Railroads -- United States; Railroads -- United States -- Finance
Second, the Government might have exacted larger payments to the
sinking fund, and have extended the debt at an unchanged rate of
interest until it should be automatically discharged. This was the
proposal of Mr. Hampton, Commissioner of Railroads, who suggested
the amendment of the Thurman Act as follows: it should embrace all
the United States bond-aided Pacific railroads; it should compel the
contribution of 50 per cent of net earnings to a sinking fund instead
of 25 per cent, and should extend the indebtedness to the Government
until discharged as provided. If any company should abandon a portion
of a subsidized line or divert its business from a subsidized to an
unsubsidized line, that company should transfer the conditions which
were attached to the former to the latter, in order to protect the
interests of the United States Government.[502] The weak points in
this scheme were many. Among them may be pointed out the fact that
contributions to the sinking fund under the Thurman Act had been
necessarily invested in government bonds, which, in view of the premium
at which they were necessarily purchased, yielded a very small return.
To double the contributions would have been to double the amount of the
railroad’s funds sunk in but slightly remunerative investments; and the
Government did not seem inclined to permit the company to adopt the
only practicable alternative, that of investing its sinking fund in its
own securities. Also, Mr. Hampton’s amendment would have continued to
an enhanced degree the constant suspicious supervision of the company
by the Government which had been, perhaps, the chief evil result of the
Thurman Act.
Public-domain text, read in full here on John Shaqi.
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