, 1891-09-25
THE UNION PACIFIC.
The Government Directors File
Their Annual Report.
A Crisis in the Financial Con-
dition of the Road.
Restrictions Imposed by Law
Should be Removed.

WASHINGTON, Sept. 24.-George f.
Leighton. John f. Plummer, Jesse
Spalding, Rufus B. Bullock and Joseph
w. Paddock. government directors of the
Union Pacific Railway company. filed
with the secretary of the interior their
annual report as follows: For the year
1890, as compared with 1889. the gross
earnings of the railway increased 1862, 643,
| while the net earnings decreased 81, OIL
800 for the same period. The gross earn
ings of all roads composing the system
increased So, 379, GAS. while the net earn
ings decreased sl,457, 800. Tho cause
for this diminution in net earnings are
mostly of a general character common to
all railways in the West and arose chiefly
from exceedingly low rates prevailing over
the greater part of the territory covered
by the system.
The event of the year to which we feel
called upon to direct the attention of the
department has been the financial en-
barrassment of the company brought
about by conditions impairing the ability
Of the company to carry its large floating
debt. The gross floating debt of the COM
pany on the 3lst of December. 1889. was
$40, l6l 600. 1t reached on the 3lst OF
December, 1890, s2l, 400, 900. Of this
amount about $15, 600, 600 was the result
of expenditures advanced In the construc-
ton of branches and was fully
represented by securities equivalent or of
greater value in the treasury of the COM
pany. But under the conditions OF the
money market in the autumn of 1890,
brought about primarily through the en-
barrassment of financial houses IN Lon
don, the market for investment of Sc
curihes of all kinds, both In this country
and Europe was seriously impaired and
the company was unable to dispose Of
them.
The policy OF the Union Pacific com.
pany in acquiring control of tributary
lines has been frequently discussed. w,
have no hesitation in saying that such
policy was absolutely necessary to tn,
prosperity of the system. 1t is doubtet
If the company could have maintained it
solvency except through such a policy
Every mile of road constructed or pur
chased has brought additional tribute Il
the trunk line. In the year 1890 abou
120 miles of new road. exclusive of sid
ings. had been added to the system.
All this work was Immediately ended
on the first suggestion OF financial danger
and has not as yet been resumed. Every
effort was made to retrenoh expenditures
in every department. The crisis in finan-
cal affairs was. however, reached in
August, 1891. 1t her became impracti.
cable, if not impossible, to carry the large
floating debt any longer through banks
and trust companies and it became neces.
sary at least to fund it for a period suf-
ticient to enable the company to market
its securities. most of which were already
hypothecated in temporary loans,
: The report then details the method
adopted by the COMPANY at the meeting
held last month to prevent financial
embarrassment.
The government directors say they re-
luctlantly concur in this course but regret
the temporary character of provision for
relief. The report then continues: The
conditions prevailing at this time en-
phasizes the recommendation so often
made by congressional committees and
by government directors that it is vitality
essential that this company be free from
the exactions imposed by law to enable il
to maintain itself in fair competition with