The Portland daily press., 1873-10-11
Prospects Of the Northern Pacific Rail-
ynod

Prospects of the Northern Pacific Rail-
road.
The failure of Jay Cooke d Co., who were
the financial agents OF the Northern Pacific
Railroad Company has naturally excited
great deal of attention and no little anxiety
rs the bonds of the company are extensively
held by thousands of people of moderate
means throughout the country. Two years
ago Berlin capitalists sent commissioner t.
this country to examine the condition of the
road, the nature of the country through
which it is laid out and the probabilities OF
its success. The report of the commissioner
has just been published in this country and
contains matter that will be of interest to
anxious bondholders. Mr.. Haas, the COM
missioner confines his report to considera-
ton of three questions: First: Are the
means provided for the construction of the
road adequate to complete the line? Second:
Does the finished line offer the necessary
guarantee that IFS income will be sufficient to
pay the stipulated interest on its bonds?
Third: Will the sums realized from the sale
of lands suffice to redeem the bonds at ma
turity?
In reply to the first question the commits
sioner finds that the construction estimate is
ample 10 build first class road; but con-
clUdes thar the estimates for working capital
and interest OF capital during construction is
far too small
On the question relative to tie income OF
the road, he is in greater doubt. On the COM
pletion Of the road the interest to be paid will
amount to $7,300,000 annually, to pay which
a gross income OF twenty millions year will
be required, as the average working expense
of American roads is sixty-five per cent Of
the total ineGme. To furnish this income,
the road draws the business of 630, G17 square
miles which in 1870 had less than one inhab-
liant 70 the mile; and Mr.. Haas concludes
that the population along the Northern Pa
ciic under the most favorable conditions, will
not be likely to exceed million and half al
the expiration of ten years. Such popula-
ton, he concludes, will not furnish an in
come sufficient to pay the interest; and fur
thermcre be does not think that the trans
continental trade will be very large item for
number of years, since the commercial re-
lations between Asia and this country have
been so intimately formed with San Francis
co that it will require long interval to d.
rect part of the trade to the northern route.
As to the question Of the ultimate ability
of the Company to pay Its bonds through the
sales of lands, Mr., Haas estimates that its
grant of fifty millions acres can be made to
realize sl25, 100000 within the thirty years
fixed for the redemption of the bonds. On
the other hand, he thinks the sales of the
lands will be slow and for a number of wears
the bond-holders will not realize their inter-
est.
The publication of this report has called
out letter from the President of the North
ern Pacific, in which he states that the COM
missioner has reached wrong conclusions be-
cause he is not familiar with the rapid set
Element along railway lines in the western
country and the consequent unusual develop
ment of railroad business. Indeed, he con-
siders the report on the whole, as most favor
able to the enterprise as it establishes the fol-
lowing important points:
l. That the estimated cost of the construc-
ton of the road is entirely reasonable, and that
the chief engineer of the company is a we'll
tried man of a reputation for honesty, expe
rience and capacity beyond question.
g. That the lands are sufficient to redeem
the entire issue of bonds at 10 per cent. pre-
MUM, and leave handsome surplus of these
at the minimum price-at which Mr.. Haas es-
Inmates them-and that, as compared with ex-
listing land grant roads, the amount of the
sales may exceed by three or four times the
issue of bonds
3. That the region of country through
which 10 Northern iS huild
in one of the most fertile on the American
continent, and is in every respect suitable fol
colonization.
Judge Rice, one of the Vice-Presidents OF
the Company, is now or has recently been in
the State. We understand that he reports
that the business over the part of the road
completed is Unexpectedly large and it is es
timated that The income of the eastern part
will reach two million dollars another year.
Of the direct line five hundred miles of the
eastern section to the Missouri river is complet-
ed where it will connect with steamboat navi-
cation extending thousand miles. Of the
western end, a little over one hundred miles
have been completed, which, with line OF
steamers on the Pacific controlled by the
Company, realizes large amount of business 4
from Nevada and along the coast. Judge
Rice takes hopeful view of the situation
and thinks that tue trouble of jay Cooke &
Co., will not permanently affect the building
Of the road.
The principal question of interest at the
present time is whether or not the Company
will be able TO pay the interest on its bonds
when it fails due. Should it fail to do so.
the completion of the Dad will be indefinite
ly postponed, as no company can expect to
sell bonds or succeed when it fails to pay in-
terest on money it has already borrowed.