Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1884-06-30
RAILROAD MATTERS.
Reasons for the Companies Borrowing
Money.

San Francisco Call, June Goth
The report, published yesterday, that the
plaintiff in the celebrated Cotton case had
given notice of an intention TO apply to
Judge Jackson Temple, of Sonoma county,
| for the appointment of receiver to take
! possession of the Central and Southern
Pacific Railroads, created good deal of
talk in business circles about the present
| financial condition of our railroads. 1t has
been matter of gossip for some time that
they were extensive borrowers of money
in this city. Seeking reliable information.
| that the public seemed badly in need of, a
representative of this paper yesterday found
prominent railroad official with an incli-
nation to answer all pertinent questions
"The railroad companies" said he, are
large borrowers at this time, and have
sought accommodations in this city be-
cause money is easy here, and because it is
very tight in New York"
What has caused the railroads to need
more money now than they usually need
at this season of the year? ?" asked the re-
porter.
Several unusual demands are to be met
| in July" replied the official, Z" and | will
| name them. In 1864 the State of California
| Endorsed guaranteed bonds of the Central
| Pacific Railroad Company to the amount
| of 81, 5OO,O 900, to run for period of twenty
| years, and, according to agreement, has
since paid the interest. These bonds ma
| ture in July, and, according to its compact,
| the company will then redeem them. Then,
not long ago, Mr.. Huntington purchased
| the Morgan line of steamers, running be-
| tween New York and New Orleans, for
about 81 100000. These steamers form the
| last connecting link in a through route
| from this city to New York via New
| Orleans. About 81 100000 is still owing
on this purchase, all of which falls due and
will be paid in July. There are s.. SOC, 900
| of unusual engagements to meet. Then,
| again, the washoutS on the Southern route,
| in consequence of the unprecedented rainy
| season, have caused another unusual ex-
penditure of about 100000 to repair and
| reconstruct the line where it was washed
out thus draining the railroad treasures
| from week to week when the receipts were
| small, because the freight could not come
! than 900 loaded freight cars are detained.
| and the road is only just getting into
| condition so that they can commence to
come through. The falling off in the traffic
| on both routes from Interruptions and other
| causes, mostly incident to this extraordi-
| nary season, has largely reduced the reve-
nueS of the companies for the time being.
| SO it happens that on account of unusual
| demands much more money is needed than
| the roads have been able to earn Conse-
quently the companies have gone into this
| market and borrowed somewhere in the
| neighbOrhood of 100000; and what is
more, they have found plenty of men will
| ing to lend their capital on the securities
| offered. The greater portion of this money,
! it will be seen, goes into investment and
| not to repair losses. There is another good
| side to these operations. The borrowing of
so much California coin at the present time
was gOdSend to those capitalists who have
been going around for months complaining
of the dearth of profitable and at the same
| time safe ventures Thus far | have treated
of the unusual demands upon these com
| panies. Besides these they have to meet a
| demand for 81 500, 900 in July for the semi
| annual interest on railroad bonds, and, in
addition to this the Central Pacific has TO
! provide million a year under the Thur
man Act These are ordinary eXpendi-
lures that the company could have pro-
vided for without any trouble, had it not
| been for these unusual expenditures.
| What are the prospects of the railroads
soon regaining a prosperous headway?''
was the next inquiry.
The signs are all good. We are enter
| my upon WndU promises 10 De lnc DeSt SlX
| months business either road has ever done
Lost profits will soon be made up by the
| resumption of business on an increased
scale Within the State the crops are large
and more grain, wool, wine, fruit, live
stock, etc, must be moved than in any
other harvest year. The financial officers
of the company say that every one of the
| unusual demands will be met when due
all the interest will be paid promptly, and
all the employees of the company will be
paid in full in July. Perhaps they may
| have to wait two or three weeks longer
than usual, but any employee who desires to
leave the company's employ is paid on
| quitting"
1t seems that the proposed application
| for the appointment of a receiver does not
| involve the Central and Southern Pacific
railroads, but applies merely to the stock
| and bonds involved in the suit, in which
Mrs. Cotton is plaintiff and Leland Stanford
ct al are defendants