The morning call., 1894-04-27

for sinking fund estimated at sufficient
amount to extlngush the debt at the maturity
of the bonds
Third-The debt of the United States, to the
amount of $4,000 000 is to be paid in per
cent 100-year bonds, secured by second mort
gage on all the principal in future to be ac-
CURED by the property OF the company. and
further secured by provision for sinking
fund of such an amount in annual payment on
account Of II, and interest on these bonds shall
always equal the sum OF 81 $4,000. From
this arrangement the United States receives
great advantage, according to the Attorney
General. It's debt becomes securad by over
5000 miles OF road, whereas the only assured
lien of the United States is now confined to
1892 miles of road. It's debt is further secured
by an annual payment TO a sinking fund OF
about S250000 which will grow larger as
bonds OF his issue are redeemed. In the inter-
est Of the reorganization plan the United States
not only contributes its share toward the re-
ducti0n of fixed charges, but may be expectcd
TO be liberal. 1t did not substitute the Union
Pacific Company for profit, but on political
grounds, and If satisfied with the security for
the principal sum, and assured OF the ability Of
The company 10 perform its charter duties, 1t
may be content with moderate income.
Fourth - The bill authorizes and provides
bonds TO be secured by third mortgage of the
properly Called the neral mortgagel and TO
b. issued for the purposes following: First
They are to be used In funding and refundng.
by exchange or otherwise, outstanding obliga-
tons. This funding and refundihg process is
expected and required to result In great re-
duction of fixed charges. Second-lt would be
he height OF folly TO reorgaDiZe the company
leaving II without resources tor development
and Improvement A railroad Is a thing of
constant growth, if not in mileage in the condi-
ton of Its pl nj, and constantly requires fresh
capital for the new construction. Consequently
the general mortgage bonds may be used for
improvements with the consent of two-thirds
of the directors.
Fifth-The power of using general mortgage
bonds and stock for refunding Is limited, so
The annual charges for the sinking fund re.
quIremenis of the bonds held by the United
STATES and the guaranteed rentals of the COM
pany OF all bonds that are issued shall not eX.
ceed IS, 500, 600. This Limitation by cutting
down the fixed charges by from 100000 to
S5,000,000 seems TO make it reasonably GER
tain that after the reorganization the company
can hardly fail 10 operate its roads successfully
and to meet all legal requirements upon its
revenues.
Slxtb-The existing sinking fund of the
United States is utilized by the cancellation OF
such parts as consists of existing first mortgage
the Secretary of the Treasury as additional
security for the new bonds accepted by the
United States.
Seventh-A plan OF reorganization has not
yet BEEN formulated. Therefore. but little
progress can be made with such plan until
the requirements of the Government are clearly
ascertained. II has been claimed The Govern
ment should content itself with prescribing
what 1t Will accept in payment of its debt and
leave all the other terms Of reorganization TO
be settled by the directors and stockholders in
teresled. II would be necessarily improvldent
for the United States to assent 10 a plan which
was not known in advance and which was not
thus ascertaned TO be such that under il the
reorganization committee may be expected 10
permanently operate is road and fulfill all Its
private and public obligations. The plan of
that character would simply bring the Govern
ment, in ouly short time, face to face with
the demands that now confront II. The u v-
eminent ought not to consent TO a scheme
which II does not know to be framed on pin
ciples of Justice TO all parties. While permit
ting the private interests involved all possible
latitude, the proposed bill puts limitations,
which are simply what sound policy and justice
require. 1t is thus with the fixed charges alter
the reorganization by fixing an amount which
in the charges, guaranteed rentals, etc., shall
not be exceeded. So the entire scheme of re-
organization must be satisfactory and receive
the cooperation of the law officers of the GOV.
eminent, and the bill also provides in terms
that the plan of reorganization sh II confer The
same conditions upon all members of each
class without discrimination or preference.
Eigbth-It being highly improbable that diff
ferences should not arise respecting the rights
of parties under the plan of reorganization, the
bill provides forum by which they shall be
adjusted. The forum suggested is the Court Of
Appeals of the District Of Columbia. 1t may
be suggested that if plan OF reorganization
is agreed to on behalf of The private interest,
Congress shall remain passive. Until the re.
quirsments of the United States are first au-
thoritativeIy defined however. the private
parties are without the groundwork upon
which reorganization plan must rest. The
bill will furnish that ground, will put creditors
and stockholders in possession of The exact con-
dition they have TO deal with and enable them
to agree upon a plan of reorganization. How
largely the United States in its credit capacity
is interested in the success of such plan
has, perhaps, been already sutfi GENTLY urged.
But il may not improperly be urged that much
more Is involved than the exact price 10 be col
lected on the public debt, Congress started
the Union Pacific Railway Company TO promote
greal public ends and 10 secure great public
advantages and granted lands and subsidies
nit its dispatches, mails, troops and munitions
of war. supplies aud public stores for the Gov
eminent Unless the objects have ceased TO be
OF value, or a corporation like the Union
Pacific Railway Company is not needed for
their accomplishment, the rehd bilitation of that
company or the substitution OF another with
like franchises and subject to like duties is i'm
peratvely demanded on the broad ground OF
the general welfare II is OF Importance to the
public and OF immense moment TO the people
OF Sta es and Territories traversed by the road
that the existence OF reeeivership should
give place 10 the management OF solvent and
strong corporation as soon as practicable In
the hands of the receivers the road Is a COM
paratively inert prOpetty-simply a mass of
assets to be kept intact, If possible, for ulti-
mate distribution among creditors. 1t Will
again become live property, principal factor
In the growth and prosperity OF tile many COM
munities served by il only when control OF
The courts, which can no more than preserve
the existing status, is superseded by the con-
troll OF owners, who can deal with it on the
principles applicable to all business enter
prises.
l am authorized to say that the special coun-
sci of the United states In Union Pacific mat
ters. the Hon. George Hoadley of New York,
whose valuable aid and cooperation in the