g to redeem said prior
liens in such manner as the court might direct, and praying that
thereupon the United States might be held to be subrogated to all the
rights of said prior lien holders and that a receiver might be appointed
to take possession of the mortgaged premises and maintain and operate
the same until the court or Congress otherwise directed. Thereupon the
reorganization committee agreed that if said petition was withdrawn and
the sale allowed to proceed on the 16th of February, 1898, they would
bid a sum at the sale which would realize to the Government the entire
principal of its debt, $6,303,000.

Believing that no better price could be obtained and appreciating the
difficulties under which the Government would labor if it should become
the purchaser of the road at the sale, in the absence of any authority
by Congress to take charge of and operate the road I directed that upon
the guaranty of a minimum bid which should give the Government the
principal of its debt the sale should proceed. By this transaction the
Government secured an advance of $3,803,000 over and above the sum which
the court had fixed as the upset price, and which the reorganization
committee had declared was the maximum which they would pay for the
property.

It is a gratifying fact that the result of these proceedings against the
Union Pacific system and the Kansas Pacific line is that the Government
has received on account of its subsidy claim the sum of $64,751,223.75,
an increase of $18,997,163.76 over the sum which the reorganization
committee originally agreed to bid for the joint property, the
Government receiving its whole claim, principal and interest, on the
Union Pacific, and the principal of its debt on the Kansas Pacific
Railroad.

Steps had been taken to foreclose the Government's lien upon the Central
Pacific Railroad Company, but before action was commenced Congress
passed an act, approved July 7, 1898, creating a commission consisting
of the Secretary of the Treasury, the Attorney-General, and the
Secretary of the Interior, and their successors in office, with full
power to settle the indebtedness to the Government growing out of the
issue of bonds in aid of the construction of the Central Pacific and
Western Pacific bond-aided railroads, subject to the approval of the
President.

No report has yet been made to me by the commission thus created.
Whatever action is had looking to a settlement of the indebtedness i