The San Francisco call., 1895-10-20
DESIRE TO TERMINATE RELATIONS
EXISTING BETWEEN UNCLE
SAM AND DEBTORS.
FORECLOSURE OF THE LIENS
GRAVE QUESTIONS TO WHICH THE
ATTENTION OF CONGRESS
Is CALLED.

WASHINGTON, D. c., Oct. 19. - The
views of Union Pacific Director Coombs
concerning the Union and Central Pacific
railroads and their relation to the Govern
ment were given in The CALLS dispatches
last night. Coombs was the only one OF
the five directors who made a careful and
painstaking personal investigation, and
this he did at the request of President
Cleveland. In the main his conclusions
agree with those of his associate directors
except that the latter present an alterna-
tive proposition which is appended. 1t
is believed, however. that if Mr.. Cleveland
makes any recommendation in his mes
sage he will adopt Mr.. Coombs proposition
to provide for reorganization of the roads
and the acceptance by the Secretary of the
Treasury of stipulated minimum sum to
be fixed by Congress.
The Government directors of the Union
Pacific Railroad have submitted their an
nual report to the Secretary of the Interior.
The directors are J. n. II. Patrick, w. J.
Combs and f. w. Doane. Mr.. Combs gave
publicity to his individual views yester-
day, as published in THE CALL. The report
says that by reason of the inability of the
receivers to meet at maturity the interest
falling due on the mortgages OF the COM
pany q number of foreclosure suits affect
ing various parts Of the property are now
pending in the Circuit courts OF the United
States.
The suit against that part of the prop
erty of the Kansas Pacific Railroad which
lies east of the Kansas Missouri State line
one-half Of mile, the report states, is a
matter OF great Importance. as it embraces
valuable terminals in Kansas City. The
Kansas Pacific Consolidated Mortgage
Company holds the mortgage. There is
some question as to whether this part of
the road is subject to a lien of the Govern
ment.
In regard to the suit brought by Dexter
and Ames affecting that part of the road
extending from Omaha to a point five
miles west of Ogden, formal notice has
been given to the Attorney General of its
pendency, and the directors state that they
are confronted with the question as to the
effect of a decree of foreclosure and sale.
followed by an actual sale, upon the lien
OF the United States. The question is of
great gravity, to which the attention of
the department and of Congress is seri-
ously invited
The report adds that as the Government
opposition to any scheme of Government
ownership of railroad properties it is un-
necessary to repeat their reasons for their
continuation. For purposes of reaching
reasonable basis of settlement and also
affording to the Government the protec-
ton which the present situation appears
to require the directors suggest the follow
ing action:
hot ic
the relations between the Government and
the railroad properties either by accepting
fixed sum of money or determinate
amount of bonds rather than to continue
for an indefinite number of years the ex-
istence of an unsatisfactory and imperfect
lien, the supervision and protection of
which necessarily involves constant fric-
ton between the departments of the Gov
eminent and the management of the roads.
Second That complications attending
the terms OF any proposed adjustment are
vastly increased by the retention of the
railroad extending from, Kansas City to
Denver and from Denver to Cheyerine
This is caused by the fact that the lien of
the United States on the Kansas Pacific
Railroad OILY extends 1884 miles west of
Kansas City, so that the adjustment of
States and of the liens on the parts of the
railroad not subject to the lien of the
United States, involves amounts out of
proportion TO the claim of the United
States.
A bill to be introduced in Congress is
submitted with the report, its purpose being
the concluding of the relations of the Gov
eminent to the railroad.
al
OF the Central Pacific and Union Pacific
United States sinking funds on October
last was $2l, ,3S9, 095. The total amount of
prior lien bonds of the Union Pacific Rail-
way Company and the Central Pacific
Railway Company amounted in the aggre-
gate TO $50, S47 600. The cash balance in
the hands OF the Union Pacific receivers
applicable to the Union Pacific property
will probably be approximately sufficient
to meet the arrears of interest accruing on
its prior bonds. The entire gross amount
of prior liens on the Union Pacific and
Central Pacific exclusive of the Kansas
Pacifc) held in the several sinking funds
will be $30,96 $50. The amount which
might be required to discharge or purchase
this prior lien is liable to be much in
creased if the foregoing mentioned sums in
the sinking fund of the United States
under the decision of the Secretary of the
Treasury and the Attorney-Generals should
not be available for the purpose indicated,
and the same consideration applies to the
sinking funds held by the trustees OF the
Central Pacific mortgages.
If Congress should fix the minimum
price which it is willing to receive in sat-
ST action OF its claims at a sum which
would meet the approval of an intending
purchaser, the entire transaction cou Id
ihanl1estiy be SO arranged between the
S;o,ntractlng parties as to avoid the neces-
s slty on any expenditure of moneys from
.ne treasury OF the United States for the
purpose of takino mn tbo ,,r;or I;ans ond