The sun. [volume] (New York [N.Y.]) 1833-1916, 1878-07-01
UNION PACIFIC FINANCES.
THE STOCKHOLDERS DIvTDENDs UN-
DER THE THURMAN Law.
why . Dividend was Passed-The boston Df-
rectors not Inclined 10 Submit TO the PEN
aIties that Congress Directs 20 be Imposed.

why Dividend wa. Pa.ed-The Bo.ton Di-
rectors not Inclined TO submit TO the PEN
alties that Congress Directs TO he Imposed.
An impression prevails In Wall street that
the laws recently enacted by Congress to secure
the payment OF moneys due to the Government
by the Pacific Railroads are exceedingly bur-
densome upon those corporations and that the
companies will find II a hard enough task to
meet their interest obigations without attempt
Ing TO pay dividends. II is fact. however that
tho magnates controlling these properties do not
look forward to the operation Of the Thurman
law with the same apprehension as parties who
are not so we'll informed
Indeed. upon the passing Of the Union Pacific
quarterly dividend. few days ago. all outside
stock Offering was at once secured by Jay Gould
and his friends.
There has been no trustworthy publication.
so far. OF the way in which the Pacific Railroads
will be affected by the execution OF the now law.
While the bill was carefully drawn there are
points In II that have not escaped the ferret-like
eyes Of the Pacific Railroad managers. and
when 1t is time to pay the first instalment into
the United States Treasury MS the basis Of the
sinking fund the amounts rendered will proba-
bly, not be so large as the Secretary OF tho Treas
ury expects to receive. The Central Pacific
Railroad already has plan on foot by which II
is hoped the land grants can be counted in as
paramount to the Government mortgage. The
affairs Of that company are 80 confused. how
ever. by reason OF its railroad extension. since
tho construction Of the original line, that II
cannot be easily figured out how much II will be
obliged TO pay into the United States Treasury.
1t is much easier to define the position OF tho
Union Pacific
The new law defines net earnings" as the
amount loft after deducting from gross earn
ings the necessary expenses actually paid
during the year in operating the railroad and
keeping II in n state of repair and also the in
terest paid during the year upon the lrst mort
gage bonds.
The important section is as follows:
M I9e company shall on .sd day in e,eh year Isy into
OF tso3r or 50 much thereof as shan hc n,ccsssr, 20
renercd a1 he ne n,s a. @ i3r % 'etn1,s
this section required to be paid amount ~ the
said railroad company '''.
Now. applying this rule to the Union Pacific.
itwill WORK as follows. taking the rear 1877 as a
basis:
Iheoperauns expenses. including a27aiai
Interest nrst mortgage bonds......... i0rss0 ~
Now the Government claims 1--WE per cent Of
the net earn ings. and will withhold all Of the COM
pcnsaiion due Tor its TRANSPORTATION over the
line ~ the road. II Will also exact as much of
sS5O.OOO ns IL necessary to bring the other
amounts up to twenty-five per centum Of the
net earnings.
Five per of net earnings ....., s27s eat %
Go,efnmsmt ire ssht az, 30 y -
'm'u states 5sr175 ~
Twenty ave per net earnings J9ia7s o4
Consequently there will be none OF the $780,
wv 70 d" PAID over by the company. Not only
this. but as the spirit Of the law is that twenty
nve per cent of the net earnings Is the maxi
mum demanded. the Union Pacific will un-
doumedly ask The Secretary. 81 the Treasury "
hhnd over the difference OF tl39 Oj6O2.
Suppos ng that the company gets OF with
tweny-il per cent. OF net earnings. 1t s inter-
estiGs to nG,o how tho stockholders viii come
out for dividends.
After paving twenty Eve per cent, the net
earnings wall he reduced To .......: Ni7t4ie 10
lani grant aui sinking nnd bond. nese
Mo Items amount 1851 22o %
Amount len for dyiionds...... ...... e. 59S 100 u
Tho capital stock is s3G.762 800. and diyl.
tribe more han the sum left after satisfying the
government claims and paying interest upon
the various issues Of bonds Should the Cow
trnment, however. hold Oh T. the sums due for
on IN excess Of twenty-five per
crntum of the net earnings. 1t is not probable
among the stockholdcrs. whether Union
lAcllc Is cheap or dear under these circum-
vestors to decide Tho Go,ernmept sTe bas nru ra n.
served the right further 10 amt .d the laws gov
ernng the conduct OF these corporations. and il
ls safe TO nRure upon tho Thurman law as a |
basis only while Congress is not in session. |
These figures are based upon the assumption |
that the annual reports OF the Union Pacific are |
interest.
II Will be seen by the above that II was impos.
slble for the Union Pacific 10 keep up eight per |
cent dividends. and II became necessary 10 at |
least reduce TO one and one-half per cent |
quarterly. II happened. however, that large |
money lnI been n y n ~ ha
Kansas Pacific as well as IN protecting tho in |
ierests Of the company at Washington. Under |
oi accounts the fact would come TO light II the |
company paid any dividends except out OF net |
earnings. The Boston directors were not |
anxious 10 submit 10 the penalties Congress has |
atcly directed TO be imposed for paying a |
dividend out of money not earned. and 30 tho |
dividend was passed.