The record-union., 1894-04-27
FOR A REIMBURSEMENT OF CLAIMS
OF THE UNITED STATES
The Railroad Company Required to
Pay Annually Into the Sinking
Fund One Million Six Hundred and
Fifty Thousand Dollars, and De-
fault for six Months Shall be Cause
for Foreclosure.
Special to the REcoRD-UNIoS.

the draft of a bill prepared by the De-
partment of Justice for the reorganiza-
tion of the Union Pacific and readjust-
ment of the claims of the United States
against the company.
The bill authorizes the Secretary of the
Treasury, with the approval of the Presi-
dent, to receive in exchange for the pres
ent claims OF the United States against
the Union Pacific Railway Company and
other liens of the United States upon the
properties of said company, bonds to an
amount equal to the aggregate indebted
ness of said company to the United States
on the first day of July, 1894, for the prin-
cipal and interest due on the bonds Of the
United States issued in aid of the con-
struction of the Union Pacific and Kansas
Pacihc Railroads.
The new bonds shall bear interest at the
rate of per cent per annum and be Sc
cured by mortgage.
The Union Pacific shall pay annually
into the sinking fund 81 ,650, 900. and de-
fault for six months shall be cause for
foreclosure.
The aggregate amount of Indebtedness
shall be computed and ascertained as fol-
lows:
First To the total amount of the
principal of said bonds of the United
States shall be added the interest which
shall then have been paid, and the inter-
est 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 amounts
so ascertained shall be deducted any and
all payments or credits upon the said in
debtedness to the United States as shall
appear in the bond and interest of the
said accounts of said companies respect
lively, with the United States on July D.,
1891.
Third-The present worth of the bal
ance fund should 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 mentioned
date and the average date of maturity of
said bonds of the United States.
The amounts so computed and ascer-
tanned shall be deemed to be the amount
due to the United States in 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 the United States
are to run 100 years, to mature July |,
1894, and to draw per cent. per annuIn
1Hl6I6Sts A0 JULIUS SGd11 D6 SeCuG6Q DF
mortgage covering all the property,
real, personal and mixed, of the railway
company. Under the terms of this mort
gage the Union Pacific, beginning with
the year 1865, shall pay annually into the
said treasury sinking fund of 81, $50, 600,
default for six months to be cause for
foreclosure. The funds and securities
now in the hands of the treasury of the
Union Pacific fund shall be held as fur
ther security for the new bonds to be is
sued.
The Attorney-General is given author
itY TO cooperate with the Union Pacific
Reorganization Committee now at work.
The plan this committee shall agree upon,
it is provided, shall limit the annual fixed
charges Of the company to SS, 800, 000.
Bonds for the extension and development
of the reorganization system may be is
sued hereafter by consent of two-thirds of
the board in the 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 liked by a majority of the
stockholders. The existing first-mort-
gage bonds now be and are superior to
the Governments lien. The company is
given power to provide for by issuing. at
or before maturity, other bonds, to run
not exceeding seventy-tive years and to
bear not exceeding five per cent. annual
present bonds. An annual sinking fund
of 81. SOC, 900 is provided for the redemp-
ton of these bonds. The Board of Di-
rectors is to consist of five. Government
Directors and fifteen other Directors,
seven of whom may be chosen by pre-
terred-stock holders and eight by COM
lnon-stock holders. Provision is made
for the courts containing and providing
tor debts Of the company and for other
incidents of the foreclosure.
The main features of the 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
resort to the harsh process Of foreclosing
its liens. II it should otherwise, how
ever, the bill provides for foreclosure by
sale or otherwise, and, if by sale, author
ICES a reorganization plan conforming to
the provisions of the Act and not less
favorable to the United States.
Second-The existing first-mortgage
bonds for So. .529, ,5l2, less amount of bonds
in sinking fund to be cancelled tS7 ,6I6, ,00O),
are TO be renewed and extended at q
lower rate of interest mot exceeding 5
Der cent J, with provision for a sinking
fund estimated at sufficient amount to
extinguish the debt at the maturity of
bonds.
Third-The debt of the United States to
the amount of $50, 600 is to be paid in
per cent 100-year bonds, secured by
second mortgage on ali the principal in
future to be acquired property of the
company, and further secured by pro-
vision for sinking fund of such amount,
IN annual payment on account of il, and
interest on these bonds shall always
equal the sum of 81, 500, 900. From this
arrangement the United States received
great advantage, according TO the Attor-
ney-General. Its debt becomes secured
by all the property of the company, over
5000 miles of road, whereas the only as
sured lien of the United States is now
confined TO ], ,423 miles OF road. Its debt
is further secured by an annual payment
10 a sinking fund OF about 500. COZ. which
will grow larger as bonds OF this issue are
redeemed. In the interest of the reor-
ganiZation plan, the United States not
only contributes its share towards the
reduction of liked charges, but may be
expected to be liberal. II did not subsi-
die the Union Pacific Company for
profit. but on political grounds. and if
satisfied with this security Tor the princi-
pal sum and assured OF the ability OF the
company to perform IT'S charter duties. it
NAV be content with moderate income
Fonrth-The bill authorizes and pro-
vides to be secured by a third mortgage
of the entire property tcailed the general
Inortgagel, and TO be issued for the pur-
poses following:
They are 10 be used in funding and re-
funding. by exchange or otherwise, OUT
standing obligations. This funding and
refunding process is expected and re-