Daily globe. [volume] (St. Paul, Minn.) 1878-1884, 1882-09-25
rHR NORTHERN PACIFIC.
THE RECENT BOOM IN THE STOCH
OF THE COMP4NY.
A Doubt Expressed as to the Ability of the
Company to Pay the Promised Dividend
Rufus Hatch Says it is All Right, and
the Promise Will be Kept.
Especial Telegram to the Globe |

the Promise Will be Kept.
Special Telegram to the Globe.
CHICAGO, Sept. 24.-One of the morning
papers contains the following:
The columns of the daily press all over
the country have contained for many
months numerous articles telling of the
rapid progress made by the contractors on
| the line of the Northern Pacific road, the
wonderful resources of the country the
| road was opening up, and the substantial
character of the road itself. The newness
of the country, the enterprise of its inhab-
itants and the great proportions of the
| undertaking, have attracted universal at
tention from the entire country, and es-
pecially from those interested in the build
ing of railroads and the fuctuation of
railroad stock. The encouraging stories
brought here by Rufus Hatch, and other
interested parties, have tended to boom
the stock Of the Northern Pacific, Canadian
Pacific and Manitoba roads, at rate
which makes the most serious fnanciers
shake their heads in disapproval. Now
comes the first named road with an adver-
tisement of $5,00O,O0O worth of its first
general mortgage fund, forty years expert
ment gold bonds at 1.O21a, announcing
that the gross traffic earnings for the year
ending July l, 1882, will not be less than
$S00,O00. The net earnings of this
| road, under the terms of the organization,
belong to the preferred stockholders
as far as per cent. after the payment of
the fixed charges of interest, and thus the
road could not be extended, but the surplus
was placed in the bonds of the branch or
feeder roads to the credit of the preferred
stock. A dividend fund has been acquired
| in this manner amounting to $4,667 ,49O,
representing a dividend of II 10 per
cent. on $42,OOO,OO0 of outstanding pre-
ferred stock. When this dividend of IL
Ito per cent, covering period of seven
years, is compared with the dividend of s
per cent. promised for this year, the dis
| crepancy is SO great as to cause surprise
even among the INITIATED. The most
sanguine stockholders will smile with in
credulity at the announcement in black
| and white that during the coming year this
| road, really in its infancy, will earn an
| amount equal to two thirds of that which
it earned in the last seven years. The ad-
vertisement is therefore no more or less
| than a glittering delusion. It promises
| what it never can perform, and it takes no
deep insight into railroad or financial af-
| fairs&o show that those who invest IN
nrfh Do 4bo
ceiving dividend of s per cent. next year
will have to content themselves with 3 or
| or less.
knowing that considerable was done
here in Northern Pacific stock, reporter
set about to find what was thought of the
| attempt to boom the road at this stage of
the proceedings. By good luck the first
| man he asked was a stockholder in the
very road in question. He is retired
broker in railroad and bank stocks, and is
man who has great local if not ma
! t1onal reputation as fnancier and espe-
| cially as dealer in stocks.
III tell you, in the first place." he said,
that am a!stockholder in Northern Pa
cific, and believe in the ultimate success of
the road. have just returned from a trip
over that line, and the Manitoba road also.
1 am glad to see that you are looking the
matter up. 1t will open peoples eyes and
also keep the road from saying rash
things. think that the Northern Pacific
road ought not to begin paying dividends
too soon.''
Il suppose that the scrip dividends rep
resent the earnings on the preferred stock
on that part of the road now completed
from Bismarck to Fargo?''
''The preferred stock is to be, / suppose"
was the reply, "a lien on that portion of
the road now completed and in opera
ton. The dividend of eleven and one-tenth
per cent?, represents the profit on the
$4,500,O00Gsed in the construction of the
road thus far.'
Il see that the company claims to esti-
mate this years earnings at $s,OOO,OOO"
For the year ending April, 1882, the
roads operating expenses amounted to
over so per cent. of the gross earnings, ,and
at that rate the expenses of the year will
amount to over $4,OOO,OOO, which of course
will be greatly increased by the interest
charges of per cent. on the 100000
which will bring the total expenses to
about $7,O0O,000. If the earnings are
$8,0O0,OO0 this will only leave the pre-
ferred stockholders about 81 600, 600, while
the 8 per cent. promised by the company
would make the dividend $3,36O,OO0. These
figures, therefore, show that the real divi-
| dend will be little over per cent.
think that the talk about
the purchase of lands swallowing up the
preferred stock is greatly exaggerated. If