Iowa County democrat. [volume] (Mineral Point, Wis.) 1877-1938, 1878-07-12
UNION PACIFIC FINANCES.
Deyising Schemes to Cheat the Govern
ment and Nullify the Law.
New York sun, July 3.

that the laws recently enacted by Con-
gress to secure the payment of moneys
due to the government by the Pacific
railroads are exceedingly burdensome
upon those corporations, and that the
companies will find it hard enough
task to meet their interest obligations
without attempting to pay dividends.
1t is a fact, however, that the magnates
controlling these properties do not look
forward to the operation of the Thur
man law with the same apprehension
as parties who are not SO well in
formed.
The new law defines "net earnings
as the amount left after dedueting from
gross earnings the necessary expenses
actually paid during the year in oper-
ating the railroad and keeping it in
state of repair, and also the interest
paid during the year upon the first
mortgage bonds.
The important section is rs follows
The company shall, on said day in
each year, pay into the treasury, at the
credit of said sinking fund, the sum of
$500, 900, or so much thereof as shall
be necessary TO make the 5 per centum
of the net earnings. and the
whole sum earned bv it us compensa-
ton for services rendered for the
United States, together with the sum by
this section required to bepaid, amount
in the aggregate to % per centum Of
the whole net earnings of said railroad
company.
Now, applying this rule to the Union
Pacific, it will work as follows, taking
the year 1877 as basis
The gross earnings were. ........ x12, ara, 2e9
The operating expenses, including
taXes.... ....,.............. 5,"13, 42l
surplus earnings ....,....... 81, $3.50. Isl
Interest on first mortgage bonds ..,. /, $50, 500
Net earnings. #.........,... SIS, 565, sa2
Now the government claims per
cent. of the net earnings, and will with
hold all of the compensation due for its
transportation over the lines of the
road. 1t will also exact as much Of
$S50,O00 rs is necessary to bring the
other amounts up to rs per centum of
the net earnings.
Five per cent OF net earnings il 49,. S21s, 1874
Government passenger transportation. 1913, 251
Government freight transportation. 362, 90s
United States mail ........,.........., 596,115
Total. ............. 80. ...... 81, $50, $50
Twenty-Five per cent. of net earning. 49l, 473
Consequently there will be none Of
the $S50,000 to lie paid over by the
company. Not only this, but as the
spirit of the law is % per cent. of the
net earnings is the maximum demand
ed, the Union Pacific will undoubtedly
ask the secretary of the treasury to
hand over the difference of $3.50 056.02
Suppose that the company gets OFT
with % per cent. of net earnings, it is
interesting to note how the stockholders
will come out for dividends.
After paying % per cent the net earn
ings will be reduced to, ......... :. 81 Ia, 4la
Out ut this must come the interest on
the land grant and sinking-fund
bonds; these two items amount to 1851, POO
Amount left for dividends So 52} 100
The capital stock is $50, 762 800, and
a dividend of Z per cent upon itwould
require trihe more than tho sum left
after satisfying the government claims
and paying interest upon the various
issues Of bonds. Should the govern
ment, however, hold on to the sums due
for transportation in excess of % per-
centum of the net earnings, it is not
probable that more than 6 per cent
could be divided among the stockhold-
ers. Whether Union Pacific is cheap
or dear under these circumstances is il
question for Wall street and investors to
decide. The government has reserved
the right further to amend the laws
governing the conduct of those corpora
tions, and it is safe 70 figure upon the
Thurman law as basis only while con
gress is not in session. These figures
are based upon the assumption that the
annual reports Of the Union Pacific are
correct as to earnings, expenses and an
nual interest.
1t will be seen by the above that il
was impossible for the Union Pacific to
keep up per cent. dividends, and ii
becomes necessary to at least reduce to
II per cent. quarterly. 1t happened.
however that large sums of money had
been spent i'll acquiring tile Kansas
Pacific as well as in protecting the in
terests Of the company at Washington.
Under the new law appointing gov
eminent auditor Of accounts the fact
would come to light if the company paid
any dividends except out Of net earn
ings. The Boston directors were not
anxious to submit to the penalties con-
gress has lately directed to be imposed
for paying dividend out of money
not earned, and so the dividend was
passed.
4 Wise Deacon.
Y