The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1894-04-27


and the readjustment of the claims of
the United States against the company.
The bill authorizes the secretary of the
treasury, with the approval OF the
president, to receive in exchange for
the present claims of the United States
against the Union Pacific Railroad
company and liens of the United States
upon the properties of said company,
bonds to an amount equal to the aggre-
gate Indebtedness of said company to
the United States the first day of July,
1894, for the principal and interest of
bonds of the United States issued in
aid OF the construction of the Union
Pacific and Kansas Pacific railroad.
The new bonds shall bear interest at a
rate of 2 per cent. per annum and be
secured by mortgage. The Union Pa
cif1c shall pay annually into the sink
ing fund $1,650,000 and default for six
months shall he cause for foreclosure.
Ascertaining the Debt.
The aggregate amount Of indebted
ness shall be computed and ascertained
as follows:
First-To the total amount of the
States shall be added the interest
which shall then have been paid and
the interest then and thereafter payable
by the United States thereon, until the
respective dates of the maturity of said
bonds, as If no payment had been made
or credit given thereon.
Second-From the aggregate amount
so ascertained shall be deducted any
and all payments or credits upon the
said Indebtedness to the United States,
as shall appear in the bond and inter-
est accounts of said conpany's respect
lively with the United States as of July
/, 1894.
Third-The present worth of the bal
ance fund shall be computed as of July,
1894, by discounting the said balance
at the rate of per cent. per annum
for the period between said last men
toned date and the average date of
States.
The amount so computed and ascer-
tanned shall be deemed to be the
amount due the United States on July,
1894, and the bonds of said company
shall be received by the United States
as herein provided at par for said
amount. The bonds to be received by
to mature July /, 1894, and to draw
per cent per annum interest The
bonds shall be secured by mortgage
covering all the property, real, personal
and mixed, of the railway company.
Under the terms of this mortgage, the
Union Pacific beginning with the year
1905, shall pay annually into the said
treasury sinking fund $1,650, 000 default
for six months to be cause for fore
closure. The funds and securities now
in the hands of the treasury, Union Pa
cific fund, shall be held as further Sc
curity for the new bonds to be issued
The encouragement is given authority
to cooperate with the Union Pa
cif1c reorganization committee now
at work. The plan this committee shall
agree upon, it is provided, shall limit
the annual fixed charges of the COM
pany to $S,500,000. Bonds for extern
sion and development of the reorgani-
cation system, may be issued hereaf-
ter by consent of two-thirds of the
board of reorganization, the bonds TO
be subject to the general mortgage
bonds Power is given the company to
issue preferred and common stock to
an amount TO be fixed by a majority OF
the stockholders. The existing first
mortgage bonds shall be and are super
ior to the governments lien. The COM
pany is given power to provide for, by
issuing at or before maturity, other
bonds to run not exceeding seventy
five years and to bear not exceeding !
per cent. annual interest, the lien to
be the same as the present bonds. An
annual sinking fund of 100000 is
provided for the redemption of these
bonds. The board of directors is to
consist of five government directors
and fifteen other directors, seven OF
whom may be chosen by preferred
stockholders and eight by common
stockholders. Provision is made for
the courts containing and providing for
debts of the company and for other in
cidents of the foreclosure.
Main Features Of the Plan.
The main features of legislation pro-
posed in the plan submitted by the at
torney-general are as follows:
The existing corporation is to be pre-
served.
That ought to be done without re-
sort to the harsh process of foreclos-
ing its liens, if it should be otherwise
however, the bill provides for fore
closure by sale or otherwise and if by
sale, authorizes a reorganization plan
conforming to the provisions of the act
and not less favorable to the United
States.
Second-The existing case mortgage
bonds for $50, 529, 512, less amount OF
bonds in sinking fund to be cancelled
$,616000 are to be renewed and ex-
tended at a lower rate Of interest. Cnot
exceeding per cent?, with a provision
for sinking fund estimated at suffic.
lent to eXtinguish the debt at the ma
turity of bonds.
Third-The debt of the United States
to the amount of $50, 900 is to be paid
in per cent. 100-year bonds, secured
by second mortgage on all the princi-
pals in future to be acquired as prop.
erty of the company, and further Sc
cured by a provision for a sinking
fund of such amount, in annual paw
ment on account of it, and interest on
these bonds shall always equal tbs
sum of S1,65O,OO0.
Advantages Alleged.
From this arrangement the United
States receives great advantage, &C.
cording to the attorney general. Its
debt becomes secured by all the prop
erty of the company, over 5000 miles
of road, whereas the only assured lier
of the United States is now confined
to 1892 miles of road. Its debt is
to a sinking fund of about SYST, 900
which will grow larger as bonds oil
this issue are redeemed. In the inter
est of the reorganization plan the
United States not only contributes lis
share towards the reduction of fixed
charges, but may be expected to be
liberal. It did not subsidize the Union
Pacific company for profit, but or
political grounds, and if satisfied with
Lie oCCui1ly LOl LIE pLiHCIpdI sum
and assured of the ability of the com.
pany to perform it's charter duties, il
may be content with moderate in.
come
Fourth-Tne bill authorizes anc
provides to be secured by a thire
mortgage of the entire property
called the general mortgage and tC
be issued for the purpose as follow
ing:
1-They are to be used in funding
and refunding, by exchange or other.