The record-union. [volume] (Sacramento, Calif.) 1891-1903, 1897-01-24
The Government Files a Suit in the U.
S. Circuit Court at Omaha,
Asking That the Lien Upon the Prop
erty be Foreclosed.
Russell Sage Predicts That If Sale IS
Consummated and the Government
Becomes Disinterested Party In
the Property the Road Will Never
Paw, and Thousands of People VIII
Lose All They Have Invested in the
Junior Securities.


Junior Securities.
OMAHA. Jan. 23.-The Government
of the United States at noon to-day
filed a suit in the United States Circuit
Court asking that the Government
lien ON the property of the Union Pacl-
fic Railway be foreclosed. The papers
presented comprise the bill OF COM
plant, the appearance of Attorney
General Harmon in the case, the petit
ton asking leave to make the recelV-
ers defendants and the order OF Judge
Sanborn granting the ptition-
The bill has reference to the Union
Pacific road alone, the Central Pacific
not being included. The interest or
the Government is alleged to be Soi,-
POI IFS 80. This includes the balance
due the Government for interest paid
on the subsidy bonds in the abount OF
500 964. 666 IS, matured bonds paid in
February. 1896, in the amount of 81
800 900: matured bonds paid in Janu-
airy. 1897, in the amount of $3,S4o,oOo;
bonds to come due in 1898, S15 ,919,512,
and bonds; to come due in 1899, S3,loi,-
600
The defendants are the Union Pacific
Railway and it's receivers, GORDON LEX
tier and Oliver Ames. as first mortgage
trustees; the Union Trust Company OIL
New York as trustee for bonds lssueu
in 1873; j. Pierpont Morgan, EoWhi
F. Atkins and the Central Trust COM
pany. as trustees for the bridge oonds.
The bill. which covers about forty
printed pages, describes the origin OF
the Union Pacific Railroad, and recltes
the various Acts of Congress In RELATION
thereto with the issues of bonds. EXhl-
bits are attached showing the state
nent of accounts between the road ana
Government.
Ii asks that Judgment be had on the
priority of all liens; that the lien OF the
United States be adjudged TO be IN
its proper order lawful 'nesa4s1fan ce
on all the premises, property ana iran
chises of the system; that through
master in chancery or otherwise oe-
scription of the road be made unat Is
subject TO the lien and liable 10 De
sold; that the value of the sinking funo
be determined, and provision Inaue
for turning it into money 50 It's apph-
cation as a credit on the debt 10 the
Government may be made; that on non
payment. in a reasonable time 10 De
fixed by the court, the mortgage De
forecIosed and the proceeds turned INTO
the treasury of the United States; that
the presetn receivers be extended Tor
this suit or others appointed for the
preservation Of the interests of all par
ties concerned
The bill will also be filed in the
districts of Iowa. Wyoming, Colorado
and Utah. Bills for the foreclosure
of the lien on the Kansas Pacific divis-
ion of the Union Pacific Will be filed in
Missouri and Kansas.
The officials here of the Union Pacific
are reticent stating that they are not in
a position to say anything regarding
the proceedings. 1t is the general i'm
preston that it will be about ninety
DAYS before the road finally passes in
TO the hands of the receivers. The news
in the papers came as a genuine sur
prise to the majority of the officials.
REORGANIZATION PLANS.
NEW YORK, Jan. 23.-Scarcely sec
ond in public Importance TO the fact
that the Go vernment viii shortly
foreclose on the lien of the Union Pa
cific is the prospect of the reorganiza-
ton of the company. In no other cir
cumstance have SO many citizens of
the United States been interested as the
bond and stockholders, and the widest
concern is being shown in the plans
of those having large interests in the
company. and at once looked upon as
leaders in any movement to put the
system upon its feet.
There are two views in Wall street
as to the proper course TO pursue and
the time which will be required for re-
organization. The leading interests
are at odds One plan is now before
the people which proposes reorganiza-
-Ion which shall cut off many branch
lines and junior securities, and assess
Stockholders $15 per share. To many
holders of junior securities 1t appears
that better treatment should be ac-
corded them. Foreign holders of the
FIRST mortgage and the preferred Sc
c,,rities are in accord with the present
pan
Some of the leading capitalists and in
situations here are opposed TO the pres
ent plan. and hope to see modified
plan. 1t was suggested to-day that an
effort might possibly be made, perhaps
by Congress, TO prevent the foreclosure
sale ordered by the President, but how
such objection could be made was not
explained. When the sale comes off
the syndicate will bid not less than
$45. 534. 600 for the Governments or
second mortgage on the Union Pacific
and Kansas Pacific line and Tor the
sinking fund. 1t is not clearly under
stood that the syndicate VIII be re-
ouired to pay out the sum mentioned,
for the sinking fund and other credlts
secured Will reduce the actual cash
needed to about SIS, 100000. The sum
required has been secured by the Kuhn.
Loeb & Company syndicate, which
favors the plan of the Fitzgerald COM
mittee.
The views of the older interests in the
Union Pacific system, which include
several capitalists and trust companies,
on the present situation were stated to-
day by Russell Sage. who has followed
the Union Pacific from its conception.
who said:
UNLESS the Government is uninter-
ested in the Union Pacific, which ii may
be. / predict that the road in the end