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upon the boods so issued by it as aforesaid, to each of said corporations sererally, and the other balf thereof to be turacd into the sinking-fund hereinafter provided, for the uses therein mentioned:.

SEC. 3. That tbere shall be established in the Treasury of the United States a sipking fund, which shall D&•jnvested by the Secretary of the Treasury in bonds of the United States; and the semi-annual income thereof shall be in like manner from time to time investid, and the same shall accumulate and be disposed of as hereinafter mentionetl. And in making such investments the Secretary shall prefer the 5 per cent. bonds of the United States, unless, for good reasons appearing to him, and which he show'report to Congress, he shall at any time deem it advisable to invest in otler bonds of the United States.

Sec. 4. That there shall be carried to the credit of the said fund, on the 1st day of February in each year, the one-half of the compensation for services hereinbefore named .rendered for the Government by said Central Pacific Railroad Company, not auflied in liquidation of interest; and, in addition thereto, the said com. pany shell, on said day in each year, pay into the Treasury, to the credit of said siaking fund, the sum of $1,200,000, or so much thereof as shall be nccessary to make the 5 per cent. of the net earnings of its said road payable to the United States under said act of 1862, and the whole sum earned it as com sation for services rendered for the United States, together with the sum by this section re. quired to be paid, amount in the aggregate to 25 per cent. of the whole net earnings of said railroad company, ascertained and defined as herein before provided, for the year ending on the 31st day of December next preceding.

That there shall be carried to the credit of the said fund, on the 1st day of Feb. ruary in each year, the one-half of the compensation for services hereinbeforo named, rendered for the Government by said Union Pacific Railroad Company, not applied in liquidation of interest; and, in addition thereto, the said company shall, on said day in each year, pay into the Treasury, to the credit of said sinking fund, the sum of $850,000, or so much thereof as shall be necessary to make the 5 per cent. of the net earnings of its said road payable to the United States under said act of 1862, and the whole sum earned by it as compensation for services rendered for the United States, together with the sum by this section required to be paid, amount in the aggregate to 25 per cent. of the whole net earnings of said railroad company, ascertained and defined as hereinbefore provided, for the year ending on the 31st day of December next preceding.

SEC. 5. That whenever it shall be made satisfactorily to appear to the Secretary of the Treasury, by either of said companies, that 75 per cent. of its net earnings as hereinbefore defined, for any current year, are or were insufficient to pay the interest for such year upon the obligations of such company, in respect of which obligations there may exist a lien paramount to that of the United States, and that such interest has been paid out of such net earnings, said Secretary is hereby au. thorized, and it is made his duty, to remit for such

current year so much of the 25 per cent. of net earnings required to be paid into the sinking fund as aforesaid as may have been thus applied and used in the payment of interest as aforesaid.

SEC. 6. That no dividend shall be voted, made, or paid for or to any stockholder or stockholders in either of said companies respectively at any time when the said company shall be in default in respect

of the payment either of the

same required as aforesaid to be paid into said sinking fund or in respect of the payment of the said 5 per cent of the net earnings, or in respect of interest upon any debt the lien of which, or of the debt on which it may accrue, is paramount to that of the United States; and any officer or person who shall vote, declare, make, or pay, and any stockholder of any of said companies who shall receive any such dividend contrary to the provisions of this act, sball be liable to the United States for the amount thereof, which, when recovered, shall be paid into said sinking fund. And every such officer, person, or stockholder who shall knowingly vote, declare, make, or pay any such dividend, contrary to the provisions of this act, shall be deemed guilty of a misdemeanor, and on conviction thereof shall be punished by a fine not exceeding $10,000 and by imprisonment not exceeding one year.

Sec. 7. That the said sinking fund so established and accumulated shall, at the maturity of said bonds so respectively issued by the United States, be applied to the payment and satisfaction thereof, according to the interest and proportion of each of said companies in said

fund, and of all interest paid by the United States thereon and not reimbursed, subject to the provisions of the next section.

SEC. 8. That said sinking fund so established and accumulated shall, according to the interest and proportion of said companies respectively therein, be held for the protection, security, and benefit of the lawfuland just holders of any mortgage or liep debts of such companies respectively, lawfully paramount to the rights of the United States, and for the claims of other creditors, if any, lawfully chargeable upon the funds so required to be paid into said sinking fund, according to their respective lawful priorities, as well as for the United States, according to the principles of equity, to the end that all persons having any claim upon said sinking fund may be entitled thereto in due order; but the provisions of this section shall not operato or be held to impair any existing legal right, except in the manner in this act provided, of any mortgage, 'lien, or other creditor of any of said companion respectively, nor to excuse any of said companies respectively from the daty of discharging, out of other funds, its debts to any creditor except the United States.

Sec. 9. That all sums due to the United States from any of said companies respectively, whether payable presently or not, and all sums required to be paid to the United States or into the Treasury, or into said sinking fund under this act, or under the acts hereinbefore referred to, or otherwise, are hereby declared to be a lien upon all the property, estate, rights, and franchises of every description granted or conveyed by the United States to any of said companies respectively or jointly, and also upon all the

estate and property, real, personal, and mixed, assets, and income of the said several railroad companies respectively, from whatever source derived, subject to any lawfully prior and paramount mortgage, lion, or claim thereon.

SEC. 10. That it is hereby made the duty of the Attorney-General of the United States to enforce, by proper proceeding against the said several railroad companies respectively or jointly, or against either of them, and others, all the rights of the United States under this act and under the acts bereinbefore mentioned, and under any other act of Congress or right of the United States; and in any suit or pro. ceeding already commenced, or that may be hereafter commenced, against any of said companies, either alone or with other parties, in respect of matters arising under this act, or under the acts or rights hereinbefore mentioned or referred to, it shall be the duty of the court to determine the very right of the matter without regard to matters of form, joinder of parties, multifariousness, or other matters pot affecting the substantial rights and duties arișing out of the matters and acts hereinbefore stated and referred to.

Sec. 11. That if either of said railroad companies shall fail to perform all and singular the requirements of this act and of the acts hereinbefore mentioned, and of any other act relating to said company, to be by it performed, for the period of six months next after such performance may be due, such failure shall operate as a forfeiture of all the rights, privileges, grants, and franchises derived or obtained by it from the United States,

and it shall be the duty of the Attorney-General to cause such forfeiture to be judicially enforced.

SEC. 12. That nothing in this act shall be construed or taken in any wise to affect or impair the right of Congress at any time hereafter further to alter, amend, or repeal the said acts hereinbefore mentioned; and this act shall be subject to alteration, amendment, or repeal, as, in the opinion of Congress, justice or the public welfare may require. And nothing herein contained shall be held to deny, ex. clude, or impair any right or remedy in the premises now existing in favor of the United States.

SEC. 13. That each and every of the provisions in this act contained shall severally and respectively be deemed, taken, and held as in alteration and amendment of said act of 1862 and of said

act of 1864 respectively, and of both said aots. Amend the preamble so as to read as follows:

Whereas on the 1st day of July, A. D. 1862, Congress passed 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; and

Whereas afterward, on the 20 day of July, A. D. 1864, Congress passed an act in amendment of said first-mentioned act; and

Whereas the Union Pacific Railroad Company named in said acts, and under the anthority thereof, undertook to construct a railway, after the passage thereof, over some part of the line mentioned in said acts; and

Whereas under the authority of the said two acts, the Central Pacific Railroad Company of California, a corporation existing under the laws of the State of California, undertook to construct a railway, after the passage of said acts, over somo part of the line mentioned in said acts; and

Whereas the United States, upon demand of said Central Pacific Railroad Com. pany, have heretofore issued, by way of loan and as provided in said acts, to and for the benefit of said company, in aid of the purposes named in said acts, the bonds of the United States, payable in thirty years from the date thereof, with interest at 6 per cent. per annum, payable half-yearly, to the amount of $25.885, 120, which said bonds have been sold in the market or otherwise disposed of by said company; and

Whereas the said Central Pacific Company has issued and disposed of an amount of its own bonds equal to the amount so issued by the United States, and secured the same by mortgage, and which are, if lawfully issued and disposed of, a prior and paramount lien, in the respect mentioned in said acts, to that of the United States, as stated, and secured thereby; and

Whereas, after the passage of said acts, the Western Pacific Railroad Company, a corporation then existing under the laws of California, did, under the authority of Congress, become the assignee of the rights, duties, and obligations of the said

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Central Pacific Railroad Company, as provided in the act of Congress passed on the 3d of March, A. D. 1865, and did, under the authority of the said act and of the acts aforesaid, construct a railroad from the city of San Jose to the city of Sacra. mento, in California, and did demand and receive from the United States the sum of $1,970,560 of the bonds of the United States, of the description before mentioned as issued to the Central Pacific Company, and in the same manner and under the provisions of said acts; and upon and in respect of the bonds so issued to both said companies the United States have paid interest to the sum of more than thirteen and a half million dollars, which has not been reimbursed ; and

Whereas said Western Pacific Railroad Company has issued and disposed of an amount of its own bonds equal to the amount so issued by the United States to it, and secured the same by mortgage, which are, if lawfully issued and disposed of, a prior and paramount lien to that of the United States, as stated and secured thereby; and

Whereas said Western Pacific Railroad Company has since become merged in and consolidated with said Central Pacific Railroad Company, under the name of the Central Pacific Railroad Company, whereby the said Central Pacific Railroad Company has become liable to all the burdens, duties, and obligations before resting upon said Western Pacific Railroad Company; and divers other railroad companies have been merged in and consolidated with said Central Pacific Railroad Company; and

Whereas the United States, upon the demand of the said Union Pacific Railroad Company, have heretofore issued, by way of loan to it and as provided in said acts, the bonds of the United States, payable in thirty years from the date thereof, with interest at 6 per cent. per annum, payable half-yearly, the principal sums of which amount to $27, 236,512; on which the United States have paid over $10,000,000 in. terest over and above all reimbursements; which said bonds have been sold in the market or otherwise disposed of by said corporation ; and

Whereas said corporation has issued and disposer of an amount of its own bonds equal to the amount so issued to it by the United States as aforesaid and secured the same by mortgage, and which are, if lawfully issued and disposed of, a prior and paramount lien, in the respect mentioned in said acts, to that of the United States, as stated and secured thereby; and

Whereas the total liabilities (exclusive of interest to accrue) to all creditors, in. cluding the United States, of the said Central Pacifio Company amount in the aggregate to more than $96,000,000 and those of the said Union Pacific Railroad Company to more than $88,000,000; and

Whereas the United States, in view of the indebtedness and operations of said several railroad companies respectively and of the disposition of their respective incomes, are not and cannot, without further legislation, be secure in their interests in and concerning said respective railroads and corporations, either as men. tioned in said acts or otherwise; and

Whereas a due regard to the rights of said several companies respectively, as mentioned in said act of 1862, as well as just security to the United States in the premises, and in respect of all the matters set forth in said act, require that the said act of 1862 be altered and amended as hereinafter enacted; and

Whereas by reason of the premises also, as well as for other canses of public good and justice, the powers provided and reserved in said act of 1864 for the amendment and alteration thereof ought also to be exercised as hereinafter en. acted: Therefore,

Mr. THURMAN. Mr. President, I shall open the discussion of this bill with as much brevity as is possible consistent with an explanation of it and of the ability of the companies to comply with its provisions; and I shall, for to-day at least, leave the discussion of the question of the power of Congress to pass it to another member of the committee that reported it; and perbaps I may never have any occasion to refer to that question, but should I have it will be at some future stage of the debate.

The amendment reported by the Judiciary Committee is a substitute for the original bill. If we proceed under the rule without any understanding, the substitute will be amendable only in the first degree. It has been the custom, unless indeed there has been some new rule adopted, in cases of this kind to adopt the substitute by unanimous consent and then treat it as an original bill, and therefore amendable in the second degree.

The VICE-PRESIDENT. "The Chair, when the bill was reported, stated that this substitute would be treated as the original bill.

Mr. THURMAN. It will be considered, then, as adopted and treated as the original bill and amendable in the second degree. That is obviously required by fairness to those who may wish to amend it.

Mr. President, this is a bill to create, in the Treasury of the United States, a sinking fund for the purpose of paying as far as it would suffice, the debts of the Union Pacific and the Central Pacific Railroad Companies. The bill, as originally introduced, embraced several other companies, namely, the Central Branch Union Pacific Railroad Company, the Sioux City and Pacific Railroad Company, and the Kansas Pacific Railway Company; but in the substitute now under consideration the provisions relative to those three companies are stricken out for the reasons stated in the report; and, as it is very short, I will read that paragraph of the report:

The condition of the Central Branch Union Pacific Railroad Company, the Sioux City and Pacific Railroad Company, and the Kansas Pacific Railroad Company is so different from that of the Union Pacific and Central Pacific, and thero being questions peculiar to each of those three companies, we think it advisable to strike the provisions relating to them out of the bill, with a view to report hereafter a bill or bills adapted to their circumstances and the rights of the Government.

The substitute therefore embraces only two companies, the Union Pacific Railroad Company and the Central Pacific Railroad Company; and now the first thing to which I wish to call the attention of the Senate is the necessity for some such legislation as that which is proposed; that is to say, for the creation of a sinking fund. I wish, however, first to premise that this is not a sinking fund for the benefit of the Government alone, although it is one of the principal, if not the principal, creditors of the two companies; because the bill carefully guards the rights of every one of their creditors, so as to give the Government no advantage whatever over any creditor that it does not now possess, the sinking fund, with all its accretions, with all its accumulations, being made a security for the debts of the companies according to their just priority, precisely as such a fund would be distributed in a court of equity.

Now as to the necessity of this legislation. The Government loaned to the Union Pacific Railroad Company, in bonds running thirty years and bearing interest at the rate of 6 per cent. per annum, $27,236,512, omitting cents. Thirty years' interest on that amount would be $49,025,722, and some cents, making the amount that would be due to the Government, for the Government pays the annual interest on these bonds, (they are Government bonds,) at the maturity thereof, $76,262,235 if the Government should receive in the mean time no reimbursement of the interest paid; but the Government is entitled to reimbursement annually under certain provisions in the charter. By one of the sections of the original act of 1862 the Government is entitled to 5 per cent. of the net earnings of the companies, to be applied toward the reimbursement of the Government the amount of interest and principal of its loan. By another section, as amended by the act of 1864, it is entitled to one-half of the account which each company may have against the Government for the transportation of Government troops, munitions of war, mails, and material of whatsoever kind, and which is familiarly known as the half-transportation account. Those two sums the Government is entitled to apply annually toward reimbursing itself the interest which it pays on its subsidy bonds, and if anything were over toward the liquidation of the principal.' The probable reimbursement from these sources, shonld the laws remain unchanged, would be, in the case of the Union Pacific, about $245,661 annually from the 5 per cent., and $421,311 annually from the half transportation, making in the whole $666,972 per annum, which for thirty years would make $20,009,160 which the Governinent would have been reimbursed. Deducting that from the principal sum loaned by the Government and thirty years' interest, which I have already stated would be, principal and interest, over $76,000,000, and there will probably remain due to the Government, at the maturity of the Government loan should the laws remain unchanged, the sum of $56,253,000 from the Union Pacific Company.

In respect to the Central Pacific the case is this: The Government loan made to it was $27,855,680. The interest upon that for thirty years would be $50,140,224, making a total of $77,995,804. The probable reimbarsement from the 5 per cent. of net earnings and the half transportation would be about $15,000,000, leaving probably due, should the laws remain unchanged, at the maturity of the Government loan, $62,995,804, which added to the amount that probably would be due from the Union Pacific Company makes a grand aggregate of $119,248,879 that will probably be due by these two companies in the years 1895 and 1896 should the laws remain unchanged.

And that, Mr. President, is without counting interest upon the interest which the Government annually pays. No one pretends that the Government has a right to compound interest upon the interest which it annually pays, but it is contended by the law department of the Government that upon each installment of interest which tbe Government pays it has a right to compute interest without rests until the maturity of the bonds; the companies themselves not being bound to pay any interest until the maturity of the bonds except so mach as may be paid by the 5 per cent. of net earnings and by the half-transportation account. But, omitting any such accumulation of interest upon interest, which would immensely enhance this sum of $119,000,000, and taking it according to the claim of the companies, that the Government has to lose all interest upon the annual payments of over $3,300,000 which it makes for these two companies, yet the amount which these two companies will probably owe to the Government at the maturity of these bonds would not be less than $119,000,000 or $120,000,000, unless indeed the business of the companies should so immensely increase in that time as to make the product of the 5 per cent. of net earnings and the half-transportation account far greater than it ever yet has been; and even if that were the case, even if the receipts from those two sources were doubled, still the amount that would be due to the Government at the end of this loan could not be less than $80,000,000.

Now it does seem to me that this bare statement of the amount for which the Government will be the creditor of these companies ought to satisfy any one that some step should be taken by Congress to secure it from loss. But it is not alone that the Government is this great creditor. By the act of 1864 it gave up its priority of lien upon the road, and there are creditors, the first-mortgage creditors holding bonds of the companies, amounting to precisely the same sum as the principal of the Government loan, that is to say, amounting to over $55,000,000, and which are a lien paramount to that of the United States. The Government, then, is subordinate to a first mortgage on these roads of $55,000,000, which added to the amount that will be due to the United States at the end of the loan, say $119,000,000, will make one bundred and seventy-odd millions of debt, to say nothing of the debt which is inferior in lien to that of the Government.

Manifestly, it does seem to me that this bare statement shows that it is the duty of Congress to begin to look out for some security that this immense amount shall not be lost. Should it be repaid to the

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