The reasons for the inadequacy of the Thurman law were, first, the failure of the net earnings of the Pacific railroads to increase as rapidly as had been expected, and second, the meager results of the sinking fund accumulations. Net earnings were disappointing because of general business conditions, especially after 1893, and because of competition from other transcontinental railroads. The accumulation of the Central Pacific sinking funds proceeded at a slower rate than had been anticipated, for reasons already given. Up to June 30, 1897, the table shows that the total proceeds of sinking fund investments by the Central Pacific Railroad had amounted to only $1,683,127.28. When it is understood that this was less than a third of the sum which the moneys paid into the sinking fund would have earned if invested promptly and continuously at 6 per cent, the loss which resulted from the purchase of government bonds becomes evident. After thirty years of contention and nineteen years of operation under the Thurman law, the accumulated reserve for the retirement of the subsidy bonds was less than $16,000,000, of which only $7,300,000 was the result of the Thurman sinking fund. On June 30, 1897, the United States had actually paid out in interest on its bonds issued in aid of the Central Pacific Railroad, $31,000,000 more than had been provided against both the interest and the principal of the debt. Except to the extent of $7,300,000, the problem remained substantially as it had been presented in 1878. CHAPTER XXI FINAL SETTLEMENT OF THE CENTRAL PACIFIC INDEBTEDNESS TO THE GOVERNMENT Refunding Proposals It is the purpose of the present chapter to describe proposals for the settlement of the government’s claims against the Central Pacific Railroad which were made between 1878 and the date of maturity of the subsidy bonds, and to explain in some detail the adjustment finally arrived at in 1899. Soon after it became apparent that the Thurman law would not provide adequately for the retirement of the federal subsidy bonds at their maturity, agitation began for other and more stringent arrangements. As early as 1882, the Commissioner of Railroads suggested that the indebtedness of the Pacific railroads be changed from a running book account and that there be a settlement and actual delivery of interest-bearing bonds for the amount found to be due upon a convenient day, say July 1, 1883. On this day he proposed that the companies should deliver to the government 100 redemption bonds, each representing a hundredth part of the indebtedness. One bond was to fall due thereafter every six months, and interest was to accrue as before upon the unpaid bonds outstanding.[552]