, 1891-04-05
OREGON THE WEAK SPOT
Where Adams Administration Was
Worst Punched.
How Gould Secured Possession of
the Union Pacific.
Was a Neat Little Bit of Work
That Did the Business.

- ASAo"AbB AAOW Nv pth y l. IL
Bromley of Boston with reference to the
inwardness Of Jay Gould's recent Union
Pacific deal will be of interest:
The weak spot in the Union Pacific
for the last two years has been in Oregon.
1t is in this part OF the system that most
OF the embarrassing complications have
occurred during Mr.. Adams administra-
ton, iu the management of which it has
shown its greatest weakness, Here was
the Union Pacifc's most promising
source of revenue; almost of consequence
at was its most vulnerable point to be
strengthened, fortified and constantly
guarded. But to pursue the figure it was
left in charge OF quartermasters. its de-
lenses were left uncovered and here one
day Mr.. Gould and a few friends saun-
tered leisurely in without firing a gun
Mr.. Gould told a reporter who asked him
the other day if he had been cunning
for Wanamaker,' that he did not own a
gun-and took peaceable possession. The
weak point was a floating debt incurred
by the Union Pacific in purchasing
through the Oregon Short Line a major
Ity OF the stock of the Oregon Railway
& Navigation, which was under lease to
the Oregon Short Line. The purchase it.
self was a wise one. as it resulted in nut
ting a 6 per cent rental practically on a 5
per cent basis. Provision for it was made
in the issue of a collateral trust bond at
5 per cent, with the stock as security. and
between seven and eight millions of the
issue had been sold. leaving five millions
in the treasury. The entire issue had
been subscribed for, but the mistake was
made in holding the remainder ior higher
prices.
Some things happened, too, that no
foresight could have provided againts.
The elements combined to laugh to scorn
the wisdom OF man. The winter of 1888
SO was so free from snow. upon which the
fields of Eastern Oregon were dependant
Tor irrigation that the wheat crop of 1889
was a failure, and the Navigation com
pany which had always derived large
traffic from this source suffered an enor-
nous loss in net earnings. There was no
wheat to haul. The snow came the fol
lowing winter; came IN such volume, with
foods, landslides and blockades, as to put
a stop to all business for weeks at a time,
leaving the road and equipment unfit to
meet the increased demands upon them
for carrying the enormous crops of 1890.
First they had no wheat to haul; next
they had no means to haul it. Even
these disasters might have been tided
over but for the added complication of
tight money, which increased the diff
Guilty OF carrying a floating debt for which
money had to be borrowed upon collateral
rapidly diminishing in value. The Navi-
cation company's earnings had fallen
short of the rental about $3.50, 600 in 1883.
and $736. 900 in 1889. and the deficit for
1890 threatened to be $1,000. 900 Tho
stock, which had held IN the neighbor
hood of par upon the strength of the
lease, showed signs of weakening under
pressure of decreased net earnings and
dropped of among the eighties. 1t grew
more and more difficult to borrow on a
collateral trust bond which had only this
much as its security. %
Mr.. Bromley goes on to recite how, in
the midst of all this Robbery, the financial
world awoke one morning to find the aged,
respectable and virtuous house of Barring
Bros. sitting on its stomach, dallying with
a brunette South American republic. The
embarrassment of this banking concern
ably assisted in ]precipitating the financial
crisis Matched by the situation in OREGON,
and which resulted in Mr.. Gould's placing
Sidney Dillon at the head of the di-
%rectors' tables.