Los Angeles daily herald., 1886-03-11
THE WESTERN UNION.
The Regular Quarterly State-
ment OF the Company.


ment OF the Company.
NEW YORK, March l0.--The regular
quarterly statement Of the Western
Union Telegraph Company shows sur
plus on January LIST, 1886. Of $4.lo2,-
1884. The net revenues of the quarter
ending March slst, based upon nearly
completed returns for January, partial
returns for February and estimating
March, will be about 81 .050, 900. adding
to surplus as above makes total OF
$5, l52, l79 "a, from which appropriations
for interest on bonded debt Of $l23, 500
and for sinking fund of $40, ,99i, leaves a
balance Of $4,000, 88s. o.. The falling off
in the net revenue for the last quarter
was in cable. commercial news and quo
tation service. There was large in
crease OF expenses for taxes and cable
and land line repairs, which are
beyond control. The receipts for
regular inland commercial messages
have been we'll maintained. The winter
being very hard one on telegraph lines,
occasioning unusual expense for their
n.aintainence and many protracted in
terruptions Of the wires for handling
business. Notwithstanding such frequent
interruptions the volume Of inland COM
mercial messages handled is greatly in
excess Of the previous year, OF a surplus
ct the close Of this quarter Of $5.008,
S68 "a. As shown in the statement,
there have been invested in the construc.
tion and purchase Of lines and other
telegraph property up TO the beginning
Of this quarter, "a, 1856, ,9S6 IL, with a
probability of requiring further
investments of considerable sums at an
early date. II is therefore recommended
to pay no cash dividends out OF the sur
plus invested In the plant, but 1t may
be capitalized by the issue of additional
capital stock and distributed pro rata
among the stockholders to whom 1t be-
longs, which would be held by the
Court of Appeals to be the legal and
proper method Of representing. John
T. Lewis, one OF the Director of the
Company, says: "The only increase in
the capital stock will be to the amount
Of dividends, viz: 81, 200. 900. Nothing
was said about issuing bonds to-day"
The Post, in iss financial article,
says about l2 o'clock Yves tern Union
directors announced scrip dividend of
IL per cent. for quarter revenue for
Of $500. 900. Net revenue for quarter to
March is estimated at s9o6. 500 or equal
to II per cent on $50, 600. 900 Of stock,
but as estimate OF net revenue for quart |
er to December 81 was s32. 400 in excess
Of actual amount it is not improbable
that present figures may also be an over
estimate, though even at the
present figures it appears that
1t has not earned its
dividends by about $3.50. 600, and il be- |
comes pertinent question as to whether
the previous dividends have not been |
paid partly out Of the surplus funds. |
Western Union dividends have been re- |
garded with suspicion for several years,
but more especially since the reduction
to per cent. in September, 1884. Evil
dence of this suspicion has been in the |
fact that while other dividend paying |
stocks have been selling on basis Of |
from to 81 per cent. on Investment in
them at the average market |
prices, Western Union has CEN
stantly sold at prices which per
cent. dividends on par, having yielded |
about o per cent. on the instrument. 1t |
Is apparent that with money lending at |
II and 2 per cent. per annum on call |
and to per cent. on instru ment loans,
stock that would pay o per cent. would
not be allowed to remain at that price
unless there was some deep-rooted sus-
picion that its dividends would sudden |
ly come TO stop. 1t appears shat this
time has arrived when it comes to debate
among directors as to whether they shall
pass a dividend or issue scrip to keep
up the fiction to the end, now at hand.
As to the cause of this improbable re-
suit, it is believed by some persons
whose practical knowledge Of operation
entities their Judgment to some consid-
Grafton, that the reduction Of telegraph
rates in the last seven or eight years has
placed the business on q basis which |
there is no profit in. The effects of |
the weather and storms are that the
wires rust, the poles blow down, and
the net result Is that the greater
part Of the entire plant has
to be renewed every 1--WE years. 1t is
also believed that in November Gould
sold out the greater part of his holdings
of Western Union, and contrary to com
mon opinion lost control of the proper
ty for the time being. II any one else
had chosen to buy control they could
easily have done so; it is also believed that
by proxies as well as his own holdings
he has control now because nobody else
wants it. Stock has been widely dis
tributed to small holders to whom high
rate returns have been very attractive,
and if these charges in regard to condi-
ton Of property and construction OF ac-
count are not true the directors will be
asked by the numerous stockholders to
explain.