The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-10-29
Mr.. HARMON EXPLAINS
STATEMENT REGARDING THE UNION
PACIFIC RAILWAY SALE.
Why Separate Foreclosure Suits Were
Necessary--FafIure of Congress to
Act on OIney's Suggestions.

CINCINNATI, Oct 2S.-Judge Judson
Harmon, who was attorney general under
the last administration of President Cleve-
land. to-day gave out the following state
ment regarding the proposed sale Of the
Union Pacific Railway:
among the criticisms Of the Union Pa
cidc situation ii is publicly declared by some
that the foreclosure of the government
lien on the main line and OF that on the
Kansas Pacific line should have been in
single suit and that possible loss by break
ing up the unity of the properties might
have been avoided by afterward consolidat-
ing the several suits.
''This statement IS wholly unfounded. As
the property is in seven different States ana
judicial districts separate suit had TO De
brought In each. The disadvantage or TINS
to the government was plain from the start.
Accordingly in a bill for settlement, pre-
pared at the request of Congress by Mr..
Olney, he inserted a provision authorizing
foreclosure of all the government liens IN a
single court If suit should be commenced
The bill failed and this provision with IT,
I'm the attorney general report Tor 1888
page 25) the subject was Sgan urged upon
the attention of Congress, as follows: AS
il may become advisable or necessary Tor
the government TO institute legal proceed
ings against one or both of the companies
above named | beg to call attention to the
necessity of a law giving some proper court
In the District of Columbia Jurisdiction OF
the entire property and of all the parIes
in interest What has been hereinbefore
said as to the general necessity or giving
one court full jurisdiction in such cases ap-
plies with especial force here. Such pro-
vision was included in the bill prepared py
Attorney General Olney at the request or
the last GongGesss ee p rePo n t io form y
of a separate act, independent OF partlcu-
lar plan of reorganization. Until the pas
sage of such an act any attempt OF the gov
eminent to protect its rights by litigation ION
will be greatly hampered. general law
for all like cases was recommended
.:1Tbe attorney general followed his report
by preparing a bill which was INTRODUCED
by both Senators Morgan and Brlce on Dec.
20 1907 1t was not passed. although IL was
again recommended. Consequently, when
the President directed foreclosure, proVlued
the too-common fate Of junior mems coulu
be avoided by guaranty, as ne had pro
pCsed to do in his message or Dec. {, 1910,
in case Congress should fail to act, the ne
cessity of separate suits could not De
.'The guaranty, secured by a large de-
pcsit of money assured to the government
in cash. on it's second lien, in the dtstrlbu-
ton of proceeds of sale, at least the prlncl-
pal of all it's subsidy bonds and more thal
half the interest which ran at per cent.
for thirty years. and, unlike the princlpai,
was not invested in the property, but went
to the bondholders To make this guaranty
good required bid at the sale OF about
$45 900 per mile for the entire system, or
$50 0O0 per mile for the part subject TO the
governments lien, including the sinking
fund, to the benefit of which, OF course.
the company was entitled. The arrange
ment was recommended in writing by every
government director and receiver.
1.-THE governments lien did not cover the
entire property of the company, nor even all
it's lines of railroad, and the remainder OF
both property and lines was heavily mort
gagged to others. Whether by the terms of
the act the government created for itself
more than a mere lien is by no means clear
under the decision of the Supreme Court,
but it's claims general creditor, If such
ii have, was not qualified nor surrendered.
1.-The sale was to be at public auction,
subject to the approval of the court and
free and open to any and all bidders with
out restriction or condition. as shown by
the terms of the agreement submitted to
Congress at the time, Jan %, 1897. The
suits which were brought in February had
foreclose the prior mortgages, making
unit sale of the entire property possible
only by concurrent action of the various
courts, with the consent of all parties. The
consolidation of the suits has always been
as much out of the question as foreclosure
hv single suit was in the BEGINNING"