The morning news. [volume] (Savannah, Ga.) 1887-1900, 1897-01-23
WILL FoREcL0a- IFS CLAIM.
he PACIFIC RAIL-
Affairs BE WOUND UT.


II Reorganization Is Put on De-
IT IOsit-The Status of Affairs Dis
ne lcussed at Cabinet Council.
eF Washington, Jan. Pit was decided at
cabinet meeting to-day to begin fore
closure proceedings against the Pacific
railroads at once. The lines of procedure
will be as indicated by tine attorney gem
eral in his annual report.
The following statement was given to
the press by Attorney General Harmon
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-
ton of the governments interest.
Following the lines indicated in his last
report, the attorney general began nego-
tiations with the reorganization commit
tee. 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 sacrifice
of it's claim by a sale at a price which
would leave nothing substantial after pay
ing prior liens.
This protection is now assured by a
ceive on it's lien on the aided portions of
the Union Pacific and Kansas Pacific lines
including the sinking fund, not less than
$40, l54 600. The sale will be public so that
the government will receive the benefit of
any higher bids UP to the full amount of
its claim, principal and interest. The sum
of 81, SOC, 600 cash was on Thursday depos-
tied with the United States Trust Com
pany of New York, by Gen. Louis F1tz-
| gerald chairman of the committee, as Sc
curity according to the terms of the agree
ment. The committee agree to bid par
| for the sinking fund if it is desired to sell
| it any time before the foreclosure sale.
Bills in equity have been prepared, sign
| ed 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 necessary
| because the receivers in charge of the
| property are made parties defendant They
| are original bills and not cross bills in the
pending suits
Whether they will. proceed as independ-
ent bills or be ordered to stand as cross
| bills in the pending suits will be deter
mined 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
ill6Q IN Ile ulSIflCIS OIL Iowa, nebraska,
| Wyoming, Colorado and Utah.
| Separate bills for the foreclosure of the
| lien on the Kansas Pacific are in course
| of preparation. These will be presented
| in Missouri and Kansas. The proposed
! arrangement was submitted, to the gov
| eminent directors before it was closed.
| They all recommend its adoption. Their
| general opinion was thus expressed: 1.-THE
| government cannot prudently long defer
| the settlement of this matter. The Union
| Pacific system has already been much
| curtailed, and it's revenues have been per-
| manently reduced. Reorganizations of
| allied and neighboring properties have
either been accomplished or are in train
| for early contamination, and the breaking
| up of the entire Union Pacific system has
been and is steadily progressing. 1t.
| therefore, seems to us inexpedient, il not
| dangerous, to neglect this opportunity
| of realizing the sum offered and thus
| expose the government to a continued
| depreciation of it's security.
| 1T is believed that there will be higher
| bids, but, if not, an estimate shows that
| crediting the amounts already received
| from the company, the government will,
| at least realize a sum equivalent to the
| principal of the subsidy bonds with inter
| est at about 1-3 per cent. from their is
/ sue to the average date of their ma turity
| or about S.45 per cent. from date of issue
| to Jan. l, 1897.
| The minimum of $40 754, 600 guaran Iced
| the government is in cash, so that all re-
| lations with the property will terminate
| upon the confirmation of the foreclosure
| sale.
1.-The course to be pursued with respect
! to the Central Pacific has not yet been de-
| termined.',
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 to-day he explained to President
| Cleveland the plan outlined in the state
ment given, which received the Presi-
| dents approval The cabinet was told at
| its session of what had been done, but no
formal action by that body was taken.
| AS indicated by the statement, the set
| Element agreed upon with the reorgani-
cation committee marks the ending of the
| relations between the federal government
| and the Union Pacific company. 1t does
| not interior, however, with the right of
| the government to institute proceedings to
| protect itself in any phases of the litiga-
| ton that may be discovered later. SO
| far as the Central Pacific road is con-
| cerned matters are not in shape for set
thing 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 consists
| of Louis Fitzgerald, chairman; Jacob H
| Schff, T. jefferson Coolidge. Jr., Chaun-
| cey M Depew Marvin Hughitt and Oliver
| Ames, second.
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