The Helena independent. [volume] (Helena, Mont.) 1875-1943, 1891-09-26
On the Contrary, the Union Pacific
Railroad Has Been Running
Behind.
Handicapped by an Immense Float.
ing Debt Which Cannot
Be Funded.
Report OF the Government Directors for
the Year IS9O-Recommendntiona
Renewed and Urged.

ton, George @. Plummer, jesse Spaulding
Rufus b. Bullock and Joseph W. Paddock
government directors of the Union Pacif
Railway company, nave filed with the sec
rotary of the interior the annual report. a,
follows: For the year 1890, as compared
with 1889, the gross earnings of the roat
increased $652. 443, while the net earnings
decreased $1,01l, $50. For the same period
the gross earnings OF all roads composing
the system increased $3,379.64s while the
net earnings decreased $1,457, 962.
The causes of this dimlnution in net
earnings are mostly of a general character,
common to all railways in tho west, and
arose chiefly from the exceedingly low
rates prevailing over the greater part of the
territory covered by the system. The fact
thata an increase of about s., 500. 900 in gross
earnings was effected at IN increased ex-
penss cost of operating and maintaing Of
about 5000, 900, the conclusion is ineyita-
BILE that after making full allowance for all
local and exceptional requirements for in
creased expenditures a large portion of the
business of the year was secured at rates
involving an absolute loss.
Thu svent of the year to which we feel
called upon to direct the attention of the
department has been the financial embar-
rassment Of the company, brought about by
conditions impairing the ability of the
company to carry it's large floating debt.
The gross floating debt of the company on
the 31st of December, 1889, was $50, 161, 600,
and, although Mt times materially less dur
ing tho year, it reached on the
3lst of December, 1890, $21.4OO. 900.
OF this amount about $4,000, 900
was the result Of expenditures and an ad-
vance in construction branches or the pur-
chase OF stock in such lines for the purpose
Of control, and was fully represented by
securities of equivalent or greater value in
the treasury of the company, but under the
conditions of the money market in the
autumn of 1890, brought about primarily
through the embarrassment of financial
houses in London, the market for invest
ment securities OF all kinds. both in this
country and in Europe, was seriously i'm
paired, and the company was unable to dis
pose of them.
A floating debt of such magnitude, how
ever well represented or secured. is always
to be deplored, as subiecting the company
to embarrassment from great monetary dis
%turbances. The policy OF the Union Pacific
company in requiring control of tributary
lines has been frequently discussed. We
have no hesitancy In saying such policy Is
absolutely necessary to the prosperity of
the system. 1t is doubted if the company
could have maintained solvency except
through such a policy. Every mile of road
constructed or purchased has brought ad-
ditional tribute to the trunk line.
In the year 1890 about 10 miles Of new
road, exclusive OF sidings, had been added
to the system. In November there was
upon which nearly $4.o 1c, 600 had been e1-
pended. In Oregon and Washington about
81, $780, 900 had been expended on the Port
land Puget Sound railroad, including 8
bridge across the Columbia river. All this
work was Immediately suspended on the
first suggestion of financial danger and has
not as yet been resumed. Every effort was
made to retrench expenditure in every de-
partment and it was hoped that no extraor-
binary measures would become necessary
to protect it's credit
A crisis in the financial affairs of the
1881. 1t became impracticabIe, if not i'm
possible to carry the large floating debt
any longer through bank and trust COM
panIes, and 1t became necessary to fund, at
least for a period. sufficient to enable the
company to market its securities, the most
temporary loans. The report then details
the methods adopted by the company at
the meeting held last month to prevent the
present financial embarrassment.
A sound public policy should, in our judp-
ment, prompt the government as q creditor
to make provision as to the time and date
OF payment of tho principal and the rate of
interest to be paid, as may be within the
ability of the company to meet, and Just
and equitable under all circumstances But
having done this, the Union Pacific should
be az free and untrammeIed as other lines
to develop and extend it's system; in fact, it
should be freed from every restriction e1-
cept those which the law imposes upon all
railways similarly engaged in Interstate
trathc. Under all conditions surrounding
the property at present are prospective con-
ditions of the future so far as they NAV be
foreseen.
We do not believe the position of the
government as a creditor will in any de-
gree be improved by delays in such adjust
ment, while, on the other hand, the ability
OF the company to discharge its obligations
to the government and public would bs
materially enhanced, and ultimate pay
ment more certainly insured by such legis-
latlon as will permit of the consolidation
and unihcation of the system and an ex-
tension OF the security of the government,
either directly or indirectly, to the whole
property. Nearly concurrent maturity, in
the near future, of the underlying first
mortgage bonds of the debt to the govern
ment and of collateral notes recently ia.
sued, aggregating over a hundred millions,
is a fact not to be overlooked or Disregard
ed. 1t presents impossible conditions
which wise forethought should amply pro-
vide for and in abundant season.