The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1891-01-11
THE FALL OF ADAMS.
How Jay Gould Got Control Of
the Union Pacific.
POOR OREGON MANAGEMENT
The Snow Blockade and the Grain Enc
bargo-Baring Bros Failure Pre-.
cipitated the Revelation.
New YORK Tribune.

tumble of lawsuits and iniunctions and 4
confusion of people and things in which
presidents and yiee-presidents and brokers
and lawyers went bobhing around in the
most amusing collisions and coniunctIons
on stage that spread from Carlsbad,
Germany, to Portland, oregon-thess
things had all taken place, and affairs had
resumed settled aspect in January, 1890,
and now everything depended on the busi-
ness of the Oregon system being conducted
economically and profitably, and broughs
to dividend-paying basis.
Why wasit not? Mr.. Holcomh had been
the first general manager of the Navigation
company under Union Pacific manage
ment. He was brought in by Thomas j.
Potter, railroad manager whose success
in the Chicago, Burlington & Quincy, and
during the very brief period of his manage
ment of the Union Pacific entities him Ia
the place universally conceded to him az
the best illustration of the practical rail-
road man brought up to the business and
promoted from the ranks. Mr.. G. ]. Smith,
who succeeded Holeomb in the Navigation
company, came in with Mr.. Potter and
Mr.. Ressequire, of the Mountain di-
vision, was also one Of his selections These
three, themselves practical men and Sc
lected by the typical practical man, were
in command at the points where the
Union Pacific plans went TO pieces, Mr..
Holcomb having been promoted to be vice
president and general manager of the en-
tire system upon the death of Mr.. Potter.
1t cannot be said that the failure was due
solely to the snow blockades and landslides
which so seriously interfered with the
business of the Oregon line in December.
1885, and January, 1890, though this was q
In February the worst was known
concerning the condition of the
roads and the prospects for busi-
ness. II it was not known it must
have been because of gross incompetency
of the management. Ii was in full view Of
the actual facts tina. the general manager
gave Mr.. Adams the most confident as
surances that everything was coming out
ri sht, that the enormous wheat crop Of
Eastern Oregon would furnish traffic
enough to make good more than all tho
losses from the winters disasters, and that
there was good prospect of the Nayiga-
ton company's earning its rentals, Of
which it had fallen short over 100000 in
1880.
Mr.. Adams apprehensions being quieted
by these assurances, he proceeded with his
plans. Instead of selling all the Short
Line collateral trust bonds. which were
quoted at 96, and had all been subscribed
the floating debt. only enough were sold tn
provide for present necessities and the re-
mainder held for higher prices. The mis-
take was discovered when il appeared az
the end of March that the Navigation
company and Short Line together had
fallen off over $500, 900 in net earnings. and
the former had failed by $l66,tO0
then the Western managers talked
wheat crop and expressed entire confi-
dence that all losses would be more than
made up by the end Of the year. In April
the Short Line began ~ pick up little,
but the Navigation company grew worse
and worse. SO that ut the end of the first
six months the two were more than $000,-
00o behind the net earnings of the same
period in 1889; and the Navigation come
pany having earned only $7f,00O above
operating expenses, had about 81, 400. 600
to earn in the remaining half year TO make
good its rental The Western managers,
apparently undismayed, continued to talk
wheat crop.
And the wheat crop was enormous.
They were right in their calculations on
that point. But what happened then2
Why, these practical railroad men who
had counted on the enormous crop ever
since the enormous snowfall of last winter
suddenly found when the harvests began
to come in just as they expected that they
had made no provision whatever for haul.
ing them. Their equipment broke down
under the first strain, and for weeks past
the Oregon newspapers have been
filed with complaints of the incom-
petent railroad management that
neglected to provide for a traffic
which they knew was coming until ii came
and swamped them. This was not the
fault of Mr.. Adams. He says he anfici.
pated possible car famine in view of thu
great wheat crop, and was particular to
call the attention Of the operating depart.
ment to the necessity of providing against
the emergency. He was assured that the
equipment was ample and everything had
been provided for. So, with expenses ill-
creasing at all points at an unaccountablo
rate, and demonstrated incapacity to
handle business when il came, the Oregon
management seemed without a redeeming
feature. A change was made In October
in the Navigation company, and the prac-
teal man at its head was succeeded by q
West Point graduate.
Notwithstanding the discouragementS
he had TO face, Mr.. Adams thought, and
still thinks, he could have successfully
tided over the immediate danger had nos
the final blow, starting from buenos Ayres
and glancing off from London-a kind OF
cross-table carom-taken his feet from un.
der him.
For several years past the Union Pacific
has been ut times a borrower of large sums
of money on its own securities in London.
The loans were effected through the house
of Barring Brothers, which had always
manifested extreme readiness TO furnish
the accommodation "Be sure and ask
for all you want" they said
when the company wanted million
or two at time. "Better have
too much than too little; and it worldnb
look well to come twice on the same err
rand" So, when in the early autumn Dir.
- 1 al
tations were doomed to disappointment
and that instead Of 5 per cent. surplus on
Short Line. there would be close shave
toward deficit. he turned at once to tho
Earrings for loan OF 81 10000, which. he
confidently believed would carry him
through the year. His application TO the
American representatives Of the nouse was
at once granted, but Messrs. Kidder, Pea
body & Co. said that as Mr..
Thomas Barring was then on ths
sea on his way to New York and the sum
asked for was quite large, II would be
proper 10 wait his arrival that he might BE-
formally consulted. at that time nobody
in this Country, IS. indeed hardly anybody
II, London. had the slightest idea that the
Bartnus we're in difficulties. But this time,
instead of repeating the usual caution to
be sure and ask for enough, Mr. Baring
hesitated over the application, remarking
to Vice-President Lane that In the exist-
ing financial situation, Y vas tne poicy O
conservatism to restrict loans rather than
extend them. This was note OF warning
from an unexpected quarter.
Mr.. Adams was uow put TO his trumps
to raise 100000 from sources nearer
home. His tYumps were low cards, ana
without knowing Il. he was sitting in 'front.'
Of an adversary who .'held over" him every
time. There was little money TO be had
anywhere on the best collateral, and the
best he could offer was far from gilt-edged