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The annual report of the Secretary of the Railroad
Company makes the amount of this indebtedness December 31
1886 $10427238.15 and this amount agrees substantially
with the books if the sum of $418271.56 paid by the Southern
Pacific Company in the early part of 1887 but properly
chargeable in 1886 be added. See Exhibit Np.25 United
States Pacific Commissioners Report and Schedule No. annexed.
The difference same $1500000 is probably due to
amounts that have been paid to Governments but which have
not yet been adjusted and therefore not credited the Company.

This amount i snow in the Treasury of the United
States in the shape of Credit on account of transportation
for future payment of interest when due and in a Sinkin
Fund. On neither sum does the Government receive any
interest while on the latter owing to the peculiar nature of
the Trust the interest derived from it by the Company is but
nominal. If these two amounts be consolidated in the
Sinking Fund above proposed and two trustees appointed
one by the President of the United States and one by the
Railroad Company and they be empowered to invest the funds
not only in all United States securities but also in the
present existing loans outstanding of the railroad Company
four per cent upon the market value or present coast of those
securities could easily be obtained.

The value of such Sinking Fund compounding the interest
every six months on July 1 1893 about the average date of
maturity of loan would be (see Schedule No.3) $37891776.26
deducting this from the amount that will then be due the
Government say $77043630.66 would leave the then debt at
$38151854.40