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gage on the properties, the company's first mortgage being a prior lien to that of the United States.

As the company defaulted in the payment of these bonds upon their maturity, and also of the interest then due, a commission, consisting of the Secretaries of the Treasury and the Interior and the AttorneyGeneral, was appointed by Congress to settle this indebtedness. This commission reported the following plan, which was adopted and is being carried out:

REPORT OF THE COMMISSIONERS APPOINTED TO SETTLE THE INDEBTEDNESS TO THE GOV

ERNMENT GROWING OUT OF THE ISSUE OF BONDS IN AID OF THE CONSTRUCTION OF THE ('ENTRAL PACIFIC AND WESTERN PACIFIC RAILROADS.

WASHINGTON, D. C., February 15, 1899. To the House of Representatives :

The undersigned commissioners, appointed by the deficiency appropriation act approved July 7, 1898, to settle the indebtedness to the Government growing out of the issue of bonds in aid of the construction of the Central Pacific and Western Pacific railroads, would respectfully report that they have concluded a settlement of the said indebtedness with the Central Pacific Railroad Company, the owner of the said railroads. A copy of the agreement of settlement is herewith transmitted.

The settlement is made as of the 1st day of February, 1899, at which date the amount due to the United States for principal and interest upon its subsidy liens upon the Central Pacific and Western Pacific railroads amounted to the sum of $58,812,715.48, that being the full amount necessary to reimburse the United States for the moneys paid for interest or otherwise in aid of the construction of said railroads.

Said indebtedness is, by the agreement of settlement, funded at the amount aforesaid into twenty promissory notes, dated February 1, 1899, payable, respectively, on or before the expiration of each successive six months for ten years, each note being for the sum of $2,940,635.78, which is one-twentieth of the total amount due. Said notes bear interest at the rate of 3 per cent per annum, payable semiannually, and have a condition attached thereto to the effect that if default be made in any payment of either principal or interest of any of said notes, or any part thereof, then all of said notes then outstanding, principal and interest, shall immediately become due and payable, notwithstanding any other stipulation of the agreement of settlement.

It is further provided that the payment of the principal and interest of said notes shall be secured by $58,820,000 of face value first refunding mortgage 4 per cent gold

4 bonds to be hereafter issued by the Central Pacific Railroad Company, or its successor having title to the railroads now owned by said company and specified in said agreement, such bonds to be part of an issue of not exceeding $100,000,000 in all.

Said bonds are to be secured by a mortgage upon all railroads, equipments, and terminals now owned by said Central Pacific Railroad Company, which mortgage shall be the first lien upon such property, or shall be secured by the deposit as collateral security therefor of certain percentages of the now outstanding bonds upon said property, or the different divisional parts thereof. The form of such mortgage is subject to the agreement of the parties to said agreement of settlement, and has been approved by the Attorney-General.

The agreement further provides that Speyer & Co., who are a party thereto, shall, within one month after the delivery to the United States of the settlement notes, accept from the Secretary of the Treasury the four earliest maturing notes, and pay to the United States the face value thereof, with accrued interest thereon to the date of payment, without recourse further than that Speyer & Co. shall, until the delivery of the refunding, bonds as collateral, be entitled to share pro rata with the United

States in the lien and all proceeds of the lien in favor of the United States to secure said indebtedness.

The said agreement was submitted in writing to the President and approved by him on the 15th day of February, and the said promissory notes have been duly delivered to the Treasurer of the United States.

Other provisions and particulars of said agreement will appear by a perusal thereof, to which reference is respectfully made.

The execution of the agreement was duly authorized by resolution of the board of directors of the Central Pacific Railroad Company, and approved by the formal action and consent of a large majority of the stockholders.

The commissioners have not found it necessary to expend any part of the sum of $20,000 appropriated for the expenses of the commission.

LYMAN J. Gage,

Secrelary of the Treasury. Cornelius N. Bliss,

Secretary of the Interior. John W. Griggs,

Attorney-General.

Agreement made and entered into the first day of February, 1899, by and between the United States of America, acting by Honorable Lyman J. Gage, Secretary of the Treasury, Honorable Cornelius N. Bliss, Secretary of the Interior, and Honorable John W. Griggs, Attorney-General, appointed by act of Congress approved July 7, 1898, a commission with full power to settle the indebtedness to the United States growing out of the issue of bonds in aid of the construction of the Central Pacific and Western Pacific bond-aided railroads, of the first part; the Central Pacific Railroad Company, a corporation created, organized, and existing under the laws of the State of California and of the United States of America, of the second part, and Messrs. Speyer & Company, bankers, of the city of New York, of the third part.

Whereas the Central Pacific Railroad Company, as now existing, was formed by the successive consolidations hereinafter mentioned, that is to say:

(a) Consolidation of the Central Pacific Railroad Company of California and the Western Pacific Railroad Company into a corporation named the Central Pacific Railroad Company, under articles of association and consolidation dated June 22, 1870.

(6) Consolidation of the last-mentioned Central Pacific Railroad Company, the California and Oregon Railroad Company, the San Francisco, Oakland and Alameda Railroad Company, and the San Joaquin Valley Railroad Company into a corporation named the Central Pacific Railroad Company, under articles of association and consolidation dated August 20, 1870.

And whereas the said Central Pacific Railroad Company, party of the second part hereto, is the owner of the following lines of railroad, with their appurtenances, which are known as and called the “bond-aided lines,” viz:

A. The line of railroad (about 737 388 miles in length), from a point about five miles west of Ogden to Sacramento, to aid in the construction of which bonds were from time to time issued by the United States to the Central Pacific Railroad Company of California to the amount in the aggregate of twenty-five million eight hundred and eighty-five thousand one hundred and twenty dollars ($25,885, 120) under and in pursuance of the provisions of the act of Congress of the United States entitled "An act to aid in the construction of a railroad and telegraph line from the Missouri River to the Pacific Ocean, and to secure to the Government the use of the same for postal, military, and other purposes," approved July 1, 1862, the act to amend the last-mentioned act approved July 2, 1864, and the act to amend the above-mentioned acts approved March 3, 1865.

B. The line of railroad (about 123114 miles in length) from Sacramento to San José, to aid in the construction of which bonds were from time to time issued by the United States to the Western Pacific Railroad Company to the amount in the aggregate of one million nine hundred and seventy thousand five hundred and sixty dollars ($1,970,560) under and in pursuance of the provisions of the same acts of Congress under which bonds were issued to the Central Pacific Railroad Company of California, as above stated.

And whereas the said Central Pacific Railroad Company is also the owner of the following lines of railroad in the State of California, with their appurtenances, which are known as and called the “nonbond-aided lines,” viz:

C. The line of railroad (about 24 miles in length) from Oakland to Niles.
D. The line of railroad (about 146180 miles in length) from Lathrop to Goshen.

E. The line of railroad (about 29687 miles in length) from Roseville to the Oregon boundary.

And whereas the said “bond-aided lines” of railroad are covered by the following mortgages and liens, viz:

First. The bond-aided line from Sacramento to the eastern boundary of California by the first mortgage of the Central Pacific Railroad Company of California to D. O. Mills and William E. Barron, trustees, dated July 25, 1865, under which bonds are now outstanding to the amount, at their face value, of six million three hundred and seventy-eight thousand dollars ($6,378,000), of which bonds to the amount of three million and seven thousand dollars ($3,007,000) are now overdue, and bonds to the amount of three million three hundred and seventy-one thousand dollars ($3,371,000) will mature December 1, 1899.

Second. The bond-aided line from the eastern boundary of California to a point about five miles west of Ogden by the first mortgage of the Central Pacific Railroad Company of California to D. O. Mills and William E. Barron, trustees, dated January 1, 1867, under which bonds are now outstanding to the amount, at their face value, of nineteen million five hundred and three thousand dollars ($19,503,000), of which bonds to the amount of eighty thousand dollars ($80,000) are now overdue, and bonds to the amount of three million nine hundred and eighty-eight thousand dollars ($3,988,000) will mature June 1, 1900, and bonds to the amount of fifteen million four hundred and thirty-five thousand dollars ($15,435,000) will mature June 1, 1901.

Third. The bond-aided line from Sacramento to San José by the first mortgage of the Western Pacific Railroad Company to D. O. Mills and William E. Barron, trustees, dated October 28, 1869, under which bonds are now outstanding to the amount, at their face value, of one million nine hundred and seventy thousand dollars ($1,970,000), and will mature July 1, 1899.

Fourth. The bond-aided line from a point about five miles west of Ogden to Sacramento by the statutory lien in favor of the United States under the acts of Congress approved July 1, 1862, July 2, 1864, and March 3, 1865, above-mentioned, securing the balance of the indebtedness to the United States (amounting as of the date of this agreement to the sum of $53,389,052.74), resulting from the issue of bonds to the Central Pacific Railroad Company of California, as aforesaid, to aid in the construction of said bond-aided line, such statutory lien being by said acts subordinate to the liens of the first mortgages of the Central Pacific Railroad Company of California described in the preceding subdivisions first and second of this recital.

Fifth. The bond-aided line from Sacramento to San Jose by the statutory lien in favor of the United States under the acts of Congress approved July 1, 1862, July 2, 1864, and March 3, 1865, above mentioned, securing the balance of the indebtedness to the United States (amounting, as of the date of this agreement, to the sum of $5,423,662.74) resulting from the issue of bonds to the Western Pacific Railroad Company, as aforesaid, to aid in the construction of said bond-aided line, such stat

INT 99—MIS, PT 1-9

utory lien being by said act subordinate to the lien of the first mortgage of the Western Pacific Railroad Company described in the preceding subdivision third of this recital.

And whereas the said nonbond-aided lines of railroad are covered by the following mortgages and liens, viz:

First. The nonbond-aided line from Oakland to Niles, by first mortgage from the Western Pacific Railroad Company to D. O. Mills and William E. Barron, trustees, dated October 28, 1869, under which bonds are now outstanding to the amount, at their face value, of seven hundred and sixty-five thousand dollars ($765,000), and will mature July 1, 1899.

Second. The nonbond-aided line from Lathrop to Goshen, by first mortgage from the Central Pacific Railroad Company to 1). O. Mills and W. C. Ralston, trustees, dated October 1, 1870, under which bonds are now outstanding to the amount, at their face value, of six million and eighty thousand dollars ($6,080,000), and will mature October 1, 1900.

Third. The nonbond-aided line from Roseville to the Oregon boundary, by first mortgage from the California and Oregon Railroad Company to David S. Dodge and Eugene Kelly, trust es, dated January 1, 1868, and the supplemental mortgage from the Central Pacific Railroail Company, as successor of the California and Oregon Railroad Company (by consolidation, as aforesaid), to Eugene Kelly and Philo C. Calhoun, trustees, dated January 1, 1872, under which last-mentioned mortgages bonds are now outstanding to the amount, at their face value, of ten million three hundred and forty thousand dollars ($10,340,000), the date of maturity of such lastmentioned bonds having been extended to January 1, 1918, by virtue of extension agreements dated September 27, 1887, and September 25, 1891, respectively.

And whereas all the said bond-aided and nonbond-aided lines above referred to are further covered by mortgage from the Central Pacific Railroad Company to the Metropolitan Trust Company of the city of New York, trustee, dated April 1, 1889, under which there are now outstanding fifty-year five per cent bonds of said Central Pacific Railroad Company maturing April 1, 1939, to the amount, at their face value, of twelve million two hundred and eighty-three thousand dollars ($12,283,000), of which bonds to the amount, at their face value, of $2,038,000 are now held by the Metropolitan Trust Company, of the city of New York, as security for the outstanding land bonds hereinafter mentioned;

And whereas it is claimed by the United States, but not conceded by the other parties hereto, that under and by virtue of the provisions of an act entitled “An act to alter and amend the act entitled 'An act to aid in the construction of a railroad and telegraph line from the Missouri River to the Pacific Ocean, and to secure to the Government the use of the same for postal, military, and other purposes,' approved July first, eighteen hundred and sixty-two, and also to alter and amend the act of Congress approved July second, eighteen hundred and sixty-four, in amendment of said firstnamed act,” approved May 7, 1878, the balances of indebtedness to the United States, hereinbefore referred to, amounting in the aggregate as of the date of this agreement to the sum of $58,812,715.48, are also secured by lien declared in said last-mentioned act upon all the railroad lines above mentioned, whether aided or nonaided;

And whereas the lands granted to the Central Pacific Railroad Company of California by the act of Congress of July 1, 1862, above mentioned, and the lands granted to the California and Oregon Railroad Company by act of Congress approved July 25, 1866, with the exceptions and reservations mentioned in the mortgage hereinafter mentioned, were mortgaged by the Central Pacific Railroad Company to Charles Crocker and Silas W. Sanderson by mortgage dated October 1, 1870, to secure an issue of land bonds of the Central Pacific Railroad Company which matured October 1, 1890, a part of which were, by extension agreement dated September 4, 1890, extended to October 1, 1900, and of which there are now outstanding bonds to the amount, at their face value, of $2,134,000;

And whereas, by act of Congress entitled “An act making appropriations to supply deficiencies in the appropriations for the fiscal year ending June thirtieth, eighteen hundred and ninety-eight, and for prior years, and for other purposes," approved July 7, 1898, it was among other things provided as follows, viz: “That the Secretary of the Treasury, the Secretary of the Interior, and the Attorney-General, and their successors in office, be, and they are hereby, appointed a commission with full power to settle the indebtedness to the Government growing out of the issue of bonds in aid of the construction of the Central Pacific and Western Pacific bond-aided railroads upon such terms and in such manner as may be agreed upon by them, or by a majority of them, and the owners of said railroads: Provided, That any and all settlements thus made shall be submitted in writing to the President for his approval or disapproval, and unless approved by him shall not be binding.

“That said commission shall not agree to accept a less sum in settlement of the amount due the United States than the full amount of the principal and interest and all amounts necessary to reimburse the United States for moneys paid for interest or otherwise: And also provided, That said commission are hereby empowered to grant such time or times of payment by installment, and at such rates of interest, to be not less than three per centum per annum, payable semiannually, and with such security as to said commission may seem expedient: Provided, houerer, That in any settlement that may be made the final payment and full discharge of said indebtedness shall not be postponed to exceed ten years, and the whole amount, principal and interest, shall be paid in equal semiannual installments within the period so limited, and in any settlement made it shall be provided that if default shall be made in any payment of either principal or interest, or any part thereof, then the whole sum and all installments, principal and interest, shall immediately become due and payable, notwithstanding any other stipulation of said settlement: Provided further, That unless the settlement herein authorized be perfected within one year after the passage of this act the President of the United States shall at once proceed to foreclose all liens now held by the United States against said railroad companies and to collect the indebtedness herein sought to be settled; and nothing in this act contained shall be held to waive or release any right, lien, or cause of action already held by the United States.

“That there is hereby appropriated, out of any money in the Treasury not otherwise appropriated, the sum of twenty thousand dollars to defray the expenses of said commission in making the said settlement.”

And whereas it has been agreed by and between the commission appointed by said act and the owners of the railroads above described that the indebtedness of the United States growing out of the issue of bonds in aid of the construction of the Central Pacific and Western Pacific bond-aided railroads should be settled upon the terms and in the manner hereinafter agreed to, subject to the approval of the President of the United States, as provided in said last-mentioned act;

And whereas Messrs. Speyer & Company from time to time negotiated the sale of large amounts of the bonds secured by mortgage upon the railroads of the Central Pacific Railroad Company above mentioned, and are desirous of cooperating in a settlement of all matters relating to or affecting the indebtedness of said company and the adjustment of its affairs:

And whereas of the first-mortgage bonds of the Central Pacific Railroad Company of California secured upon the bond-aided lines above mentioned, and amounting in the aggregate at their face value to twenty-five million eight hundred and eightyone thousand dollars ($25,881,000), there have been already deposited and still remain on deposit, subject to the order of Messrs. Speyer & Company, bonds to the amount at their face value of twenty-five million six hundred and thirteen thousand dollars ($25,613,000) under a bondholders' agreement dated August 14, 1897, a copy whereof has been furnished to the party of the first part hereto;

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