The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1897-01-27
UNION PACIFIC FORECLOSURE

The Omaha Bee is not at all certain
as to what the effect of the foreclosure
! Of the second mortgage on the Union
Pacific will be. 1t says that the part
nership that has existed between the
/ government and the Pacific roads since
! the early COS is to be not extended by
! the funding of the debt, but summarily
/ dissolved by the sale of the govern
ment's interest to the highest bidder,
and that the cutting of this knot
should relieve congress of further fruit
less discussion of the Pacific railroad
debt settlement and remove forever the
temptation to sacrifice the public in
terest in these roads to the private
gain of any syndicate of railway mag
mates
But this is not all the work to be
done, by any means. The Bee very
properly says that lit must not be i'm
agined that the mere order of fore
closure is the final solution of the Pa
cific railroad problem. Under the terms
of the agreement entered into between
the attorney general of the United
States and the Union Pacific reorgan-
ization committee only one condition
has been exacted, and that is guar
antee to the government that there
viii be a bid of not less than the stipu-
lated upset price based on the face
value of the debt and the accrued
sinking fund payments. Foreclosure,
however, is only a preliminary to re-
organization Are the new owners to
be left perfectly free to reinflate the
existing fictitious capitalization and go
through again and again the disastrous
process of bond floating and stock wa
tering? Are the people dependent upon
the road to be compelled to continue
paying eXorbitant passenger and
freight transportation rates to meet in
terest on the present colossal capital
iZation, or one still larger? Is the
road to be weighted down anew with
fixed charges, bound to eat up more
than the traffic will produce, and be
driven in a few years to a second re-
ownership on the same plan as recently
occurred in the case of the Atchison?
Are any provisions to be made to in
sure for the Union Pacific the cooper
alton of the Central Pacific, that is in
OlSD6uSdDle Il IL ~ NC vital IL was
designed to be-the great transconti-
mental thoroughfare for the whole
country"
These are all important questions
When the governments claim has been
satisfied it is hard to see how it can
impose any conditions which shall for
bid the reinhation of the existing fic-
titious capitalization if the new owners
choose to reinflate it. That it would
be possible in the future to initiate the
capital stock as has been done in the
past. is very doubtful; the conditions
and development of the entire country
make this impossible.
We agree with the Bee that foreclos-
ure having been determined upon, the |
court proceedings should be expedited !
in every proper way and the period of |
uncertainty cut short as Sarly |
as possible; and that the reorganization |
of the Pacific roads upon a firm and |
stable footing and their operation upon |
a basis of economy and sound finan-
ciering cannot fail to work incalculable |
benefit to the people of the western
states and contribute measurably to
the better settlement of the country, |
the development of its resources and |
the restoration of general prosperity.