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 „xrIC RAILROAD FUNDING BILL 
 
 SPEECH 
 
 LION. H. HENRY POWERS 
 
 OF VERMONT, 
 
 HOUSE OF REPRESENTATIVES, 
 
 JANUARY 7, 1897. 
 
 WASHINGTON. 
 
 1897. 
 
SPEECH 
 
 OF 
 
 HON. H. HENRY POWERS. 
 
 PACIFIC RAILROAD FUNDING BILL. 
 
 The SPEAKER. Tho regular order is that the House resolve 
 itself into Committee of tho Whole House on the state of the Union 
 for tho purpose of considering the Pacific railroad funding hill 
 (H. R. 8189), and the gentleman from New York, Mr. Payne, will 
 tako the chair. 
 
 Tho House accordingly resolved itself into Committee of the 
 Whole House on the state of the Union, Mr. Payne in the chair. 
 
 The CHAIRMAN. The Houso is in Committee of the Whole 
 for the consideration of the hill H. R. 8189. The Clerk will first 
 report the order. 
 
 The Clerk read as follows: 
 
 Resolved , That on Thursday, January 7,1807, immediately after reading the 
 Journal, tho Houso shall resolve itself into Committee of tho Whole House 
 on the state of tho Union for tho consideration of II. R. 8180, entitled “A 
 bill to amend an act entitled 'An act to aid in tho construction of a railroad 
 and telegraph line from tho Missouri River to the Pacific Ocean, and to socuro 
 to the Government tho use of tho same for postal, military, and other pur¬ 
 poses,’ approved July 1, 1 : also to amend an act approved July 2, 18(54, and 
 
 also an act approved May 7,1878, both in amondment of said first-mentioned 
 act and other acts amendatory thereof and supplemental thereto, and to pro¬ 
 vide for tho settlement of claims growing out of the issue of bonds to aid in 
 tho construction of certain railroads, and to secure (he payment of all indebt¬ 
 edness to tho United States of certain companies therein mentioned;” that 
 said bill shall be considered under tho rules governing general debate during 
 tho said day and tho day following, until the hour of 8 o’clock p. m., at which 
 timo general debate shall close, and then said bill shall be open to amendment 
 and consideration under the five-minute rule until 5 p. m. the following day, 
 atwhichtime the coin inittee shall rise and report tho bill and pending amend¬ 
 ments to tho Houso. Tho previous question shall bo considered as ordered 
 on tho pending amendments and tho bill to its final passage, and the final vote 
 thereon shall bo taken immediately after the reading of tho Journal on Mon¬ 
 day, January 11. 
 
 Tho CHAIRMAN. Tho Clerk will report the bill. 
 
 The Clerk read as follows: 
 
 A bill to amend an act entitled “An act to aid in tho construction of a rail¬ 
 road and telegraph lino from tho Missouri River to tho Pacific Ocean, and to 
 secure to tho Government tho use of tho same for postal, military, and other 
 purposes,” approved July 1.1862; also to amend an act approved July 2,1804, 
 and also an act approved May 7, 1878, both in amendment of said first-men¬ 
 tioned act, and other acts amendatory thereof and supplemental thereto, and 
 to provide for tho settlement of claims growing out of tho issue of bonds to 
 aid in the construction of certain railroads, and to secure the payment of all 
 indebtedness to tho United States of certain companies therein mentioned. 
 
 Mr. POWERS. Mr. Chairman, this bill has been in print now 
 for several months, and I suppose every gentleman of tho House 
 has examined it. I therefore ask unanimous consent to forego tho 
 reading in extenso of the bill at this time, and in connection with 
 that- 
 
 The CHAIRMAN. The gontleman from Vermont asks unani- 
 
 2502 3 
 
4 
 
 mous consent that the reading of the bill be dispensed with. I 3 
 there objection':* . _ , , , 
 
 air RICHARDSON. Mr. Chairman. I want to ask a question 
 fcofoiv i "ivc consent. 1 understand tlie views written by the 
 gentleman from Texas [Mr. Bell] have been exhausted also. I 
 think we ought to have a reprint. 
 
 Mr. POWERS. I would suggest to the gentleman from Ten- 
 ni sec that in consequence of the fact that this bill in its terms 
 provides that it should take effect on the 1st of January. 1897. it 
 will he necessary to reprint the bill; and I propose when the com¬ 
 mittee rises to ask a reprint of the bill, making the necessary 
 changes to conform to the change of dates. 
 
 Mr. RICHARDSON. And will you include with that request 
 that there be a reprint of the views written by the gentleman from 
 Texas [Mr. Bell]? , , „ , 
 
 Mr. POWERS. I will, with a great deal of pleasure. 
 
 Mr. HEPBURN. Mr. Chairman, there is one matter to which 
 I would like to call the attention of tlie chairman of the Commit¬ 
 tee on Pacific Railroads. 
 
 Tlie CHAIRMAN. The first question is, whether there is objec¬ 
 tion to dispensing with the readiug of the bill? [After a pause.] 
 The Chair hears no objection. 
 
 Mr. BELL of Texas. Mr. Chairman, I desire to ask the gentle¬ 
 man from Vermont a question. I have a substitute which I have 
 prepared and which I desire to offer and have voted upon, and I 
 would ask him if he would not be willing to have an order made 
 to have it printed at the same time? Will you include that in your 
 request? 
 
 Mr. POWERS. I will include that in my request when the 
 committee rises this afternoon. 
 
 Now. Mr. Chairman, by an understanding had with the mem¬ 
 bers of the Committee on Pacific Railroads, the time for debate is 
 to be equally divided between the friends and the opponents of 
 this bill; and the same understanding contemplates that I shall 
 control thetinieon behalf of the majority, and that the gentleman 
 from Missouri [Mr. Hubbard] shall control the time on the part 
 of the minority. I ask unanimous consent that that understanding 
 be confirmed by an order of the committee. 
 
 The CHAIRMAN. Unanimous consent is asked that the time 
 for general debate be divided equally between tho two sides, the 
 affirmative to he controlled by tho gentleman from Vermont and 
 the negative by the gentleman from Missouri [Mr. Hubbard]. 
 Is there objection? [After a pause.] The Chair hears none, and 
 it is so ordered. The gentleman from Vermont. 
 
 Mr. POWERS. Mr. Chairman, in opening the discussion upon 
 this question, which I think the House will soon perceive is the 
 most important question that will come before us for considera¬ 
 tion at this session. I shall endeavor to address myself to the can¬ 
 dor and sound judgment of tho House. If there be any attempt 
 during the progress of this debate to make appeals to the preju¬ 
 dices of men, the opponents of this bill will have a monopoly of 
 that privilege. It is a straight, simple, business proposition that 
 we intend to submit to the consideration of the House. It is a 
 proposition in the consideration of which an appeal is to be made 
 to the judgment of the members of this House as candid men. 
 Very likely I can best serve tho purpose that I am charged at this 
 time with forwarding by calling attention for a few moments to 
 25C2 
 
5 
 
 the history of this Pacific railroad legislation, and, before going 
 further, I would say that if any gentleman should desire to sub¬ 
 mit to mo any inquiries he will receive a more elaborate and 
 intelligent answer if he will be kind enough to withhold them 
 until I shall have concluded the main part of my remarks, because 
 interruption will break the continuity of the story, and I think 
 a more useful purpose will be served; and it will be more satis¬ 
 factory to those who seek information in good faith, if they will 
 make a note of any questions they desiro to put and submit them 
 when I shall have concluded my remarks. 
 
 In 1862 begins the history of this great enterprise of construct¬ 
 ing a railroad from the waters of the Missouri to the waters of 
 the Sacramento in California. Many men, who had been called 
 visionaries by the public, had, before 1862, advanced the theory 
 that it was possible to build such a railroad, but none of those 
 theories took form or shape until the war broke out in 1861, and 
 the Administration then in power discovered that there was a sort 
 of wavering loyalty to the American flag on the Pacific Coast, 
 and, for patriotic reasons, desired the construction of a transcon¬ 
 tinental railroad, an object which the people of California and of 
 that section of country had long hoped for and that many men 
 had had fond anticipations would some time bo accomplished. 
 The opportunity was a favorable one, but still you are to remem¬ 
 ber that the country was then in the very throes of the greatest 
 war of modern times. 
 
 Notwithstanding all the obstacles that were presented by the 
 condition of things then existing, the promoters of this enterprise, 
 backed by an indulgent consideration on the part of Congress, 
 set their faces toward the completion of this great work, and in 
 a short time thereafter were enabled to see the fall fruition of 
 their hopes. In 1862 the promoters of this enterprise came and 
 knocked at the doors of Congress for a charter and for such sub¬ 
 stantial aid as the magnitude of the work seemed to demand. It 
 was plain to everybody that private capital could not accomplish 
 the desired result and that Government aid must be obtained; 
 and thereupon Congress, listening with a willing ear to this ap¬ 
 peal, in view of the considerations to which I have already referred, 
 passed the act of July 1,1862, by which the Union Pacific Railroad 
 Company was chartered and endowed with all the usual fran¬ 
 chises of a railroad corporation, with power to construct a rail¬ 
 road from the Missouri River on the east to the Pacific Ocean on 
 west. At the same time, and as part of the same act, Congress 
 endowed the Central Pacific Railroad Company of California, a 
 corporation created by the legislature of that State, with the same 
 Federal franchises that were conferred upon the Union Pacific 
 Company. That is to say, instead of incorporating a distinct 
 company for the western end of the proposed line, they took an 
 existing corporation, which they had a perfect right to do, and en¬ 
 dowed it withthe additional Federal functions which would enable 
 it to build this railroad not only through California, but also 
 through the intervening territory'between California and the Mis¬ 
 souri River. 
 
 Tho act of 1862 provided that the two companies, the Union 
 Pacific Company and the Central Pacific Company of California, 
 should have, as substantial aid for the building of their respec¬ 
 tive portions of the road, a magnificent land grant of each alter¬ 
 nate section of land on either side of the line for a distance of 
 2562 
 
6 
 
 ._ 5 sections for every 10 miles. These lands were granted 
 
 10 md. «—.>secw> _ • f * r thc ,, UT i»osr> ot enabling them to 
 to i • ■ two cmi ' • , • , t ) Government so much desired. 
 
 • l! -Si.lv, 
 
 ! :::d sub- 
 
 as it is teimed an thi that tllG G..vernment should issue thirty- 
 and deliver them to the companies as fast 
 
 jc.u Opel Hie several sections ot the road. 
 
 of ItiOS provided that on the completion of a section of 
 40 milestf road and upon proof of that fact being made to the 
 40 ni.u S OI r< a 1 Y 0 s i l0U lcl issue to the company, per 
 
 S« ; .et,;ry of the Tre^urj jwsnoma in Ul0 act . ^ 
 
 nnly. tlio fin'll S country between the Missouri and the 
 
 ratio was tnat R k ? I \ Ioulllam s the subsidy should be at the 
 S o 1 IW m {3 . l£ll attention specifically to the fact 
 it this subsidy was granted by the mile, and not as an entire 
 that this su J su b.sidv by the mile upon completed sections 
 TZrail.oad and noSg £se. The acl further provided that 
 9* over the Rocky Mountains, and also m crossing over 
 
 the SXm? on the California end, the subsidy of §16,000 per mile 
 should l^ tripled, making $48,000 per mile, and that between the 
 Rockies and the Sierras, where the work of construction was more 
 difficult than on the outside ends of the line, the subsidy should 
 be twice the original amount, or 8*2.000 per mile That was the 
 magnificent grant, the splendid aid. which the Government of 
 Se United States rendered toward the completion of this great 
 
 ^Now^Mr^Srman, it is important for us to remember that 
 to-dav the building of a transcontinental line of railroad from the 
 Missouri River to the Pacific Ocean is not a difficult work. We 
 look upon it in the light of the past history ot railroad building, 
 ami we see that four or five of these great transcontinental lmes 
 have been built. But when you go back to 186- you find that this 
 was looked upon as an almost impossible venture. The debates 
 which were had here in Congress demonstrate that not one man 
 in three had at that time the slightest idea that a road across what 
 was then supposed to be the Great American Desert could be built, 
 m- that emriueering skill was adequate to the task ot mastering 
 ?ie^mSteS?the g Rocky and the Sierra mountains. But it was 
 done Looking at it from the standpoint of the men who took 
 this work in hand, it is not strange that m spite of the great patri¬ 
 otic purpose which the Administration had m view at that time— 
 the demand for the construction of this road for the public good- 
 tliere was still great hesitation at the almost impassable obstacles 
 that presented themselves to the promoters of this enterprise. 
 
 But these companies went forward. Under the act of 18G~ they 
 endeavored to enlist private capital m the enterprise. But it 
 looked so chimerical—it looked to business men so practically 
 absurd—that very little money was raised, and the scheme seemed 
 to be paralyzed from the start. So those men came back to Con¬ 
 gress in 1864 and said to the members of both Houses: ‘ We can 
 not raise the necessary capital to construct these railroads: we 
 are hampered by the fact that the Government itself, under the 
 act of 1862, is to have a bottom mortgage on the railroad; we can 
 not raise money ourselves to build the road. But vve ask you to 
 permit these companies to place upon the road a first mortgage 
 underlying the claim of the Government; and with the sale ot the 
 2502 
 
7 
 
 bonds and the proceeds of that mortgage, plus the aid that is to 
 be rendered by the Government, we can assure Congress that the 
 road can bo constructed.” 
 
 In 1864 Congress had the same patriotic ardor for the construc¬ 
 tion of these roads that it had in 1862. It very readily, therefore, 
 granted this request, and the distinctive characteristic of tho leg¬ 
 islation of 1864 is the fact that the Government stepped back one 
 pace in the lion which it was to impose on these roads and the 
 securities for the repayment of the subsidy which had been given 
 them, and allowed the companies themselves to place beneath tho 
 mortgage of the Government a mortgage of prior obligation upon 
 which they could realize money for the prosecution of this enter¬ 
 prise. 
 
 Now, those two acts—the act of 1862 and the act of 1864—con¬ 
 tain tho charters of the Union and Central Pacific railroads, so 
 far as the provisions of these charters are important for us to 
 consider to-day. The whole legislation is there found, and it is 
 readily accessible to members. It is embraced in the report of 
 the Commissioner of Railroads for 1895, and this is accompanied 
 with tho digest of the decisions of tho Supreme Court on this sub¬ 
 ject. In passing, I may say that from tho time this legislation 
 was enacted down to this day various questions have arisen be¬ 
 tween the Government and these companies, and all necessary 
 information on this subject is comprised in a nutshell in the re¬ 
 port of the Commissioner of Railroads for 1895. 
 
 Now, the Supreme Court has decided that under this legislation 
 the security of the Government rests upon that portion of tho 
 railroad lino that was actually aided by the Government. As 
 everybody knows, the Union Pacific Railroad is now or was until 
 recently a great system of railroad lines embracing nearly 8,000 
 miles, whereas the original lino as projected under the legislation 
 of 1862 and 1864 embraced only about 1,800 miles. The Central 
 Pacific Railroad of California, as it existed under tho original 
 legislation, embraced only the line from Ogden, in tho State of 
 Utah, to San Jose, in the State of California, a distance of about 
 860 miles; but to-day the Central Pacific system embraces a large 
 number of additional lines that have been brought into it by pur¬ 
 chase and by new construction. 
 
 But before 1 go any further, I desire to call the attention of the 
 House for a moment to tho geography of this situation. When 
 the legislation of 1862 was first proposed, thero arose an earnest 
 contention between different towns on the Missouri River for the 
 eastern terminus of the road. In-fact, there were as many towns 
 and cities contending for that terminus as contended for the honor 
 of the birthplace of Homer. Sioux City (then a trading post up 
 in the northern part of Iowa), Omaha (or Council Bluffs, on the 
 opposite side of the river), Atchison, Leavenworth, Kansas City, 
 and other towns were thus contending. By reason of this fact 
 the friends of the measure itself were divided into factions, each 
 body of the friends of the road clamoring for the locality in their 
 own particular section. Such things, perhaps, are in accord with 
 the judgment and observation of members hero as to what human 
 nature is in this world. The result was that Congress, in order 
 to compose this difficulty and to quiet this contention, provided 
 that the starting point upon the Union Pacific Railroad should be 
 on the one hundredth meridian of longitude. Instead of starting 
 on the Missouri River, they went away out 394 miles into Kansas 
 2503 
 
8 
 
 ami :.-V ■ miles or -oiuo such distance into Nebraska, to the one 
 hundredth meridian, and provided that the line of road should 
 start ;>t that common point. They also provided that from that 
 point _t),e one hundredth meridian—branch lines should be con¬ 
 structed to 1 cities and towns. Thus every- 
 
 bodv's desire was met. and the railroad became an accomplished 
 
 ^* l \V lii'ii, however, they came to construct the road.it soon becamo 
 appa-.-ent that all tlie-e branch lines were uncalled for. To make 
 a long story short, and without going into a recital of the various 
 legislation that was had on the subject. I may say that it all caino 
 down at last to this: The main line of the Union Pacific Railroad 
 n Omaha, in tl tate of Nebraska, and ran west to Og¬ 
 den, in the State of Utah. Here is the line traced by this black lino 
 on t lie map. | Illustrating.] Another branch of the main line started 
 from Kansas City and ran west to the one hundredth meridian, a 
 distance of 3i)4 miles. Practically, the distance is a few rods less 
 than that, but that statement is near enough. So that the Union 
 Pacific Railroad when constructed consisted of its main line from 
 Omaha to Ogden and the lower line from Kansas City running 
 3>)4 mi es west. And. Mr. Chairman, in that connection, I would 
 say to the committee that this lower line to which I have just 
 called your attention is the old Kansas corporation known as the 
 Leavenworth, Pawnee and Western Railroad. They had a charter 
 from the Territorial legislature of Kansas authorizing them to 
 build a Pacific railroad. Congress, in the act of 1862, provided 
 that that road should be a part of the Union Pacific system; that 
 it should participate in the subsidy and in the land grant as well 
 ns any other portion of the main line of road. 
 
 The black line on this map, to which I have called your atten¬ 
 tion, indicates that portion of the Union Pacific system that was 
 subsidized by the Government of the United States—that portion 
 of the road which received Government aid. 
 
 Now, I wish to call the attention of the committee to the fact 
 that the Supreme Court of the United States decided that the 
 bond aided portion of the upper line began at a point about 31 
 miles west of the bridge across the Missouri River, that initial 
 point having been fixed by the President of the United States, and 
 that the aid onl z extends to a point 34 miles west of this Omaha 
 Bridge On the lower line, or the Kansas City line, this portion of 
 the railroad entitled to the subsidy and covered by the mortgage 
 begins at a point one-half mile distance from the union station at 
 Kansas City, and, as I have already stated, runs out a distance of 
 some 35)4 miles. That, in short, is the story of the legislation and 
 the geographical routes of the roads as well as the part of the lino 
 that is covered by the subsidy. 
 
 In 1864 Congress relieved the Union Pacific Company of any 
 obligations to build the road to Sioux City. Afterwards another 
 company took it and built the road down the east side of the Mis¬ 
 souri River to a po nt about 100 miles distant, and there crossed 
 the river and joined the main line at Fremont, in Nebraska, I 
 think, if I am correct in the name: and that was aided by the Gov¬ 
 ernment. So also was the Central Branch of the Union Pacific. 
 The various towns, as I have shown, were contending for the road, 
 and it was provided that what is known as the Central Pacific 
 Branch, midway between tho upper and lower branches of the 
 Union Pacific, should be granted aid for a distance of 100 miles, 
 but it terminated at that point. So much for the Union Pacific. 
 
 ~5()2 
 
9 
 
 Now, the Central Pacific Railroad started originally as a Cali¬ 
 fornia corporation. They were authorized by the act of Congress 
 of 1862 and the act of 1864 to continue the construction of their 
 road not only to the western line of Nevada—the limit of the State 
 line—but als> to enable them to build eastwardly until they met 
 the Union Pacific, which was being constructed westward. ’ That 
 is the story in brief of the beginning of the construction of these 
 two roads. 
 
 It is easy to see, Mr. Chairman, that with thus magnificent land 
 grant given to the Union Pacific and the Central Pacific system, 
 as well as the subsidy granted to each, it became a question of 
 rivalry between them as to which should get the largest share. 
 It became a race of diligence between the Central road, building 
 from the west, and the Union Pacific, from the east, to see which 
 could get the most of this grant by the Government, because the 
 land grant and the subsidy were paid to both of them by the mile, 
 and the more miles that any road could get in, the more land and 
 the more subsidy it would be entitled to. The result of it was 
 that these roads built right by each other in the vicinity of Salt 
 Lake for a distance of about 80 miles, which was graded by the 
 Central Pacific east of Ogden, the present terminus of the road; 
 and the Union Pacific had shot by where the work of the Central 
 Pacific was going on; and then each of the roads came to Congress 
 claiming the land grant and subsidy for the additional mileage 
 thus constructed. ('ongress settled the matter by the act passed 
 in 1869, which provided that the point of junction between the 
 two roads should be at a certain point about 5 miles west of Ogden. 
 
 This diligence resulted in another strange fact. Under the leg¬ 
 islation of 1864 the roads had up to July 1, 1876, to complete the 
 line, a distance of more than 2,000 miles. They had to cross the 
 Rocky Mountains, the Sierras, as well as to traverse the great in¬ 
 tervening arid space between the two. But this race of diligence 
 enabled these companies, under the most formidable obstacles, to 
 build the complete roads to the satisfaction of the Government, 
 and they were accepted by the Government on the 10th day of 
 May, 1869, four years after they had struck the first blow in the 
 work. 
 
 Now, why did the Government want these roads built? I will 
 show you. They were paying for the transportation of the mails 
 overland to California, as well as to other points on the Pacific 
 coast, a sum total of between seven and eight million dollars a 
 year. After the roads were built this was cut down from 
 $8,000,000 a year to a little over $1,000,000. They were compelled, 
 before the building of the roads, to incur very heavy expense in 
 the transportation of their supplies for the Indian agencies, their 
 munitions of war. their troops, and other matters of freight. By 
 the building of this road they were enabled to cut down this 
 expense in an equally large ratio. 
 
 Not only that. Prior to the building of these roads that great 
 and almost boundless empire that lies between these two ranges of 
 mountains, with millions of public lands for sale, was practically 
 cut out from the world. No man wanted to go there and settle, 
 and therefore no man would buy an acre of that land. But by 
 pushing this line of railroad through it opened these lands to sale 
 and to settlement, and thousands and millions o: inhabitants are 
 to-day living in that region that was opened up by the enterprise 
 of these men that had this matter in charge. And I may say right 
 here in passing, that if the Government of theUnitedStatesshould 
 256? 
 
10 
 
 lose every dollar of its indebtedness against these companies, 
 should make a free gift of it, it could still credit the companies 
 and itself with more than ten times as much in dollars and cents 
 as it has ever expended in the construction of these roads. Why, 
 the building of this Union Pacific through Nebraska and Kansas 
 lias strung together towns and cities like beads, and has carried 
 civilization out through that country and across the Rockies, 
 through its open portals to that great plain beyond; and we to-day 
 are enjoying the blessings of it, not least among which is the pres¬ 
 ence on this floor of the genial gentlemen from Colorado and 
 Utah, and Nevada, and other States out there that we should never 
 probably have heard of had it not been for the building of this 
 road. It opened up the great silver-mining industries of the 
 country. Colorado, Utah, and Nevada were opened up, and the 
 mines of that country were worked. Why, we never should have 
 heard of a free-silver party if it had not been for the opening up 
 of that country. I do not know that that is any argument in sup¬ 
 port of the passage of this bill. [Laughter.] 
 
 Now, in short, this is the way in which the Government got into 
 this fix. The Government away back, under the act of 1802, under¬ 
 took to secure to itself the payment of these subsidy bonds, and 
 the plan which they then adopted, in the light of the facts then 
 existing, was undoubtedly a safe one to calculate upon. They 
 provided that the issue of these subsidy bonds upon the comple¬ 
 tion of each 40 miles of railroad—the delivery of these bonds to 
 the companies—should ipso facto create a statutory lien upon that 
 section of road, and to secure payment they provided that this 
 statutory lien should be a first lien, and that the roads, in addi¬ 
 tion to that security, should pay into the Treasury of the United 
 States a sum of money equal to 5 per cent of its net earnings after 
 the road was constructed. It was supposed that this 5 per cent of 
 the net earnings would be sufficient to meet the current obliga¬ 
 tions of the Government as they matured. 
 
 At that time, as you will remember, this was the only line in 
 contemplation. Nobody dreamed that the Atlantic and Pacific, 
 the Texas Pacific, the Northern Pacific, the Canadian Pacific, or 
 three or four other competing lines that have since been built, 
 would ever bo constructed. Everybody supposed that all the 
 freight and all the passengers that were moved between the East 
 and the West were to go over this line and that the business there¬ 
 fore would he immense. But in the progress of time, these pro¬ 
 moters having demonstrated that a road could ho built over the 
 Rockies, other men interested themselves in competing lines, and 
 in a very short time four or five of these lines have been constructed. 
 Therefore the receipts of these two companies have been lessened 
 by that active competition on the part of other lines. 
 
 We are not to say that the Congress of 1S62 acted in a short¬ 
 sighted manner, because as things then appeared to them it was 
 doubtless a sound piece of reasoning to say that the 5 per cent of 
 the net earnings of those companies paid into the sinking fund 
 would pay off this indebtedness in the end. 
 
 Now, matters ran along in this way until 1878. Mind you, the 
 road was finished in 1869 and accepted by the Government. The 
 Government, indeed, during the whole progress of construction 
 had its commissioners to inspect the work as it went along, week 
 by week, month by month, and year by year, and if there was 
 any criticism to be made, those commissioners had the right to 
 25G3 
 
11 
 
 point it out to these companies and have any wrong corrected. 
 But the work was accepted. 
 
 It was soon seen, after the roads started in and these other com¬ 
 peting lines were projected and completed, that the provision 
 made under the legislation of 1862 and 1864 would be insufficient 
 to meet the debt at its maturity. 
 
 The Supreme Court of the United States had meantime decided 
 that the interest upon the subsidy bonds was not due from the 
 companies until the maturity of the bonds. The provision in the 
 statute is that the bonds shall be issued running thirty years, 
 the interest thereon payable semiannually, and that these" com¬ 
 panies should meet and pay that interest. But the court says, and 
 I think it is a unanimous opinion, that under the language used 
 in that enactment the interest upon the subsidy bonds paid by the 
 Government could not lx; taken from the company until tho prin¬ 
 cipal of the debt matured. And the result of that is the interest 
 has been accumulating against these companies, and to-day wo 
 are confronted with a vast amount of unpaid interest, as well as 
 the balance of principal. 
 
 In 1878 this matter was again taken in hand by Congress, and 
 Judge Thurman, then a Senator from the State of Ohio, prepared 
 and secured the passage of a bill known as the Thurman Act, the 
 essential provisions of which, so far as this question is concerned, 
 are these: That instead of paying into the Treasury 5 per cent of 
 its net earnings, which upon an actual experience had proved to 
 be insufficient, the Thurman Act provides that there shall be 25 
 per cent of the net earnings paid in. I ought to have said, in pass¬ 
 ing, what the two acts of 1862 and 1864 provides. The act of 1862 
 provided that the whole amount of the indebtedness from the Gov¬ 
 ernment to the railroads for the transportation of mails, for the 
 transportation of its troops, and for other purposes, should be 
 retained by the Government. 
 
 In 1864 Congress modified that by providing that of these trans¬ 
 portation char ;('s only one-half should be retained in the Treas¬ 
 ury and the other half paid to the company. You observe that 
 the Government thus was one of the very best customers of these 
 roads. It had to pay these roads an enormous sum, and they 
 took care to provide in the act itself that they should not be 
 charged any higher rate than that charged private individuals for 
 similar service. These transportation charges, which were enor¬ 
 mous in amount, were to be retained, under the act of 1862, alto¬ 
 gether in the Treasury; under the act of 1864 one-lialf only, and 
 under the act of 1878, the TImrman Act. the whole was to be 
 retained, but one-half of it should be applied to the current inter¬ 
 est on the subsidy bonds, and the other half go to the sinking 
 fund, the theory of the Thurman Act being that one half of its 
 transportation charge, plus some other reserve, would take care 
 of the current interest on these bonds, and the sinking fund itself 
 would at the maturity of the bonds be large enough, if well 
 invested, to take care of the principle. 
 
 Now, I will restate these propositions, because it is a pretty 
 important piece of arithmetic. Under the actof 1862 the security 
 retained by the Government was a first mortgage on the road, plus 
 5 per cent of the net earnings and the whole transportation 
 charges; under the act of 1864 the security of the Government was 
 a second mortgage on the road, plus 5 per cent of the net earnings 
 and one-lialf the transportat on charges; under the Thurman Act 
 2502 
 
12 
 
 of 1878 the security of the Government was 25 per cent of the net 
 earnings, made up in this way: First, the transportation charges 
 that the Government would be owing to the road as a debtor; sec¬ 
 ond 5 per cent of the net earnings; third, such a proportion of the 
 aggregate sum of $1,200,000 in the case of the Central Pacific, and 
 $800 000 in the case of the Union Pacific, should be paid into the 
 Treasury of the United States, which with tlio other two reserva¬ 
 tions transportation charges, and 5 per cent, would aggregate in 
 the whole 25 per cent of their net earnings. 
 
 Now, if I have not made myself understood on that proposition, 
 I desire that some gentleman advise me of the fact, because it is 
 an important consideration. 
 
 Now, then. Judge Thurman, m one of the most elaborate dis¬ 
 cussions of this question that has ever been made in its entire his¬ 
 tory, practically demonstrated, as the reader will see, the facts 
 that his provision amply secured the repayment of this money. 
 Why did it fail? Why, it failed, Mr. Chairman, just as many 
 times the best laid plans of men as well as mice fail. The reduc¬ 
 tion in the rates of transportation was a very important contribut¬ 
 ing factor to bring about this result. The freight rates from the 
 east to the west have been going down, down, down, as time 
 advanced, to such a point that they hardly pay the charge made 
 necessary by that transportation. This, however, is not peculiar 
 to the history of these roads. It is peculiar to the history of all 
 railroads in this country. How many of these roads have gone 
 into the hands of receivers from the same cause exactly? Not 
 only that, but the Government itself has divided this patronage 
 with the Pacific roads. Instead of sending all its freight, all its 
 transportation business over this line, the child of its own crea¬ 
 tion, the child that it should nourish and encourage, especially if 
 it expected a repayment of its debt, it has divided its patronage. 
 Some of it has gone to the Central Pacific, much of it to the Santa 
 Fe, and much of it has gone to the other roads, thereby reducing 
 the receipts in the treasury of the company, and to a correspond¬ 
 ing degree the receipts in the Treasury of the United States have 
 necessarily been cut down. 
 
 But that is no fault of the railroads. It was a wise policy that 
 promoted the building of these other lines. Other sections of this 
 country needed opening and development as well as that central 
 portion, and therefore the Government was wise in encouraging 
 it, and no man has a right to criticise that policy; but the neces¬ 
 sary result of it was to diminish tho earning capacity of these 
 roads which the Government itself had assisted in building, and 
 therefore that policy contributed very largely to bringing the road 
 into its present insolvent condition. 
 
 The Thurman Act was based upon the theory that Government 
 money was worth 5 per cent interest, and if that theory had proved 
 correct, no doubt the Thurman Act would have worked out tho 
 result anticipated by its author. But instead of tho Government 
 borrowing money at 5 per cent interest, it can borrow at a rate 
 nearer to 2 per cent, and this appreciation in tho credit of our 
 Government, which ought to thrill with pleasure tho heart of 
 every patriotic American, has also contributed very largely to the 
 disastrous result which has overtaken these roads. 
 
 Mr. BOATNER. Does the gentleman from Vermont advocate 
 the passage of this bill on the ground that the management of the 
 companies has been such that they have paid to the Government 
 2563 
 
13 
 
 al that judicious and proper management would have -enabled 
 them to pay? 
 
 Mr. POWERS. I do; and I might as well come right to that 
 point now as at any other time. My friend from Louisiana [Mr. 
 BoatnerJ was a meml>er of the Committee on Pacific Railroads 
 two years ago. and 1 know -what his views are. His views are 
 that the promoters of these railroads are a set of rascals, that they 
 have got rich, and that they ought to disgorge and pav off this 
 debt themselves. Now, if they have got rich out of the United 
 States of America, I say amen to his proposition. But if, on llie 
 other hand, they have discharged every obligation they were under 
 to the Government and have got rich from other sources, I say it 
 is none of our business. I say that men who will build a railroad 
 through snow hanks 35 feet deep, and who will shed over miles of 
 a railroad so that they can go on through the storms of winter and 
 complete their road and operate it, men who undertook an enter¬ 
 prise that nobody had any faith in when they started upon it, 
 ought to get rich if they succeed in accomplishing what people 
 generally supposed to be an impossible task. I do not mean that 
 they ought to get rich out of the Government, but if in the exer¬ 
 cise of their wits they get rich I say that is their business. 
 
 Mr. BOATNER. The gentleman from Vermont- 
 
 Mr. POWERS. I decline to yield further, Mr. Chairman. I 
 would yield to the gentleman, but I know he is going to have time 
 in this debate, so that he will have full opportunity to advocate 
 his side of the question. 
 
 Let me suppose a practical case byway of illustration. The 
 Government lias been engaged for several years past in building 
 in this city the most magnificent Library building on the face of 
 t he earth. I think it was Mr. Batterson. of Connecticut, who took 
 the contract for that work. My friend from Connecticut [Mr. 
 Hill] nods his assent. Mr. James G. Batterson. of Connecticut, 
 took the contract to construct that Library for §(>,000,000, a large 
 sum of money. The Government made its plans and specifica¬ 
 tions and said to Mr. Batterson: “ If yon will go ahead and con¬ 
 struct that "building we will pay you six millions.” 
 
 Now, suppose that Mr. Batterson made a net profit of $2,000,000 
 upon the work, is that any reason why he should be called upon 
 to ‘ • disgorge ” those two millions? Is it any reason why we should 
 mark him down as a'‘rascal’’because he has succeeded by his 
 wit, by bis enterprise, by his intelligence, in making a handsome 
 profit on the job? Certainly not. The Government said to these 
 Pacific road companies: “Gentlemen, we want a line of railroad 
 constructed from the Missouri River to the Pacific-Coast; we want 
 to open up our great possessions between the two great ranges of 
 mountains: we want to lessen the cost of transporting supplies 
 and munitions of war across the continent, and supplies for the 
 Indians to the interior of onr country; we want a cheaper mode 
 of transportation. If you will take all the risk and peril -of build¬ 
 ing the road and will construct it to our satisfaction, we will give 
 you so much money, we will give you such and such a land grant, 
 and we will lend you each $33,000,000 by way of suitsidy, which 
 you may repay according to the terms of contract. If these con¬ 
 ditions are acceptable to you, go on and build the road.” 
 
 Now, if those companies went on and built the road. Whatman 
 is there outside of a lunatic asylmn who will say that they have 
 got rich out of the Government? They have gotten out of the 
 2562 
 
14 
 
 Government just exactly what the Government contracted to 
 give them- no more. Not only that, but under the provisions of 
 the acts of 18(52 and 1864. as well as the Thurman Act of 1878, they 
 have paid into the Treasury of the United States, notwithstanding 
 the fact that the Union Pacific Company during the last three 
 years has been in the hands of a receiver, every dollar that the 
 Government required of them. Not a cent has been defaulted. 
 Where, then, is the ground for saying, as my friend from Louisi¬ 
 ana [Mr. Boatner] will say when ho comes to discuss this ques¬ 
 tion, that the men who built this railroad ought to disgorge ” 
 and pay this debt themselves? They are nothing but stockholders 
 in a railroad company. If any of you gentlemen are stockholders 
 in an insolvent bank, do you pull out your, own pocketbooks and 
 pay its debt, or do you insist that the bank itself must pay? 
 
 Mr. BOATNER. Mr. Chairman-—- 
 
 Mr. POWERS. I decline to be interrupted, Mr. Chairman. 
 
 Mr. BOATNER. Well, if the gentleman declines to be inter¬ 
 rupted, I beg him not to undertake to state what I am going to 
 say. [Laughter.! 
 
 Mr. POWERS. Well, Mr. Chairman, I know what the gentle¬ 
 man is going to say. [Laughter.] We might just as well under¬ 
 stand it now as at any other time. Now, I repeat, these railroad 
 companies have discharged every obligation which they were 
 under to the Government, and you are to note, gentlemen, that 
 the obligations imposed upon these roads were imposed by you. 
 Your predecessors, who occupied these seats, imposed the obliga¬ 
 tions. They fixed the requirements to which the companies should 
 bo held. They provided that the companies should pay so much 
 into the Treasury every year, and if it was not enough you might 
 just as well scold aboiit your predecessors here as to scold about 
 the companies, and you might do it more reasonably, because tlio 
 company had no voice in fixing the obligation. The Congress of 
 the United States, the supreme power, fixed that requirement at 
 its own will, and usually the companies had no voice in the mat¬ 
 ter. If they fixed it at too low a sum, we must simply scold about 
 the faulty judgment of our predecessors. We all know that there 
 never was a Congress assembled on this continent that was so wise, 
 so pure, and so handsome as the present Congress. [Laughter.] 
 
 They fulfilled all those obligations. What has been the result? 
 Why, gentlemen, the result of those requirements exacted of those 
 companies has been this, that the Union Pacific Railroad Company 
 has actually paid into the Treasury §5,000,000 more than the total 
 amount of the subsidy bonds originally granted to them. I reit¬ 
 erate that statement: Tho Union Pacific has returned to the 
 Treasury of the United States the total principal of the subsidy 
 bonds issued to it plus §5,000,000, and tho Central Pacific has 
 returned into the Treasury under those various requirements a 
 sum that lacks only about §10,000,000 of the amount originally 
 granted to that road. 
 
 Mr. McCREARY of Kentucky. Will the gentleman stat9 the 
 whole amount paid in? 
 
 Mr. POWERS. I will give those figures in a few moments. I 
 will state, however, that they appear in the report of the majority 
 of the committee. 
 
 So that these railroad companies have actually returned to the 
 United States Treasury all the money that was originally granted 
 to them, less about §5,000,000. That leaves, therefore, this differ- 
 2503 
 
15 
 
 ence of $5,000,000, plus the accrued interest; and that is the most 
 important item of the whole; that is the subject-matter of this 
 proposed legislation. 
 
 Now, without taking more time on this branch of the subject, 
 I will go at once to the provisions of the bill which the majority 
 of this committee have proposed for vonr consideration. 
 
 Mr. CORLISS. If the gentleman will allow a question, I would 
 like him to state, before he proceeds further, what the indebted¬ 
 ness of these roads to the Government was at the time the roads 
 were practically completed. 
 
 Mr. POWERS. The gentleman will find those figures in the 
 majority report; but I may as well call attention to them now. 
 I should say that the report to which I now refer was made up at 
 the last session of Congress, and therefore it is six months short 
 in the computations of interest that should he allowed. I make 
 this explanation so that gentlemen may not be misled. I have, 
 however, in my desk a statement, which I may as well now refer 
 to, of the exact amount of this indebtedness as it will be on the 
 1st day of July next. As I have already said, the bill under con¬ 
 sideration was prepared last winter. Its terms contemplate that 
 it shall go into effect on the 1st day of January, 1897. That time 
 having passed, it is necessary to revise the bill, substituting July 
 for January at the appropriate places in the bill; 
 
 On the 18th of last December, after it was understood that this 
 bill was to bo brought up at this time for consideration, I wrote to 
 the Treasury Department, asking for a computation of the amount 
 of the debt of both these roads as well as the amount of the sink¬ 
 ing fund applicable to them. I have here a letter of Mr. Curtis, 
 the Assistant Secretary, transmitting this statement. The actual 
 amount due, I will say to the gentleman from Michigan [Mr. Cor¬ 
 liss], on the 1st day of next July from the Central Pacific will be 
 $57,904,177.36, as appears from the report of the Government 
 actuary, which I hold in my hand. On the same date the actual 
 amount due from the Union Pacific Railroad will be $53,289,593.45; 
 that is the net balance. 
 
 Mr. SPALDING. That includes the accrued interest? 
 
 Mr. POWERS. It includes everything; it is the grand total of 
 the whole debt. 
 
 Mr. CORLLSS. Neither the statement which the gentleman 
 has made nor the report to which he has referred us gives dis¬ 
 tinctly the information for which I asked. 
 
 Mr. POWERS. Did the gentleman want the original amount 
 of the indebtedness? 
 
 Mr. CORLISS. Yes, sir; the indebtedness when the roads were 
 completed. 
 
 Mr. POWERS. The gentleman will excuse me; I thought he 
 wanted the present amount. 
 
 When the first subsidies were granted, the Union Pacific and 
 the Kansas Pacific (that is this upper line displayed on the map 
 and this lower line extending 394 miles, which is all one road 
 received from the Government $33,539,512; and theCentral Pacific 
 Railroad of California and also the Western Pacific, which is now 
 a part of the Central Pacific, received $27,855,680. 
 
 Mr. FAIRCHILD. Is the difference between the amount of file 
 original indebtedness and the figures at the present time made 
 up solely by the interest that has not been paid? 
 
 Mr. POWERS. By that and by the application of the sinking 
 2502 
 
fund. Now, then, this Congress is confronted with this condition: 
 These subsidy bonds have some of them already matured, and the 
 balance of them mature on the 1st day of January, 1898, and the 
 1st day of January. 1899. Tho time for action has come. The 
 Government must do something to close out its relations with 
 these roads. The President of the United States under the act 
 of 1887 already has authority to foreclose the lien of tho Govern¬ 
 ment, and if necessary, pay off the underlying first mortgage 
 The first question, therefore, that presents itself to us is this: Is it 
 wise business policy for the Government to foreclose its lien or to 
 seize the property, as some gentlemen contend it may be seized un¬ 
 der tho act of 1862, and get out of it what it can by the foreclosure? 
 
 Supposing that these gentlemen are right—that the Government 
 can seize this property; the act of 1862 provides that upon a de¬ 
 fault in tho payment of this interest as it matures the Govern¬ 
 ment shall be authorized to take possession of the propertv- but 
 every lawyer knows that that does not mean at all that the Secre¬ 
 tary of the Treasury can walk into the office of this company and 
 demand possession of the road and its property, and by force of 
 arms or otherwise actually take possession. It means tha t lie can 
 take possession only by judicial process. He must resort to some 
 judicial process if Ins request is not granted peaceably. That im¬ 
 plies litigation. That raises all the questions that (lie company 
 might raise as to the right of the Government to do that. It does 
 more: It would require that the Government pay off its under¬ 
 lying first mortgage in order to realize any benefit from the seiz- 
 urc. Suppose that the Government, instead of taking that course 
 should foreclose the mortgage by proceedings in tho courts. Now’ 
 under the practice of the Federal courts where this case would <*o 
 the Government does not have what is known in New England as 
 a strict foreclosure; that is, when tho mortgage upon the fore¬ 
 closure takes the property itself. 
 
 Under the Federal Legislature the procedure must be to expose 
 tbe property to public sale. The Government, therefore, if it fore¬ 
 closes the mortgage, must put the road and its property up at auc¬ 
 tion subject to the lien of the first mortgage, or it must pay off tho 
 lien and sell the fee of tho property. Is that wise? Now, let us 
 consider that matter for a moment. What would it amount to’ 
 It will cost the Government, to pay off the underiving mortoa-ms 
 upon the road, between sixty and seventy millions of dollars. Does 
 the condition of tho Treasury at this time, and tho condition of 
 the business of the country, warrant us in imposing on the Treas¬ 
 ury a burden of sixty or seventy millions of dollars for the pur¬ 
 pose of trying an experiment—for tho purpose of trying the experi¬ 
 ment of foreclosing the mortgage, and trying to get something for 
 the property or tho land that is left behind? Is it a wise procoed- 
 ln £\, ” ^onld we do that in our dealings with individuals? 
 
 ., V by, gentlemen, it seems to me that the absurdity of the propo¬ 
 sition needs no illustration. Take a common case familiar in vour 
 own business experience and illustrated in everyday life. If you 
 have a man who owes you a debt—and every man who hears me 
 t mi , c m his business life had an insolvent 
 i t0 de ? ho bad an insolvent debtor, and he held a 
 
 i 8 ®f°£ d m ortgago on tho farm, a farm encumbered by an under- 
 tor fL^? age h J g cn ? u ^ h t0 swee P all away, would ho send 
 Sa r'/ 5 ? bim what you propose to say to these 
 railroads. How would he conduct the business? Would he do it 
 
17 
 
 by pounding his debtor, swearing at him, calling him a thief, 
 abusing him for the faults committed in the past; or would he 
 deal with him on a business footing and proceed to get the very 
 best settlement available? Would he say to him. “My dear sir, 
 you are a gambler, or a thief; you are dabbling in politics, ox- 
 worse, you have been dabbling with Polly, and to punish you for 
 your sins I decline to deal with you on a sound business basis or 
 bn ordinary business principles. I will sacrifice your property as 
 a punishment for your past sins, although probably by the same 
 operation I lose the axnount of my debt/’ Would any sensible 
 man act in that way? That would be the act of a child. It would 
 be simple. 
 
 The CHAIRMAN (Mr. Hull in the chair). The time of the 
 gentleman from Vermont has expired. 
 
 Mr. POWERS. I believe, Mr. Chairman, that I have; by the 
 consent of tho House, entire control of the time. 
 
 The CHAIRMAN. That is correct; but under the rules of the 
 House, even where unlimited time is within the control of a mem¬ 
 ber, he is not allowed, except by unanimous consent, to occupy tho 
 floor for more than one hour. 
 
 Mr. POWERS. I ask unanimous consent to proceed. I shall 
 ixot detain the committee very much longer. 
 
 Mr. WATSON of Ohio. I move that the gentleman be permit¬ 
 ted to conclude his remarks. 
 
 The CHAIRMAN. Without objection, the gentleman from 
 Vermont will proceed. 
 
 There was no objection. 
 
 Mr. CURTIS of Kansas. I would like to ask the gentleman 
 fx-om Vermont a question in connection with the matter he has 
 just been discussing. 
 
 Mr. POWERS. Very well. 
 
 Mr. CURTIS of Kansas. If this property is now unable to pay 
 the debt, why have you increased by your bill the first lien on tho 
 Union Pacific road for $21,000,000 and the first lien on the Central 
 Pacific over $24,000,000? 
 
 Mr. POWERS. Because we get two dollars for one of addi¬ 
 tional security. But I will meet that point further on,if the gen¬ 
 tleman will permit me to proceed. 
 
 Mr. CURTIS of Kansas. I make the suggestion for this rea¬ 
 son, that the Union Pacific, according to tho appraised value of 
 the increased securities, is only worth $36,000,000 to-day, and the 
 land is put in at $16,000,000. No one acquainted with the facts 
 willdispixte the assertion that that land is not worth $16,000,000 
 now. 
 
 Mr. POWERS. I will come to that later on. 
 
 Now, Mr. Chairman, as I was saying, as individuals dealing 
 uitli an insolvent debtor we would be very likely to say “My 
 dear sir, what I want to find out is your debt-paying capacity; the 
 ability of your farm to meet the obligations. I want to know tho 
 average income of your farm under ordinary conditions?” When 
 we have ascertained that fact we will adjust the burden to his 
 shoulders in such way as he can bear it. Now, if by reducing our 
 rate of interest and extending the debt for four or five years, it 
 will enable him to work out from under the load and permit him 
 to pay in full, why, manifestly every man here would adopt that 
 plan/ Wo have adopted the same plan in all of our dealings here¬ 
 tofore. We say that a foreclosure would be unavailing; that the 
 256:2-2 
 
18 
 
 receipts of the property would be unavailing from the fact, that 
 the thin:? you seize or foreclose is nothing in the world but an 
 inter!' : er-yorly. . _ 
 
 y u t suppose, for instance, the Secretary of the Treasury.should 
 the Union 1 ‘acific line, under 
 ■ ijicrateit. What would be the effect? 
 
 and get within :{ 
 
 mi u f the bridge across the Missouri River, and be stopped 
 there. Tb re world be a fence built across his line and he could 
 not get a mile farther without the consent of the parties who con¬ 
 trol the remainder of the line. 
 
 Mr. OUDEN. But could expropr he not taoie t get into tho 
 terminal point? 
 
 Mr. POWERS. You mean that it could be condemned under 
 the right of eminent domain? 
 
 Mr. OGDEN. Yes. 
 
 Mr. POWERS. I should say, no. If one road has the property 
 condemned under that right already, there is no authority, as far 
 as I know, that would allow another road to come in and con¬ 
 demn again and take away the possession. 
 
 Mr. OGDEN. Not if they are not using it. 
 
 Mr. POWERS. But they can use it. The city of Omaha is a 
 great city, and the .roads from the East want to get in there. 
 There is not any trouble but what the bridge will be used, and 
 these terminals down in Kansas City will be used. If he wanted 
 to start out his train for Denver over that line he would have to 
 jump over a half mile of track belonging to some one else before 
 lie could get onto his own road. 
 
 Mr. MAGUIRE. Will the gentleman permit a question? 
 
 Mr. POWERS. Yes. 
 
 Mr. MAGUIRE. Is not Omaha as great a city from the West 
 as an eastern terminal as it would be from the East for the other 
 roads? 
 
 Mr. POWERS. Well, I hope so. I do not know what the 
 facts are. 
 
 Mr. MAGUIRE. Well, I should hope so. 
 
 Mr. POWERS. It is a pretty big city from the East. 
 
 Mr. SWANSON. I should like to ask the gentleman a question 
 for information, because I could not find it in the report. 1 see 
 you have, as the gentleman from Kansas [Mr. Curtis] has said, 
 an additional amount of $21.000,000- 
 
 Mr. POWERS. I will explain that. 
 
 Mr. SWANSON. What I want to know is how that item is 
 made up? 
 
 Mr. POWERS. I should prefer not to be diverted from my line 
 of thought, because I am coming right to that point. 
 
 Mr. BARHAM. Will it interrupt the gentleman- 
 
 Mr. POWERS. 1 can not be interrupted by the gentleman 
 from California [Mr. Barham] . He is going to talk, and he must 
 talk in his own time. 
 
 ‘ ’ r. BA Mil AM. I wanted to ask about the Omaha Bridge. 
 
 M . POWERS. I will give you all the information I have about 
 it presently. 
 
 N nv, as I have already said, if we are going to seize the prop¬ 
 erty. or if we are going to foreclose the mortgages, it is important 
 for us to consider what wo are going to get under that proceed¬ 
 ing. And, a . : so instead of getting a road with terminals. 
 
19 
 
 and with these branch lines, a network of which, as voit will 
 observe, runs all along in connection with these roads; instead of 
 getting a system that can be worked as a railroad, we get an 
 empty trunk, without terminals anywhere, and we have got to 
 take our chances in dealing with somebody else. 
 
 Now, it may be said that these owners of these terminals, per¬ 
 haps, and the owners of these branch lines are in just as bad a 
 predicament as we are. that they want the trunk lines as much as 
 we want their help. That is true, but how does that help the 
 argument at all? It makes no difference what they want. The 
 question is, What shall we have as a matter of legal right? And 
 we have got to depend upon the graciousness of these parties or 
 upon some inducement that we can hold out to them in order to 
 have a completed railroad. That is what we are going to get. 
 
 Not only that. This road would have to be put up at public 
 sale under foreclosure proceedings. Who on earth would be likely 
 to bid it off? Would you or I or any outside party take the risk 
 of stepping in and bidding on that property that was nothing but 
 an interior property, without terminals or anything else? Cer¬ 
 tainly not. Wo should not dare to. The ownership of these 
 branch lines, the very ownership of these terminals, the very own¬ 
 ership of everything essential to make that railroad worth a cop¬ 
 per is in the hands of other parties and probably hostile parties. 
 Now, where will you find the man with capital, the man who has 
 millions of money to invest, who will step into a hornets’ nest of 
 that kind and make a bid? What is the practical result? These 
 very men whom you are now scolding about, the very men who 
 own the terminals and own these connecting lines are the only 
 ones who can safely bid on the property, and probably they will 
 bo the only bidders. They would get the property at their own 
 figures. 
 
 Every man can see what that would necessarily lead to. So 
 that the procedure of a foreclosure compels the Government to 
 raise sixty or seventy millions niore of money to put into this hop¬ 
 per, and also leaves the Government with an insecure property 
 after they have got their decree. 
 
 Mr. NORTHWAY. Will the gentleman permit me? 
 
 Mr. POWERS. Certainly. 
 
 Mr. NORTHWAY. If wo accept the bill of the committee, do 
 we get security upon all of these terminals and branch lines clear 
 through? 
 
 Mr. POWERS. We do. I am coming right to that. 
 
 Now, it struck the committee, and it has struck every com¬ 
 mittee that has ever considered this subject since the Pacific rail¬ 
 roads have been built, it lias struck all the railroad commissioners, 
 everybody who has investigated the matter, and they have all 
 reported with one voice, that the true way to solve this problem 
 was to fund this debt by an extension at a lower rate of interest, 
 get a security upon a line which, if we are obliged to take it, will 
 be a railroad line and not a section of a railroad line. 
 
 This committee have therefore proposed this bill, the essential 
 features of which are these: That the amount of the Government 
 indebtedness shall be ascertained as of July 1 next. The present 
 bill before you reads January 1; but, as I said before, this will 
 have to be corrected, and I will ask for an amendment. On the 
 1st of July this indebtedness is to be ascertained by getting at the 
 present worth of the subsidy bonds that have not yet matured, 
 2563 
 
20 
 
 bringing them down to the 1st day of July, 1897, so that on that 
 day we will know just exactly what is the debt from the railroad 
 company to the Government; and that thereupon the companies 
 themselves shall issue first-mortgage bonds, taking up the exist¬ 
 ing mortgage, not only on the aided portions of the lines, but on 
 their entire system, issuing a first mortgage equal in amount to 
 the principal of their existing first mortgage; and that the Gov¬ 
 ernment shall take a second mortgage, lapping over the same 
 property, lapping over the terminals, the Omaha Bridge, worth 
 $2,000,000, and lapping over the Denver and Pacific road that runs 
 from Denver to Cheyenne, and lapping over the branches forming 
 the Union Pacific. In other words, a blanket mortgage, resting 
 upon all this property, from branch to branch, to the same extent 
 as the first mortgage that wo allow to be put on. 
 
 Now, will we gain anything by that? My friend from Kansas 
 called my attention to this fact. I say we do. We get a mort¬ 
 gage on a system of roads. We get a mortgage on a railroad 
 instead of a mortgage on a portion of a line, it covers the whole 
 thing, the terminals at Council Bluffs, the Omaha Bridge, the 
 Omaha terminals, and on the line clear through. Essentially it 
 covers also this line from Kansas City out to the three hundred 
 and ninety-fourth milepost, where it now ends, to Denver, together 
 with all the branches and feeders that supply this line. So that 
 if the worst comes to the worst in the end and the Government 
 is obliged to foreclose its indebtedness, it can then take a prop¬ 
 erty that can be operated as a railroad. There is one advantage. 
 
 Mr. FAIRCHIL D. Mr. Chairman, will the gentleman allow me 
 to ask him a question? 
 
 Mr. POWERS. Certainly. 
 
 Mr. FAIRCHILD. What would ho the western terminus of 
 that road that would be covered in the new mortgage to the Gov¬ 
 ernment? 
 
 Mr. POWERS. Ogden. 
 
 Mr. FAIRCHILD. How about the road still west of Ogden? 
 
 Mr. POWERS. That is the Central Pacific. 
 
 Mr. FAIRCHILD. That is operated by the Southern Pacific? 
 
 Mr. POWERS. That is now operated by the Southern Pacific. 
 
 Mr. FAIRCHILD. And this proposition would not include any 
 of the property of the Southern Pacific? 
 
 Mr. POWERS. Certainly not. We can only deal with these 
 two corporations as the Government has always dealt with them. 
 The debt of the Government has not run against them joiutly, but 
 severally. 
 
 Mr. FAIRCHILD. One more question. Can the gentleman 
 state how many alterations have been made as to the security given 
 by these roads since the original subsidy was granted to them? 
 
 Mr. POWERS. Three. 
 
 Mr. FAIRCHILD. What better position would we be in fifty 
 years from now, in view of the fact that we have no road farther 
 west than Ogden, if they again should come in and ask for a fifth 
 alteration? 
 
 Mr. POWERS. The original act provides that these two lines 
 shall be operated as one continuous line, and they always have 
 been. 
 
 Mr. NORTH WAY. But not a continuous mortgage. 
 
 Mr. FAIRCHILD. But not a continuous mortgage. 
 
 Mr. POWERS. Congress could not make a continuous mort¬ 
 gage over the two corporations. The Union Pacific is our several 
 
 2562 
 
21 
 
 debtor, and the Central Pacific is our several debtor. They are 
 not our joint debtor; therefore we can not impose a joint mort¬ 
 gage upon the two. 
 
 Mr. FAIRCHILD. But they are operated by the same men? 
 
 Mr. POWERS. Not at all; they are operated by distinct cor¬ 
 porations. 
 
 Mr. FAIRCHILD. By distinct railroad corporations, but by 
 the same interest. 
 
 Mr. POWERS. No. not in the same interest. Tho Union Pa¬ 
 cific is separate in its interests from the Central Pacific, and the 
 Central Pacific is separate in its interests from the Union Pacific. 
 
 Mr. FAIRCHILD. Are not the men of the same interest making 
 the same proposition as to both railroads? 
 
 Mr. POWERS. Both railroads will take this bill, but they do 
 not have a joint interest in this property, and this bill is not framed 
 that way. 
 
 Mr. FAIRCHILD. My question is as to the individuals in 
 interest in both companies, not as to the corporate identity. I 
 understand that these companies are both hero asking for this legis¬ 
 lation and that the same people who are interested in them are also 
 interested in the Southern Pacific. 
 
 Mr. POWERS. You say they are here asking for this legisla¬ 
 tion. I can not say that. 
 
 Mr. FAIRCHILD. Will the gentleman deny it? 
 
 Mr. POWERS. Yes: I will deny it. 
 
 Mr. HILBORN. Then who is asking for this bill? 
 
 Mr. POWERS. The Pacific Railroad Committee of the House 
 of Representatives, representing the Government of the United 
 States, are asking for it. This bill is objectionable to both com¬ 
 panies. 
 
 Mr. MAGUIRE. Then they can simply refuse to accept it. 
 
 Mr. POWERS. They can refuse, and it is not certain but that 
 they will do so. This legislation is objectionable to them, and we 
 have had to force upon them an unwilling dose. 
 
 Mr. MAGUIRE. Let me ask the gentleman- 
 
 Mr. POWERS. Mr. Chairman, I can not be interrupted by a 
 gentleman who is doubtless going to talk upon this subject three 
 times as much as I shall. 
 
 Now, the bill proposes that this indebtedness shall be extended 
 with interest at the rate of 2 per cent. 
 
 Mr. SWANSON. I wish to ask the gentleman a question for 
 information, to see if I understand this matter. I understand 
 that from the three hundred and ninety-fourth milepost on the 
 Kansas Pacific up to Denver the Government has at present a 
 first-mortgage lien? 
 
 Mr. POWERS. No, sir. 
 
 Mr. SWANSON. I do not mean the subsidized portion- 
 
 Mr. POWERS. No; tho Government has no lien on that road 
 from tho three hundred and ninety-fourth milepost to Denver. 
 The Denver and Pacific Railroad Company lias an outstanding first 
 mortgage, and wo propose to allow the Union Pacific Company, 
 under a reorganization, to place a first mortgage on its own prop¬ 
 erty that shall be equal to the face value of the existing mortgages 
 on the same property. 
 
 Mr. SWANSON. Now, from the three hundred and ninety- 
 fourth milepost to Denver and to Cheyenne, Wyo., the first-mort¬ 
 gage bonds are included in the $21,000,000, are they not? 
 
 Mr. POWERS. Certainly. 
 
 2563 
 
22 
 
 Mr. SWANSON. What is the earning capacity of that road to 
 pay off the existing mortgage bonds? 
 
 Mr. POWERS. I will come to that in a moment, if the gentle¬ 
 man will be a little patient. As I was saying, Mr. Chairman, t he 
 provisions of this bill are simply these, that this debt shall be 
 extended at 2 per cent interest. That looks like a small rate of 
 interest, and the committee did their best to make it 3 per cent, 
 but they studied and took into consideration the debt-paying 
 capacity of the debtor, and they found that if they levied 3 per 
 cent interest they would simply leave the debtor worse off than 
 he was before. lie would not be able to meet the obligations of 
 the first year, and the whole arrangement would fall to the ground. 
 
 Mr. SMITH of Michigan. Let me ask the gentleman upon 
 what the committee's estimate was based? 
 
 Mr. POWERS. Upon the net earnings fora series of years, 
 down to the present time. 
 
 Mr. SMITH of Michigan. Another question for information. 
 You stated a while ago that the Government had diverted its 
 traffic and had sent it over competing lines. I would like to know 
 whether there has been any other diversion of traffic by the people 
 owning the Union Pacific. 
 
 Mr. POWERS. Do you mean the Union or the Central Pacific? 
 
 Mr. SMITH of Michigan. The Union and the Central both. 
 Has there been any other diversion of traffic to competing lines 
 which are within tli • influence of the owners of the Central and 
 the Union Pacific? 
 
 Mr. POWERS. You will be told by my friends from California 
 as this debate progresses that the Southern Pacific road has 
 absorbed the earnings of the Central Pacific. That is not true. 
 I shall not stop at this time to demonstrate that it is not true, but 
 I can do it. 1 propose to wait, however, until they make the 
 statement, and then I will undertake to show the House that there 
 is not a particle of truth in it. As to the Union Pacific, I know of 
 no diversion of its earnings to any other road whatever. 1 never 
 heard any intimation made that it had diverted its earnings. 
 
 Mr. SMITH of Michigan. Is the gentleman from Vermont pre¬ 
 pared to say that the Union Pacific has had its proportion of the 
 business; that there has been no diversion of traffic from it? I 
 understand that there are competing lines, and it has been stated 
 that the traffic has been diverted to "those lines. 
 
 Mr. POWERS. It is quite true that there are competing lines 
 running from Chicago to Denver. I thinkthere are three of them; 
 certainly two. 
 
 Mr. SMITH of Michigan. Are they not controlled by the same 
 people who control the Pacific roads? 
 
 Mr. POWERS. No, sir: they are not controlled by the same 
 people, and one of those roads, as we are informed, is here now, 
 trying, in its own interest., to defeat this bill. There are compet¬ 
 ing roads, but no man has asserted, and I do not think any man 
 will assert, that either the Burlington or the Missouri Pacific or 
 the Rock Island is part and parcel of the Union Pacific. 
 
 Mr. SMITH of Michigan. I am not hostile to tho gentleman’s 
 plan. I am asking for information. 
 
 Mr. POWERS. Well, these other roads are hostile to the Union 
 Pacific. That is the fact. 
 
 Now, then, as to the Union Pacific and the Central Pacific, it 
 may be generally said that, in order to get at what the companies 
 2562 
 
23 
 
 have paid on this indebtedness, the committee made a careful 
 study of their net earnings in the situation in which they are 
 placed and with the circumstances surrounding them, for several 
 years back, including not only years of prosperity, but years of 
 adversity. All railroads, like all other business enterprises, are 
 the beneficiaries of good times and the victims of bad times. In 
 order, therefore, to get at afair average we have studied that ques¬ 
 tion very deeply; and we have come to the conclusion that 
 $4,000,000 in each case will cover the last dollar that can be safely 
 counted upon as certain net earnings of this company. We have 
 started on that basis; and starting upon that basis we have pre¬ 
 pared this bill, which figures out like this— 
 
 Mr. LACEY. 1 would like to ask the gentleman a question in 
 connection with the dividends. Why does the bill provide fox- 
 dividends at 4 per cent on tin* stock, when the Government can 
 get only 2 per cent on the bonds that are held for the stockV 
 
 Mr. POWERS. Well, my dear sir, if you expect a railroad com¬ 
 pany to undertake to pay a debt, do you imagine you can ignore 
 the stockholders? Can you say to the stockholders of a railroad 
 corporation under these circumstances, “Gentlemen, you never 
 shall hope to get a dollar out of this property; but we are going to 
 compel you to pay this debt?” 
 
 Mr. LACEY. The point of my question was why the dividends 
 should be larger than the interest on the bonds? 
 
 Mr. POWERS. We propose to allow a 4 per cent dividend in 
 order to bring the stockholders into this arrangement. We want 
 them to undertake this bimfen, and we can not get them to do so 
 unless they can see a chance some time of getting something out 
 of the property for themselves; and 4 per cent is a small dividend 
 with which to tempt them into this arrangement. 
 
 Mr. MOODY. Will the gentleman tell us what is the present 
 market value of the stock upon which it is now proposed to pay a 
 4 per cent dividend? 
 
 Mr. POWERS. The market value of the Central Pacific stock, 
 so far as I have known anything about it during the last six 
 months, is about 17. The market value of the Union Pacific is 
 nil. You will see the Union Pacific stock quoted in the papers as 
 sellingat $9 and $10; but the explanation of that is this: The Union 
 Pacific reorganization committee has corralled 95 per cent of this 
 stock—has gathered in the certificates under an agreement with 
 the holders that they will stand an assessment of $15 a share, and 
 has issixed to each stockholder a certificate that the stock is so 
 held. Those certificates, coupled with that obligation, are put on 
 tbe market and sold to-day for nine or ten dollars. The last mai*- 
 ket quotation wbicli I saw was about $10; and those same certifi¬ 
 cates obliged the holder to stand an assessment of $15 a share. 
 
 Mr. IIILBORN. Will the gentleman allow me to ask what 
 dividend the Central Pacific is now paying on its stock? 
 
 Mr. POWERS. My friend from California [Mr. Hilbokn | is 
 going to make a very eloquent and plausible speech before this 
 debate closes, and I suggest that he ask that question of himself 
 and answer it. 
 
 1 should go back, perhaps, a step in this debate and say that in 
 addition to this mortgage which it is proposed to place upon the 
 whole property of the system, it is provided in the bill that the 
 companies shall secure the payment of the annual requirements 
 made of them by giving the Government the right to withhold 
 2563 
 
24 
 
 the money that will be clue from the Government to the company 
 for transportation services until these current annual require¬ 
 ments are met. 
 
 As I have already said, the Government is a patron of these 
 roads. It hires them to transport its mails and to do all the 
 freighting that it has occasion to do in that part of the country 
 I heir patronage has amounted in the past to a large sum of 
 money. In the case of the Central Pacific it has reached annually 
 as much as $600,000; in the case of the Union Pacific, a muchlarger 
 sum, 1 think about double that amount—about $1,200,000 a year. 
 So that by giving the Government the right to retain their money 
 m its Treasury until the companies have met and discharged their 
 annual obligations, the entire interest chargo, at least, due from 
 the companies will be met by that money alone, leaving nothing 
 to be provided for on the part of the companies except the annual 
 cash payment, which, as I shall presently show, is a requirement 
 that both of the companies must come under. We provide that 
 they shall pay this rate of interest semiannually; we secure the 
 payment of it and the payment of all the obligations wo assume 
 by this first mortgage, plus the right on the part of the Govern¬ 
 ment to retain in its own hands money enough to meet the annual 
 interest charge. 
 
 . Now, in addition to that interest we reqtiire them to pay an 
 annual installment upon the principal of the debt, amounting in 
 the case of each road to $:J<>5,000. so that each road, as will bo 
 seen, will pay into the Treasury, if it complies with these require¬ 
 ments, $1,000 a day, or, for the two roads. $2,000 a day, for the first 
 ten years that this contract will be in force. For the second dec¬ 
 ade they are to pay the sum of $550,000 each, plus the interest as 
 it matiires, or a little over $1,500 each per day. And thereafter 
 $750 000° Wh ° Ie det>t 13 paid ’ they are t0 pay annuall y the sum of 
 
 Mr. McCREARY of Kentucky. I wish to ask the chairman of 
 the Committee on Pacific Railroads, who is now on the floor, 
 whether he believes that these companies can comply with these 
 obligations if the relief contemplated in this bill be granted them? 
 
 Mi. POWERS. I am very glad the gentleman has put that 
 question. It is a pertinent one. My friend from Kentucky has 
 struck the very kernel of this whole question. That is the ques¬ 
 tion—Can the companies comply? There is no use in harassing 
 your debtor so that he can not comply. The question is a very 
 pertinent one, and coming from the source it does, I am very 
 grateful to my friend for asking it. J 
 
 Now, we think the companies can comply with these require- 
 ments. As I have already said, their net earnings per year are 
 safely enough counted at $4,000,000, and that under the most 
 adverse conditions that we can reasonably expect the companies 
 to rest under m the future. * 
 
 ?J a ! r ^ an : 1 think } ma y sa >% without undertaking 
 p ™ phes ^' that thft tn ^ es could clearly bo worse in the future 
 S ey hft ve been in the past three years, and yet during that 
 time these roads certainly had earnings enough to comply with 
 
 the requirements of the Government. P y 
 
 « An the Cas , e ° f t J he C ® ntral Pacific Railroad we require, inasmuch 
 as the} are leased to the Southern Pacific, that the Southern Pa- 
 b9 requ i re<1 10 enter into an obligation and 
 S aran ^ Ge t0 t l0 ^ overnmen t, or rather to assume the payment of 
 
25 
 
 this annual requirement of the Government. The Southern Pa¬ 
 cific Railway Company is a large corporation. It was chartered 
 in the gentleman's own State. It has a vast amount of property. 
 Some of our friends will no doubt tell you in the course of this 
 discussion that it is not good for anything. But it is one of the 
 heaviest corporations in the country. Certainly it does not hurt 
 your security to have a second indorser, even though he may not 
 he regarded as strictly good. We say in this case that the indorser 
 is good. 
 
 Not only that, hut there is a sum of money, amounting to 
 $2,414,000, or thereabouts, now in the Treasury of the United 
 States belonging to the Southern Pacific Company—not the Central 
 Pacific, but belonging to the indorser, the guarantor, of the Cen¬ 
 tral Pacific—which we demand shall be presently applied in reduc¬ 
 tion of the Central Pacific debts of the Government. We have no 
 right to it as a matter of law. It is a question that has beeu in 
 contention as to whether it belonged to the Central or the Southern 
 Pacific road for a long time. The courts have decided that it 
 belonged to the Southern Pacific, and we can not legally demand 
 payment of the same; but the committee exacts, as a requirement 
 for this bill and to bring this company to a strict compliance with 
 the terms of the bill, that this payment shall be made, and they 
 have filed an assurance that it may be done. 
 
 Now, to answer the question of my friend from Kentucky. 
 The payment of both the Central Pacific Company and the other 
 roads will bo about as follows: The payments on behalf of the 
 Central Pacific will be for the first year, interest on bonds of the 
 United States, $1,153,6150.28; installment of principal. $365,000; 
 compensation for services on nonaided linos to bo applied (with 
 consent of Southern Pacific Company) to the extinguishment of 
 bonds, $2,409,818.20, making a total of $3,928,448.48 which the 
 Government will receive for the first year. 
 
 On account of the payment by the Union Pacific the Government 
 will receive, interest on bonds to the United Slates, $1,074,208.07; 
 installment of principal, $365,000, being a total of $1,439,303.08. 
 
 Now, of course, that does not count interest on the first-mort¬ 
 gage bonds, which must be provided for, and we have prepared, as 
 will be seen on page 10 of the report, a table which shows, in the 
 case of the Central Pacific Railroad, that the interest, at 4 per 
 cent, on the first-inortgage bonds on the entire line will amount 
 to $2,307,260.57; interest on the Government indebtedness, 
 $1,153,630.58: and installment of principal, $365,000: making a 
 total of $3,825,890.85. You will see that this is some $100,000 less 
 less than the $4,000,000 limit. 
 
 The question may be asked, Why do we leave it at that? The 
 answer is, We can not make it 3 per cent interest, because that 
 would add some $550,000 to the burden of the Union Pacific road 
 and carry it beyond the limit. In the case of the Central Pacific 
 it would carry it above the average by some $570,000 beyond the 
 four-million limit. And so you see we are necessarily tied down 
 to 2 per cent. 
 
 Basidesthat. Mr. Chairman, these companies should have a little 
 margin in their treasury. Who does not know that every rail¬ 
 road is compelled to meet unexpected demands, such as a val uable 
 bridge burning down, a valuable depot property being destroyed 
 by fire; accidents by which personal injuries are received and 
 compensation necessarily demanded therefor. In other words, the 
 2562 
 
26 
 
 debtor must have a little pocket money to meet the contingencies. 
 Is that not the case in all business matters? What business man 
 does not conduct his business on something of that same princi¬ 
 ple? Would he say to the debtor, ‘ ‘ Give me the last cent you have 
 left in your pocket; I will not leave you anything; your family 
 may be sick, your house may burn up, a thousand and one things 
 may happen to you; but I don't care, I will leave you nothing?” 
 What sensible man would not leave him something to cover contin¬ 
 gencies. 
 
 Mr.WATSON of Ohio. If the gentleman will allow me, in that 
 connection. I wish to call his attention to a statement in the re¬ 
 port. On page 10 of the report you say that the Government 
 would receive from both roads annually, for the first decade, for 
 principal and interest, some $0,000,000. Is that not a mistake? 
 Should it not be $5,000,000 as the receipts from both? 
 
 Mr. POWERS. Possibly there may be an error there. 1 will 
 be glad if the gentleman will make the computation. 
 
 Mr. WATSON of Ohio. I think it is a mistake in the print. It 
 ought to be something over $5,000,000. 
 
 Mr. POWERS. Now, the Union Pacific will make the follow¬ 
 ing payments: 
 
 Interest at 4 per cent on first mortgage.. $2,189,240.00 
 
 Interest on Government debt.. . 1,074,308.17 
 
 Installment of principal ... 3(55,0U0.00 
 
 Total. 3,(528,548.17 
 
 Now, if I have not answered the question of my friend from 
 Kentucky [Mr. McCreary], I shall be glad to do so. 
 
 Mr. McCREARY of Kentucky. I am very much obliged to the 
 gentleman. 1 think lie has answered the question very fully. I 
 desire to ask another question in that connection. I think tlio 
 gentleman touched upon it before. In your bill you provide for 
 the extension of the Government lien on certain property. 
 
 Mr. POWERS. Yes. 
 
 Mr. McCREARY of Kentucky. If you have stated it, I did not 
 hear it, and I ask you to state it again. What do you value the 
 property at which is covered by this extended lien? 
 
 Mr. POWERS. In reference to the valuation of this additional 
 property that the Government will have a mortgage upon, of 
 course it is a question that every gentleman must judge of for 
 himself. 
 
 Now, take the case of the terminals at Denver. I have a state¬ 
 ment which shows the amount of property. This railroad owns 
 2,000 acres of land there. I am speaking now of what appeared in 
 1890, six years ago. They owned 2,000 acres of land and GO miles 
 of side tracks, together with their warehouses, their depots, and 
 everything of that sort. At Kansas City they owned 283 acres of 
 land and 80 miles of siding. At Omaha they owned 819 acres in 
 the very heart of the city, and 45 miles of side track. At Council 
 Bluffs they owned 1,000 acres of land, together with all their ware¬ 
 houses and everything of that sort. 
 
 Well, now, to say how much that property is worth in dollars 
 and cents is a very difficult question to answer. Connected with 
 this railroad and as a part of this railroad, it is invaluable. If 
 you want to get at it by asking me how much it will take to du¬ 
 plicate it, I answer that Mr. Choate, the division superintendent 
 of the Union Pacific, says you can not duplicate the terminals in 
 2562 
 
27 
 
 Denver for less than $10,000,000. Not only that, they say that the 
 coal lands that are owned by the Union Pacific Railroad are them¬ 
 selves worth the entire Government debt. 
 
 Why, the Union Pacific Company has coal beds along its line 
 so that it is supplied with coal at a nominal price per ton. It 
 costs them hardly anything. These coal lands of the railroad are 
 invaluable adjuncts. 
 
 And of course if they are so valuable to the railroad, they must 
 necessarily be so to the Government, if the Government is com¬ 
 pelled in the end to take the railroad. 
 
 Mr. McCREARY of Kentucky. Just one more question. Your 
 report shows that the Government lien is extended over very val¬ 
 uable properties indeed, including about 20 per cent of the main¬ 
 line mileage of the Union Pacific Railroad. The point I desire to 
 get at is this: The prior lien, which is now about .$01,000,000, will 
 be increased, as I understand it. by your bill, $21,000,000 on the 
 Union Pacific and about $24,000,000 on the Central Pacific. I 
 want to see if the property that the lien would be extended to, 
 not now embraced, would cover about that? 
 
 Mr. PO WERS. I will say in answer to my friend from Kentucky 
 [Mr. McCreary] that in 1890 the Senate appointed acommittee. of 
 which Mr. Frye was chairman. They went out over this prop¬ 
 erty and made an extended examination of it. They had experts 
 with them. They looked into the question of the value of this 
 property, and they reported unanimously that in their judgment 
 these railroads were worth $47,000 per mile of main line, and that 
 the terminals were worth the figures which I have been quoting 
 from their report. 
 
 They reported a bill which was very similar to the one now 
 under consideration. It provided for an extension of time, at 2 
 per cent interest. It provided for an annual payment, not so 
 much as we provide, but they estimated at that time the value of 
 that property, and made out that the excess of security over and 
 above what we now have was not less than $92,000,000. 
 
 Now, that was six years ago. Whether the property is worth 
 more in dollars and cents to-day I leave to every man here to con¬ 
 sider. Of course, these railroad terminals have been expanded; 
 new sidings have l>een put in; new buildings have been com¬ 
 pleted; so that I tbink it is fair to reason, although we have no 
 expert testimony on the subject, that the terminals at all these 
 places are worth more to-day than they were worth six years ago. 
 
 Now, then, I have taken more time than I intended to in the 
 discussion of this measure. 
 
 Mr. PERKINS. Before the gentleman concludes: I have lis¬ 
 tened with much interest to the debate. I have heard nothing in 
 regard to the Sioux City and Pacific road. The gentleman is 
 aware that the people of the Northwest are somewhat interested 
 with reference to connection along the line originally proposed by 
 the Sioux City and Pacific. Now, I would like to inquire of the 
 gentleman if there is any consideration involved for the Sioux 
 City and Pacific road? 
 
 Mr. POWERS. I am very sorry to say, in reply to my friend 
 from Iowa, that this committee has not felt itself permitted or 
 justified in according any aid to the Sioux City enterprise. I sup¬ 
 pose, and I have no doubt my friend knows that fact, that some 
 amendment will be proposed covering that ground, and when it 
 is it will be time enough to discuss that. I prefer not to exhaust 
 
28 
 
 my time and be diverted in that way. This bill does not do any 
 good to the Sioux City road. 
 
 Mr. PERKINS. The Sioux City and Pacific road is a branch 
 of the Union Pacific? 
 
 Mr. POWERS. Yes. 
 
 Mr. PERKINS (continuing). And that property is not con¬ 
 sidered in this bill? 
 
 Mr. POWERS. Nor is the property of the Central Branch con¬ 
 sidered another one of the parts of the Union Pacific Railroad 
 Company. They have nothing to do with it. 
 
 Mr. PERKINS. I do not understand at this time anything in 
 the way of aid is asked for the Sioux City and Pacific Branch, but 
 it is proposed to ask for recognition in the way of connection, etc., 
 if that line is built. An amendment to accomplish that purpose 
 will be offered if an opportunity is afforded. 
 
 Mr. POWERS. Very good. I will assure my friend that no 
 objection will be made to any proper amendment that he or any 
 other gentleman may offer. 
 
 I have already taken more time than I intended in the discus¬ 
 sion of this measure, my purpose mainly being to bring to your 
 mind a little resume of the history of this transaction, so that, 
 knowing what the past of these roads has been, you would be bet- 
 ber able to Imow what their future ought to be and what you 
 should do in disposing of this question. This committee are in 
 accord with every committee in either House that has considered 
 this subject. They present a plan hero similar to that which 
 has received the sanction of other committees, and one that has 
 received the sanction of every person that has ever investigated 
 the matter. It may be imperfect. I wish it were better. I wish 
 we could get a mortgage with ample security paying G per cent 
 interest. But we. have taken the best we could, and we have 
 squeezed them, to use a homely expression, to the last cent. We 
 have approached the very verge of their possible pecuniary ability 
 in the requirements we have imposed upon them. 
 
 Now, the practical question remaining is, Will this Congress 
 undertake to collect this debt from these companies, or will it 
 ruthlessly throw it away? You will doubtless be regaled by some 
 of the bitterest denunciations against the managers of these com¬ 
 panies. I have tried to forefend against that by saying they have 
 not taken a dollar from the Government, If they have taken it 
 from somebody else, let somebody else do the fighting. We can 
 not go into the fight, between Mr. Huntington and Mayor Sutro, of 
 Ban Fx-ancisco. We are engaged in making an effort to collect a 
 debt from an insolvent debtor, and the question, gentlemen, with 
 all its momentous issues, is submitted to your sound judgment in 
 the hope that you will find, after you have investigatid it, that 
 this is the best possible way to get along with this ixncomfortablo 
 qxxestion. 
 
 Mr. HENDERSON. Before the gentleman takes his seat, per¬ 
 haps my attention was diverted, but the gentleman from Kansas 
 [Mr. Curtis] asked a question about the increased stock, and the 
 increased amount in bonds and mortgage bonds upon tlie lines. 
 Did the gentleman touch upon that? 
 
 Mr. POWERS. I intended to. The gentleman did not com¬ 
 plain about the answer I made. 
 
 Mr. HENDERSON. I knew the gentleman asked the question. 
 Do I understand that it is a doubling up of its indebtedness? 
 
 2563 
 
29 
 
 Mr. POWERS. Wo take the exact first mortgages on every foot 
 of this system and put them in a hotchpot at their face value and 
 say that the company may issue a new first mortgage of the samo 
 amount as the first mortgages now existing on the property, and 
 that we then put our debt on the top of that. 
 
 Mr. PATTERSON. I apprehend that the gentleman’s inquiry 
 goes to this point, whether the contemplated mortgage increases 
 the first-mortgage lien on the subsidized line. 
 
 Mr. HENDERSON. That is exactly the point I wished to get at. 
 
 Mr. POWERS. It increases it in one sense, and in another it 
 does not. Take this line [indicating]; in ascertaining the amount 
 of the new mortgage we count the existing first mortgage on this 
 line, plus the existing first mortgage on that line [indicating], 
 and add them together, which gives the amount of the general 
 first mortgage, and the debt to the Government goes on top of 
 that. 
 
 Mr. SW ANSON. I see in the report that you make this amount 
 $21,999,000, but the report does not state the names of the securi¬ 
 ties of which that sum is made up. Now, I would like to know 
 the names of the securities that make it up, so that we may ascer¬ 
 tain their value in the market. 
 
 Mr. POWERS. I have stated once or twice that they are the 
 
 terminal properties. 
 
 Mr. SWANSON. The Omaha Bridge, for instance, is named, 
 and we can look and see what that is worth; but for the remaining 
 part of this amount no names of securities are specified, and I 
 think they ought to be stated, so that we might be enabled to see 
 what is their value to-day. 
 
 Mr. POWERS. I can not give the names of the securities with¬ 
 out consulting the reports, because they are quite numerous. 
 
 Mr. CURTIS of Kansas. The gentleman will find that infor¬ 
 mation in Mr. Bell s report. 
 
 Mr. SWANSON. I have Mr. Bell’s report. He simply gives 
 the estimated value. What I want to know is what the securities 
 are. As I understand, this estimate puts them at par. Now. if 
 the securities are not worth that amount, it might perhaps be 
 better for ns to pay $10,000,000 for them rather than extend them 
 over the entire line. 
 
 Mr. POWERS. There is no question, Mr. Chairman, as to the 
 value of the property, and before the discussion ends 1 will submit 
 a tableWhich will satisfy the gentleman. 
 
 Mr. PARKER. Did I understand the gentleman correctly 
 when I understood him to state that the new first mortgage w T ould 
 cover all of the system? 
 
 Mr. POWERS. The entire system of the Union Pacific Com¬ 
 pany. 
 
 Mr. PARKER. And all of the first-mortgage debt? 
 
 Mr. POWERS. The first mortgage on the entire system will 
 be made up of existing first mortgages on the different parts of it. 
 There are several corporations, each of which has a first mortgage. 
 
 Mr. PARKER. In the receiver’s report I find: First-mortgage 
 bonds, $40,000,000, with $2,500,000 interest also, other bonded debt, 
 $40,000,000, and $2,500,000 interest; making $45,000,000 on that 
 sy s tern. N o w- 
 
 Mr. POWERS. If the gentleman will pardon me, I have not 
 seen that report, and I do not like to talk about it without having 
 2502 
 
30 
 
 examined it, but I will try to answer the gentleman's inquiry 
 before the debate ends. 
 
 Mr. PARKER. Another question. Why is the description of 
 the property of the Union Pacific Railroad so different from the 
 description of the Central Pacific Railroad's property? I notice 
 that the description of the Central Pacific property includes every 
 property of that railroad company, all bonds, stocks, etc., owned 
 by it, and that those words are left out of the description of the 
 property of the Union Pacific. 
 
 Mr. POWERS. The gentleman, I think, is laboring under a 
 mistake. The description covers the same thing in botli cases. 
 A more careful examination will show the gentleman that the 
 descriptions are alike and we require an inventory of the property 
 to be filed in the Treasury. 
 
 Mr. PARKER. I think the gentleman himself is mistaken on 
 that point. 
 
 Mr. POWERS. Mr. Chairman, I do not like to be discourteous, 
 but I have taken so much time that I must decline to answer 
 further questions at this time, and now I leave the matter in other 
 hands, reserving the balance of my time. 
 
 2583 
 
 O