The Springfield herald., 1897-10-15
UNION PACIFIC SALE.
TERMS OF THE COMPROMISE
Attorney General McKenna Issues . State
Inent of the Agreement Made e-ThinkS 1t
the Best to Be Obtained.

! Washington. Oct. 9.-The attorney
general to-day gave out the following
statement regarding the sale of the I'm
ion Pacific railroad:
'There seems to be n misapprehen-
sion OF the action of the previous adj
ministration in regard to thePacihc rail
roads. There was no agreement to sell
! the roads or the sinking fund Of the
| Union Pacific.
I'm consideration of the appearance
of the United States in the foreclosure
proceedings, already commenced, and
the prosecution of Its own mortgage, 1t
| was guaranteed n bid Of $40. 195.O59 Mt
the sale, which should be ordered by
=, the court. over and above the amount
OF the first mortgage. This amount in
cluded the sinking fund and $780,
600 in addition.
'There was no formal agreement. 1t
consisted of letters between the reor-
gnnizntion committee and separate
counsel of the government and Attor-
ney General Harmon, all of which
We're published in Senate document SO,
| Fifty-fourth Congress, second session.
"The agreement. as have said, goes
no further than to provide for the ap-
pearance of the government in suits
brought for the foreclosure of the first
mortgage bonds and bringing suit OF
foreclosure for its own.
1.-The sale of the property was (and
necessarily must be by the direction
of the court. MS in other foreclosure
suits, with the whole world for bid
ders.
''The appearance was made and the
suits instituted, as agreed before the
advent of the present administration.
These suits. therefore. 1t had to ac-
cept, and it has endeavored to secure
such decree ms 1t believed the govern
ment under the laws Incorporating the
railroads was entitled to.
sit may be disputable as to whether
The agreement to go into court should
have been made. 1t is not disputable
MS to what the government, after II
WAS in the court, could do. There,
| like any other suitor. the government
was subject to the orders of the court.
mean. of course. subject TO the or
ders of the court as creditor. AS
sovereign its powers could not he af-
fected, and have not been by the de
crees. We think, therefore, that the
action of the government and the sit,i-
alton are very plain. 1t has not sold
Its interest 1t has enabled interests
to be sold Mt public auction to the re-
organization committee, or to any com
mittee or to any body or association
which, or who, may bid the highest.
"In what have said do not mean
to imply criticism of the previous ad-
ministration. What 1t did, 1t no doubt
did on mature reflection and in sin
cerest Judgment, and its action was rec
commended by both receivers. who had
been appointed upon the application
of the United States, and was also
unanimously recommended by the hve
government directors.
Now as to the relation OF the gov
ernment to the decrees; They, as ren-
dered, were in many respects gratify-
ing, hut in other respects were not as
the government strenuously contended
for. For instance, the Omaha bridge
mortgages, amounting to about 81
! 100000. were adjudged to be superior
| to the lien Of the government on that
part of the road between Omaha and
Council Bluffs. and, In addition, the
money and assets in the hands Of the
receivers accruing from the operation
| of the roads were ordered to be sold
instead of being reserved to meet a
deficiency judgment expected to be oh
tained by the government. This
amounted to more than S2.OOO,OOO.
| This. of course, would become impor-
tant II the price bid at the sale should
not equal the governments lien.
Dissatisfied with the DEGREES, there
fore. the government considered the
propriety of an appeal. The reorgani-
zatiOn committee. learning this. came
forward with an increased bid of over
S4.OOO,OO0. making the total of their
guaranteed bid S50.OOO.OOO instead of
S45.7 .O50. an increase Of S4.245.941.
This increase removed the objections
to the DEGREES. so far as the money
contentious We're concerned. In all
else the DEGREES were just and satisfac-
tory. Under these circumstances an
appeal did not seem justified.
| Regarding a higher bid. the prospect
of it seems as great now as 1t would
be later These considerations deter
! mined the government. 1t must be re-
membered that the governments lien
is n second One-sccond to first mort
gage of S33.OO0OO0. The advantage il
has secured. therefore, is. to repeat
somewhat that at the sale under the
DEGREES of foreclosure there will be a
bid for the roads of fifty millions of
dollars over and above the first mort
gage. and. besides. the benefit of alb
| Solute freedom of competition at the
sale. The government may. therefore
secure its whole claim through high
| er bid. 1t is sure of 500. 900 900. and
this amount. in connection with the
payments already made. will pay the
principal of the debt twice over.
I