occurred to the mind of 

 mortal man, because standing back of and be- 

 hind these first-mortgage securities there is an 

 immense interest, amounting to over $130,000,- 

 000 or $140,000,000. Therefore, the contin- 

 gency of the companies failing to pay the in- 

 terest on these bonds or their failure to pay 

 the bonds on maturity is a thing not to be 

 thought of, at least for ten years, and conse- 

 quently it is a mere idle section threatening the 

 credit of these companies to even suggest the 

 possibility that the interest is not to be paid 

 on these first-mortgage bonds, which are high 

 in the market, equal to the bonds of the United 

 States. Such a suggestion as this in a law of 

 this kind, passed by both Houses of Congress, 

 appears to be a mere effort, you may say, to 

 bear down these bonds, to toss them into the 

 market as discredited and suspected by the 

 Congress of the United States.'' 



Mr. Hoar, of Massachusetts, said in discuss- 

 ing the relations of the Pacific Railroads to the 

 Government: 



" There is not one single dollar due to this 

 Government from any of these roads not one, 

 and will not be until the year 1897, or there- 

 about. The United States Government agreed, 

 in consideration of the enormous risk of the 

 original builders of this road, that they would 

 lend them these Government bonds, and they 

 should not be called upon to pay back either 

 principal or annual interest till their maturity 

 at the end of thirty years. 



"What the Government did by the Thur- 

 man act was not to come in as a creditor who 

 had made a bargain and break it, to repudiate 

 their contract with these men not at all. 

 They said that under our supervising power as 

 a government we will require you to pay into 

 a sinking-fund a sum of money, so that there 

 shall be some preparation toward the payment 

 of your debt at maturity. Now, what is the 

 result of that process? That sinking-fund is 

 required by law at this moment to be invested 

 in securities which pay only 2'2 per cent, an- 

 nually of interest. 



"As to the money expended on the road, the 

 Senator from Mississippi says they buy every- 

 thing on credit, and do not pay cash for any- 

 thing. They find a road that has been built 

 by somebody else with a bond and mortgage, 

 and they buy the equity and pay for it, and 

 have to pay the interest on those bonds, anc 



