Birmingham state herald. (Birmingham, Ala.) 1895-1897, 1897-01-23
FORECLOSURE. PROCEEDINGS
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Having Been Ordered 10 the
Union Pacific Matter
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DANGEROUS. TO DELAY
Since the Defeat Of the Funding Bill, Thought
49,. the President,
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HENCE THE ORDER TO foREcLOsf
The Government Is Guaranteed to Receive
Not Less Than s45, ,754 900 by the
Sale eff the Property-Attorney-
General Harmon's Statement.

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Washington, Jan. 22.-The following
statement was given to the press by At
torney General Harman this evening:
Upon the defeat of the funding bill in
the house, the president directed the at
torney general to commence foreclosure
proceedings against the Union Pacific
Railway company, first making the best
arrangements obtainable for the protec-
tion of the governments interest. Fol-
lowing the lines indicated in his last
report, the attorney general began ne
gotiations with the reorganization COM
mittee. On Thursday an agreement was
made which will result in immediate
steps to foreclosure. The chief subject
of the negotiations was the protection OF
the government against the risk of sac
rifice of its claim by a sale at price
which would leave, nothing substantial
after paying prior liens. This protection
Is now assured by guarantee that the
government shall receive on its lien on
the aided portions OF the Union Pacific
and Kansas Pacific liens, including the
sinking fund, not less than $45,7b4,000.
The sale will be public, SO that the gov
ernment will, receive the benefit of any
higher bids up to the full amount of its
claim, principal and interest The sum Of
$4,000, 600, cash was on Thursday deposited
with the United States Trust company,
of New York, by Gen. Lewis Fitzgerald,
chairman of the committee, as security
according to the terms of the agreement.
The committee agree to bid par for the
sinking fund If 1t Is desired to sell 1t at
any time before the foreclosure sale.
"BillS In equity have been prepared,
signed by the attorney general and Hon.
George Hoadley, special counsel, and for
warded to st, Louis, where they will, on
Friday, be presented to Judge Sanborn,
who has jurisdiction in all the districts
and whose consent to their filing Is nee
essary because the receivers in charge of
the property are made parties defend
ant They are original bills and not cross
bills In the pending suits. Whether they
will proceed as independent bills orsto be
ordered to stand as cross bills In the
pending suits will be determind by the
judge. but, in either event, the result will
be practically the, same, viz:
The sale. of the, property under the
governments lien as well as under that
of the first mortgage. The bills will be
filed IN the district of Iowa, Nebraska,
bills for the foreclosure of the lien on the
KANSAS Pacific are in course of prepara-
ton. These will be filed in Missouri and
Kansas. ..s-
THE proposed arrangement was sub
mitted to the government directors be-
fore 1t was closed. They will recon-
mend its adoption. Their general optn-
ion was thus expressed:
The government cannot prudently
longer defer the settlement of this mat
ter. The Union Pacific system has al
ready been much over-taxed and its rev.
enueS, have, been permanently reduced.
Reorganizations of allied and neighboring
properties have either been accomplished
or are In train for early consummation
and the breaking up of the entire Union
ID e. ref 1,nH hnn nd tc cth
progressing. 1t, therefore, seems to us
inexpedient, If not dangerous, to neglect
this opportunity of realizing the sum Of
fered and thus expose the government to
a continuous depreciation of its security.
"It is believed that there win be higher
bids, but If not, an estimate shows that
crediting amounts already received from
the company, the government will at
last realize a. sum equivalent to the prins
cipal of the subsidy bonds, with interest
at about 8 1-3 per cent. from their issue
to the average date of their maturity, or
about AS per. cent from date of issue
'.The minimum of $45, ,754, 900 guaranteed
the government is in cash, so that all re-
lations with the property will terminate
sale. srte er,ro..saN gS se
"The course to be pursued with respect
to the Central Pacific has not yet been
determined"
Attorney-General Harmon returned
from New York last night fresh from
his negotiations with the reorganization
committee of the Union Pacific Railway
company Prior to the regular cabinet
meeting today ne explained to President
Cleveland the plan outlined In the state
ment given, which received the Presi-
dents 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 set
tlement agreed upon with the reorganiza-
ton committee marks the ending of the
relations between the federal government
and the Union Pacific company. 1t does
not interfere, however, with the right
of the government stoginstitute proceed
ings to protect itself IN any phases Of the
litigation that may be discovered later.
So far as the Central Pacific road is con-
cerned, matters are not in shape for set
Ting its relations with the governments.
but something Is likely to be done in the
near future. The reorganization COM
mittee of the Union Pacific Railway COM
pany consist of Louis Fitzgerald, chair
man; Jacob H. Schih, r., Jefferson Coli
lidge,, ar, Chauncey M Depew, Marvin
Hugflftt and oliver Ames.