The herald., 1897-10-29
ATTORNEY GENERAL HARMON
MAKES ANSWER TO CAUTIOUS
CRITICISM
Western Lines Meet and Agree to
Abolish High Commissions on
North Coast Business
Associated Press Special Wire.

IL,
the last administration of President
Cleveland, today gave out the following
statement regarding the proposed sale
of the Union Pacific railway:
Among the criticisms of the Union Pa
cific situation it is publicly declared
by some that the foreclosure of the gov
ernment's lien on the main line and OF
that on the Kansas Pacific line should
have been in single suit and that pos
sible loss by breaking up the unity OF the
properties might have been avoided by
afterward consolidating the several
suits. This statement. is wholly un-
founded.
AS the property is located in seven dill
ferent states and judicial districts
separate suit had to be brought in each
The disadvantage of this to the govern
ment was plain from the start. Accori-
ingly bill for settlement, presented At
the request of congress by Mr.. Olney,
was inserted into the provision author
izing foreclosure of all the government
liens in a single court, if such should be-
come necessary. The bill failed and the
provision with it, In the attorney gen
erals report for 1895 (p. 25) the subject
was again urged upon the attention OF
congress. as follows: LAS it may be-
come advisable or necessary for the
government to institute legal proceed
ings against one OF both of the COM
panies named, beg to call attention to
the necessity of law giving some prop
er court in the District of Columbia jur-
isdiction of the entire property and OF
all the parties in interest. What mas
been heretofore said as to the general
necessity of giving one court full juris-
diction in such cases applies with es-
pecial force here. Such provision was
included in the bill prepared by Attor-
ney-General Olney at the request of the
last congress (see his report for 1884, r.
26). 1t should now be put in the form OF
a separate act, so as to be made inde-
pendent of any particular plan of re-
organization. Until the passage of such
an act any attempt of the government
to protect it's rights by litigation will
be greatly hampered.'
A general law for all like cases was
recommended (p. 24. The attorney
general followed his report by prepar-
ing a bill which was introduced by both
Senators Morgan and Brice on Decem-
ber 90 1895, (54 cong. 1st session, vol. 2S.
record PIP. 26S, 269). 1t was not passed,
although it was recommended. (Report,
1896, p. 25.)
Consequently when the president di-
rected the foreclosure, provided the
toO-common fate of junior liens could
be avoided by a guaranty, as he had
promised to do in his message of Decem-
ber I. 1886, (second session, fifty-fourth
congress- p. y in case congress should
fail to act, the necessity of separate
suits could not be avoided.
The guaranty secured by a large de-
posit of money, assured by the govern
ment, in cash on it's second lien, in the
distribution of proceeds of sale, at least
the principal of all it's subsidy bonds and
more than half the interest, which ran at
per cent for the thirty years, and, un-
like the principal, was not invested in
the property, but went to the bondhold-
ers. To make this guaranty good re-
quired bid at the sale of about $45, 900
per mile, for the entire system, or $50. 900
per mile for the part subject to the gov
ernment's lien, including the sinking
fund, to the benefit of which, of course,
the company was entitled. The ar
rangement was recommended in writing
by every government director and re-
ceiver.
The governments lien did not cover
the entire property of the company, nor
even all it's lines of railroad, and the re-
mainder of both property and lines was
heavily mortgaged to others. Whether
by the terms of the act the government
created for itself more than mere lien
is by no means clear under the decision
of the supreme court, but it's claim as Il
general creditor, If such it have, was not
qualified nor surrendered.
The sale was to be at public auction.
subject to the approval of the court, and
free and open to any and all bidders
without restriction or condition, as
shown by the terms of the agreement sub
mitted to congrss at the time, January
rs, 1897. (Second session Fifty-fourth
Cong, p. 1241) The suits, which were.
brought in February, We're to remain
separate, like those brought to foreclose
hte prior mortgages, making q united
sale Of the entire property possible only
Wy CohN ltit cStioIl ol llle various
courts, with the consent of all parties.
The consolidation of the suits has AL
ways been as much out of the question
as foreclosure by single suit was in the
beginning.
RATES RESTORED
CHICAGO, Oct. 2S.-The meeting of
the lines of the Western Passenger as
sociation with the Union Pacific resulted
in an agreement to restore the old basis
of commissions on November 12. The
Union Pacific stated at the opening of
the meeting that it had no objection to
the abolishment of the high commits
sions that have for the last two months
been paid on North Pacific coast busi-
ness and on traffic to Colorado common
points. This was about all there was u
settle, and the meeting adjourned.
WON'T BUY THE BRANCH
CHICAGO, Oct. 2S.-The Tribune to-
morrow will say: High railroad author
ity in Chicago today gave out the decla-
ration that the reorganization commit
tee of the Union Pacific has given up the
idea of buying in the Kansas Pacific
branch. The syndicate owns $1,000 900
in first mortgage bonds of the Kansas
Pacific and would get the road by pay
ing the amount due the government,
namely $12.90S,272, but the committee