The herald., 1897-01-23
IMMEDIATE FORECLOSURE
The Railroad Policy of the Pres.
ident
PROPER PRECAUTIONS TAKEN
To Prevent Sacrifice When the Sale Is
Made
Bidders Are Ready With Their Coin to
Buy the Union Pacific
Property
Press Special Wire

|
WASHINGTON, Jan. 22.-Attorney-
Lowing statement of the agreement with
the reorganization committee of the
Union Pacific railway.
Upon the defeat of the funding bill in
the house the president directed the at
torneygeneral to commence foreclosure
proceedings against the Union Pacific
Railway company, first making the best
| arrangements obtainable for the protec-
tion of the governments interests. Fol-
| lowing the lines indicated in his last re-
port, the attorneygeneral began nego-
tiations with the reorganization commit
| tee. Thursday an agreement was made
| which will result in immediate steps to
| fbreclose. The chief subject Of the ne
| g0tiatiOnS was the protection of the
| government against the risk of the sac
| rifice of it's claim by the sale at auc-
! tion, which would leave nothing substan-
| tial after paying the prior liens. The
| protection is now assured by guaran-
| tee that the government shall receive
| on it's lien on aided portions of the Union
| Pacific and Kansas Pacific lines, in
| cluding the sinking fund, not less than
s45, 754 900. The sale will be public, SO
| the government will receive the benefit
of any higher bids up to the full amount
| of it's claim, with principal and inter-
| est. The sum of four and a half millions
of dollars in cash was deposited Thurs
| day with the United States Trust COM
| pany of New York by General Louis
Fitzgerald, chairman of the committee.
| as security, according to the terms of the
| committee. The committee agree to bid
| par for the sinking fund, If it is desired
to sell at any time before the foreclo-
sure sale. Bills In equity have been pre-
| pared, signed by the attorney general
| and Hon. George hoaoley, special coun-
sci, and forwarded to st. Louis, where
they will on Friday be presented to
Judge Sanborn, who has jurisdiction in
| all districts, and whose consent to their
| filing is necessary because the receivers
in charge of the property are made par
| ties defendant.
They are original bills and not cross
| bills in the pending suits. Whether they
will proceed as independent bills or be
ordered to stand as cross bills in pend
| ing suits will be determined by the
| Judge, but in either event the result will
| be practically the same. viz: the sale of
! the property under the governme
! lien as we'll as that under the first mort
| gage. Bills will he filed in the districts
| of Iowa, Nebraska, Wyoming, Colorado
and Utah. Separate bills for foreclosure
| of the lien on the Kansas Pacific are in
I
filed in Missouri and Kansas. The pro-
| posed arrangement was submitted to
| the government directors before it was
closed. They all recommend its adop-
| ton. Their general opinion was thus eX-
| pressed. The government cannot pru-
| IDENTIFY longer defer the settlement of this
matter The Union Pacific system has
already been much curtailed and its rev.
enue has been permanently reduced. Re-
organizat tions of allied and neighboring
properties have each been accomplished
or are in train of early consummation,
and the breaking up of the entire Union
Pacific system has been and is steadily
progressing.
1t therefore seems to us ireXpedient, If
rot dangerous, to neglect this opportun-
ity of realizing the sum offered and thus
expose the government to continuous
depreciation of its security. 1t is be-
lieved there will be higher bids but if
rot, the estimate shows from the amount
already received from the company. the
government will at least realize a sum
equivalent to the principal of the sub
sidy bonds, with interest at about 3.13
per cent from their issue to average
date of their maturity or about 3.45 per
cent from date Of issue to Jan. 1, 1897. a
minimum of $575i,O0O guaranteed the
government is in cash. All the rela-
tions with the property will terminate
upon the confirmation of the foreclosure
sale. The course to be pursued with re-
spect to the Central Pacific has not yet
been determined.
The following named gentlemen COM
prise the reorganization committee:
Louis Fitzgerald, chairman: Jacob II.
Schiff, Chaurcey NJ Dspew, r. Jefferson
Coolidge, w. Marvin Hughitt and Oliver
Amcs.
1t is understood that the necessary
legal proceedings incident to the govern
ment's taking part in the foreclosure
suits now pending at Omaha on behalf of
the first lien holders will be begun at
once and the case pushed to a speedy
conclusion. The outlines of the agree
ment with the reorganization commit
tee were approved by the attorney
general very soon after the failure of
the funding bill, only the exact amount
of the guarantee remaining in abey-
ance. Nor was this point decided until
Judge Harmon's visit to New York early
this week. The first offer of the syndi-
cate was $45. 900, coo even. The attorney
general, however. insisted upon an in
crease of S75i,G00, which was finally
agreed to at the last conference yester-
day. This makes the total amount which
the government will receive in cash S45,-
1870 From this amount, however, the
government will redeem at maturity the
bonds now outstanding, the last of which
do not become due until 1899. The inter-
est on these bonds until maturity will
also be paid by the government
In official circles the agreement is re-
garded as highly advantageous to the
government. Although the interest
which the government has paid and will
continue to pay until the last of the out
standing bonds mature was at the rate
of per cent the figure obtained by the
attorneygenera is regarded as very
liberal For many yearss. the govern
ment's money involved in the Pacific
railroads has not been regarded as an
investment and the interest payments
have not been looked upon other than
as an expense. even at the figure guar
anteed.