The record-union., 1897-01-23
The Cabinet Decides TO Begin the Fore
closure Proceedings at Once.
Line of Procedure Indicated in the At
torney-Generals Report.
The Government Will Lose Tlany
Millions of Dollars of Interest
Through the Sale, Unless Huch
Higher Bid is Made Than the One
Proposed by the Reorganization
Syndicate.
Syndicate.

Proposed by the Reorganization
Syndicate.
WASHINGTON, Jan. OFT was de-
cided at the Cabinet meeting to-day to
begin foreclosure proceedings against
the Pacific railroads at once. The line
of procedure will be as indicated by the
Attorney General in his annual report.
The part of Attorney General Har-
mons report referred TO is as follows:
THE report of Hon. George Hoadley,
special counsel of the United States,
which is affixed to the report, shows
that there is no substantial change in
the state of the litigat tion about the
Union Pacific Railway and its branches,
and concerning the subject the Attor-
ney-Genera1 says:
Il have grave doubts as to the ability
of the Government to preserve the
present situation much longer. l am
advised that an attempt will be made
to enforce the Government appear
ance in the foreclosure case, with a
view Of giving a complete title to the
purchaser at the foreclosure sale.
while / believe the position hereto
fore taken and still maintained by the
Government is the true one-namely,
that it's appearance cannot be COM
pelled-it must be confessed that the
contention of opposing counsel is at
least ebatable-namely, that while the
Government cannot be sued with view
to recovery again, it may properly be
made a party to a suit in equity
brought by the holders of bonds issued
by it's express consent upon property
on which it has itself received a lien.
LAS the only object of steadfastly
keeping the Government out of the case
thus far has been to secure some Ia
vora BILE solution of the difficult problem
presented by its ownership of subor-
dina'te security upon property whose
value is generally believed to be INSULT
cient TO pay in full any but the first
mortgage liens, think that, unless the
pending funding bill be passed and ac-
cepted the Government should endeav-
or to secure terms for its appearance in
court in the way Of an assurance of
such a bid on the property in the case
of a judicial settlement as will secure
to il a fair realization of the value Of
its lien.
If this be not done and the Govern
ment should be compelled to sue to pro-
tect it's own interests, or required to
appear and set up its claim in the
pending cases, the benefit of the posi-
ton so long maintained may be large
ly lost"
HARMON'S STATEMENT.
WASHINGTON, Jan. 22.-Attorney-
General Harmon has returned from
New York fresh from his negotiations
with the Reorganization Committee Of
the Union Pacific Railway Company.
Prior to the regular Cabinet meeting
to-day he explained to President Cleve-
md the plan outlined in the statement
given, which received the PreSident's s
approval. The Cabinet was told at it's
session of what had been done, but
no formal action by that body was
taken.
AS indicated by the statement the
settlement agreed upon by the Reor-
ganization Committee marks the end
ing of the relations between the Fed
eral Government and the Union Pacific
Company 1t does not interfere. how
ever, with the right Of the Govern
ment to institute proceedings to protect
itself in any phases of litigation that
may be discovered later. So far as the
Central Pacific Road is concerned, mat
ters are not IN shape for settling its
relations with the Government, but
something is likely TO be done in the
near future.
The Reorganization Committee of the
Union Pacific Railway Company con-
sists of Louis Fitzgerald chairman.
Jacob H. Schiff T. jefferson College,
Jr., Chauncey NJ. Depew, Marvin Hugh
lit and Oliver Ames.
The following statement was given
10 the United Associated Presses by At
torney- General Harmon this afternoon:
ITpon the defeat OF the funding bill
in the House the President directed the
Attorney General to commence fore
closure proceedings against the Union
Pacific Railway Company. first making
tho best arrangements obtainable for
the protection Of the Government inter
x.c+s Following the lines indicated in
bts last report the Attorney General
haear negotiations with the Reorgan-
tua.;o, Committee. On Thursday an
aeraauent was made which will result
IN ;,nmediate steps to foreclose. The
chief subject of the negotiations was
the protection of the Government
against the risk of sacrifice of its claim
NV a sale at a price which would leave
nothing substantial after paying prior
liens
The committee guarantees that the
Government shall receive In its lien
on the aided portions of the Union Pa
cific and Kansas Pacific lines, including
the sinking fund. not less than S4o,-
154.OOO. The sale will be public, so
that the Government viii receive the
benefit of any higher bids.
The sum of four and a half million
dollars cash was ON Thursday deposit
ed with the United States Trust Com
pany of New York by General Louis
Fitzgerald, Chairman of the commit
tee, as security according to the terms
of the agreement. The committee
agrees to bid par for the SINKING Iuhu
II it is desired TO sell IT at any tline
before the foreclosure sale.
Bills In equity have been prepared
and signed by the Attorney-Generai
and Hon. George Hoadley, speclal
counsel, and forwarded to St Louis,
where they will on Friday be pre-
sented to Judge Sanborn, who has
jurisdiction in all the districts, and
whose consent to their filing Is nec-