The sun. [volume] (New York [N.Y.]) 1833-1916, 1897-10-10
rHE UvIoN PACIFIC FoREoLosURR
ttorney.eepe McRenua Explains tire Ef-
rcct Of the Goxernmentts Aotien.

feet OF the GoVernnenpn Actten.
wAsH1saToN, Oct. o. Regarding the atti-
tude OF the Government toward tho forthcom.
ing sale Of the Union Pacific Railroad under
decree of foreclosure and the relations Of the
Administration with the reorganization COM
mittee Attorney General McKenna at noon TO-
day made this statement:
''There seems to he a misrepresentation of the
action OF tho previous Administrator In re-
gard to the Pacific railroads. There was no
agreement to sell the roads or the sinking fund
OF tho Union Pacific. In consideration OF the
appearance of the United States in the fore
closure proceedings, already commenced, and
the prosecution Of it's own mortgage, 1t was
guaranteed a bid of $45, 75l, 06o. 80 at the sale
which should BIO ordered by the Court over and
above tho amount of the first mortgage. This
amount included tho sinking fund and was
based on Al, estimate Of par for tho sinking fund
and 500. 500, 900 in addition. There was no
formal agreement. It consisted Of letters be-
tween the reorganization committee and special
counsel OF the Government and Attorney.Gen
erl Harmon
'Tho agreement, as l have said, COOS no fur
ther than to provide for the appearance Of the
Government in suits brought for tho foreclos-
ure of the first mortgage bonds and bringing
suit for the foreclosure of It's own. The sale OF
the property was TO ,be, and necessarily must
be, by the direction OF the Court, as 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 Theses suits. there
fore, 1t had TO accept, and 1t has endeayored to
secure such DEGREES as II believed the Govern
ment, under the laws Incorporating the rail-
roads. was entitled TO.
agreement to 40 into court should have been
made. 1t Is not disputable as to what the
There, like any other sutton. the Government
was subject to the orders Of the court. l
court as creditor. AS sovereign. its powers
could not be affected. and have not been by tho
DEGREES. We think. therefore, hat the action
of the Government and the situation are very
plain. 1t has not sold its interests. 1t has
enabled all interests to be sold at public auction
to;the Reorganization Committee. or to any com
mittee:or TO any body or association which or
who may bid, the highest,
I'm what l have said l do not mean to inn
ply criticism Of the previous administration
What IT did il, no doubt, did on mature refeo-
ton and in s singer It, Judgment d.h sRt, and its action mSn
bad been appointed upon the application Of the
United States, and 1t was also unanimously
recommended by the i've Government direo-
Now. as to the relation Of the Government to
the DEGREES. They, as rendered, were in many
respects notwithstanding so-but in
other respects were not as the Government
etrenuously, commended for. For instance, the
Omaha bridge mortgages, amounting to about
81. 200. 900, were adjudged to be superior TO
the lien OF the Government on that part Of the
in addition, the money and assets in tho hands
of tho 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 obtained by tho Government.
This amounted to more than 81, O0O. 900. This,
of course, would become important II tho price
bid at the sale should not equal the Govern
ment's lien.
DISSATISFIED with the DEGREES, therefore, the
Government considered the propriety of an APP
peal, and had, indeed, prepared the papers for
such appeal. The Reorganization mint
learning this, came forward with an increased
bid OF over four millions of dollars, making the
total of their guaranteed bid $780, 600. 600 instead
Of $45. 754, 059.9 90, an increase of 81. 245, GAL.
This increase removed the objections to the de.
crees SO far as the money contentious were con-
satisfactory. Under these circumstances an
appeal did not seem justified.
"kegurding a higher bid, the prospect of II
seems As great now as 1t would be later. These
considerations determined the Government. II
must be remembered that the Governments
lien is n second ono, subject to q first mortgage
of 1888, DOC. 600. The advantage 1t has secured.
therefore, is, to repeat somewhat, that at the
sale under the decree of foreclosure there will
be q bid for the roads Of fifty millions OF dollars
over and above the first mortgage, and besides
the benefit Of absolute freedom of competition
at the sale. The Government may, therefore,
secure its whole claim through q higher bid
1t Is sure'of $50, 600, 900, and this amount, in
connection with the payments already made
will pay the principal Of the debt twice over"