New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1893-03-01
THE DIRECTORS REPLY.
NORTHERN PACIFIC OFFICIALS SPEAK.
THEY ANSWER THROUGH PRESIDENT OAkEs
THE INvEsTIG ATING COMMITTEES

THEY ANSWER THROUGH PRESIDENT oAKEs
THE INvEsTIG ATING COMMITTEES
CHARGES.
The directors of the Northern Pacific Railroad,
through the president of the company, thomas L.
Cakes, have made the following reply 10 .ie
recent report of the Investigating Committee whlch
contained severe criticisms on the management OF
the road
To the Stockholders of the Northern Pacific Railroad
Company
Although the report of the committee appointed
October 20, 1872, has not been formally r'c'N'o
mr. acted mon by you vet nasmuch AT II has "cli
given to the public, deem IT wise to make S'a'e-
ment calling your attention TO tie errors ana hi'V'
curate deductions contained I'm that report H. oons
this we shall show. I'm the first place, 'hat inc "c'S
Of the present management complained OF ny '"o
committee were either authorized or approved ~ Sou
through formal votes r.Irescntng large ma1ores OF
the entire stock OF the company and, In the secoho
place we shall show that these acts were "Hci!
conceived, judciously executed, and have pceh i"'
the best interests of the property inrus'ed 10 OUR
charge
The resolution under which the committee acted
does not confne its inquiries to any special period
in the history Of the road Int since the comm,''ee
hos limited IFS examination, chiefly, to the history
and the policy OF the past three years, We MINK IL
best Mt the outset TO direct your attention. pre"S' "
the history OF the road prior to Tie Time "heh 'i'
control of It's affairs passed to the present manage
ment and the reasons which governed 'ne Po''''
criticised BY the committee.
POLICY AS TO BRANCH LINES.
Tn. charter Of the Northern Pacific authorized the
construction of a railroad from some convenient pot
on Lake Superior to convenient point on i''ge'
eound When this charter was granted no rai'roau
existed In this region, and the country was w'iucr
ness. To Gid in the development OF the Nor'i-
west by the construction Of this line, Congress sra'
lands upon each side Of the proposed rou'e IN.
main line as located reuchcd no large city ana "ouu
encourage settlement along only a narrow Dei'
.Aocent IN the railroad Early in the history OF the
companv IL was deemed essential TO reach the grow
fng cities Of st. Paul and Minneapolis to enn"e lh9
company to exchange business with the th"n eAiso"s
lines from those cities to Chicago ms gave IIsc :"
the lease OF the st. Paul and Northern r"oi"o
RAILWAY, extending from Branerd to those CUES
r, ,s.. met with the approval Of all Of the officers
and directors Of the company and oil us s'ocNho'ucS
q well. 4.
The construction Of the main line would only ue
veon a very small portion OF the granted lancs. lno
company desired to reap the greatest possioe oene".
from the sale OF these lands. The iahos Uc"'eu u.
q distance from the main line could only 90 ue.eops
ana disposed OF to advantage by the construction Oh
hz,nrh lines or feeders The policy OF constructing
throuch an unsettled country such lines. when IN
their inception II treated distinct from the "1'i'
une would clearly not pay liked cnsrees IL .'.
ouerating expenses, very carefully cohSuereu AZ
an early date by the officers and directors OF Tue i
ubose views were presented to the STOCKHOLDERS. ~
xra. urged that while these branch lines might not.
cnnstaered alone pay operating expenses ana nAeo
charges they would originate new business 1or inc
main line, and the benefit thus derived wouu iiio'e
thon counteroalance any loss AFTER carer" au
mature consideration the officers directors anu s'oo"
holders all united In the Wow that tho general sys
fem vould. probably Immediately, and certainly IN
the future be benefited by the construction Oh 'uesc
so.called branch lines feeders, ana Doth 'he oeo
tors and stockholders authorized their cons'rucuon
Under the policy 80 adopted various branches "eie
constructed. some Of which nave surPssseu eAPvN
tion and earn more than their operating expenses
ma nxed charges even when considered MS lnae-
vendent lines Others as anticipated, have not shown
such mood results, but when credited Win the oeen'
10 the main Nne through business originating upon
them. on the basis Of 60 per cent net, which OASIS
Ga anproyed by the committee show gain and not
loes to the system large. This policy of construct
ing or acquiring branch lines or feeders was aiopeo
long before the charge Of your road became 'eseu ia
the present management, and many Of the Dr'hcn
lines had then been constructed The branch lines
earlier In date developed the country surrounding
them and now make q comparatively good financial
showing whereas the more recently constructed OF
acquired branch lines have not had sufficient time
for development; but still, when treated us parS VI
the entire system, show gain instead OF ioss' aho
promise to earn IN the future their operating
expenses and Fixed charges, In ADDITION 10 'he IN
creased earnings resulting TO the main line from theii
operation.
The committee does not cri1cise the general policy
OF constructing and acquiring these braIch lines a'
feeders and the wisdom OF such policy Is clearly
exemplifed by the following statement In lis report
"The Auditor argues that if We assume tlat TIE COS
to the main line OF transporting this branch-Ahe buAl
ness is 40 per cent Of It's earniDg which w1ud seen
lsa N BILE
net earnings of the main line would be &4,4O'OU
With which to meet the direct deficiency OH thes
branches Of say, IL 100000" Up. Ia.
Treating all the branch lines together and as
part Of the Northern Pacific system. the result Il
thus gain in net earnings 10 your company OF uboa
e3,17OOoo.
This policy OF cor strucing branch lines feeder
has not only met with the unanimous approval .
successive boards OF your directors from - year
bai was formally auhorized by you a 81 ms s,
day Of september. 1850. The method Of c5nSruc
ton and acquisition OF these roads has br"n iron
poris Of the president and ether officers of You
COMPANY, and submitted annually u you at you
ccivcd your unanimous approval. When The erca
business depression upon the coast occurGrd yea
assumed obligations in regard to them which had 4
be fulfilled The meeting OF thr'e Civilizations =, c,rsr'
determined by resolution not 10 undertake any new
e,nsruc,ion work n assume any new ohS Mons
Among the alleged acts Of the present mann gcmcn
which have come nnder the criticism Of the com
uhttee the construction and acquisition OF ccrta
specific branch lines or feeders. We VIII c"nsid'
them in the order in which they appear in the com
u!iti' c's report.
when this line OF steamers was obtained you
two great rivals the mon t'ac,9c and tn Cila;itI
Pacific had, and have, lines Of steamers plyin
upon the waters Of the -"und divcrting a larg
volume Of business from your COMPANY j., III
purchase you acquired ntn' i'OatS. two OF "lich
wear prior had cost $40O. 900. twO-thirds Of III
entire purchase price OF This line. The acquisition
Of This line became imperative, as your conIpan,
WAS then. under mandamnS from the courts, com
pclled 10 accord TO the Union Pacific Railroad Com
pany transportation facilities between the Sound ant
Portland. which virtually placed that company upo
An equal footing in securing your sound traffic
without this steamship line your COMPANY won't
have lost "a large part OF its Sound traffic. 1h
Union Pacific would have II, ertcd II, via Portland
Your company would have had the benefit OF han
Of only aIout $50 miles. by the acquisition Of thi