'J888                  U. S. PACIFIC  RAILWAY  COMMISSION.
Union Pacific Company has repeatedly violated the provisions of the Churman act, violations which the preceding Administration, though Republican, had not punished. He will also find that by the Thurmaa act the Government is entitled to interest on the advances made on coupons of the subsidy bonds. In both bills presented to Congress for the settlement of this debt that has been omitted. In the Outhwaite bill, the Union Pacific Company has been credited with $2,000,000 on its partial pavments, which the Hoar bill omits. The Outhwaite bill makes the indebtedness of the Union Pacific $52,000,000, while the Hoar bill makes it $54,000,000.
Commissioner Anderson. I suggest that Mr. Middledith embody in dis written communication to us any errors of computation or calculation that he may have discovered.
The Witness. I simply say it is known that the Union Pacific pays 5, 6, 7, and 8 per cent, on its mortgages and has even professed to earn i or 5 per cent, on its stock. I had a computation made by Professor Elliott, the Government actuary, at Washington, of what would be the difference between extending the debt on the Outhwaite plan and 5 per cent.; and the difference which the Government loses by accepting a settlement of 3 or 3J per cent, is $111,000,000. In other words, even giving the company such an extension, they are getting a fresh subsidy from the United States greater than the debt.
As far as questions of law are concerned, I believe the Judiciary Committee decided against Mr. Dillon on the matter of the necessity for the indictment of these gentlemen who have violated the law of 1873, although the bill was simply reported favorably to the House. It never came to any question.
WITNESS BELIEVES IN AN EXTENSION.
Q. Have you considered the question of the adjustment of the debt fco the Government on the basis of extension?—A. Yes, sir; I believe in making an extension of the debt. I do not believe in crippling the ijompanies in any way.
Q. Will you submit to the Commission, in writing, your statement irfit?—A. Yes.
Q, Have you considered the question of the settlement of the debt with the Government on the basis of an immediate settlement ?—A. I liave not.
Commissioner Anderson. A cash settlement.
The Witness. You mean the amount that would be proper to pay ?
The Chairman. I mean an immediate settlement, whether cash, or itherwise, provided it be immediate.
INTEREST PAID BY GOVERNMENT LUMPED IN COMPUTATION.
The Witness. I have not. I would like, before leaving the question of bills, to say something about how this Outhwaite bill was prepared. The Government has paid annually the interest on those bonds since 1867; $2,000,000, for instance, in 1867, and $2,000,000 in 1868. Every one of those $2,000,000 has been lumped in computation, and instead of the Government getting interest on it, the whole has been thrown forward to 1907 and discount deducted from their payments made twenty years before.
Commissioner Anderson. That seems to have been a legitimate conclusion from the decision of the Supreme Court, holding that the interest was not intended to mature until 1907.