The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1893-03-09
DEFEND THEIR ACTS.
Northern Pacific Directors Re-
ply to Criticisms.
THE LAKE SHORE PURCHASE
Steamer Line and the Belt Line-South.
eru Roads Reduce Kstes-Clark
Returns to Gould Lines.

YORK papers Of March I, answers in detail the
criticisms OF the committee on the management
OF the property. After calling attention to the
fact that the committee confined itself 70 crisi-
csm OF Tho management In the last three years,
the directors show the necessity of constructing
branch lines and that they brought the COM
pany q gain In net earnings in the last fiscal
year OF $s,l7o00Q They say that the floating
debt 10 due 70 the obligations incurred Tor these
branches ana that the decision reached in Jan.
uary, 1891. to undertake no new construction
has besn strictly complied with. The criticisms
are then met In turn and the passages relating
to the Puget Sound property are here quoted In
full. Taking up 6rst the purchase OF the Puget
Sound 4 Alaska steamer line, the directors say !:
When this line of steamers was obtained. your
two great rivals, tho Union Pacific and the
Canadian Pacific, had. snd now Shsye- lines OF
steamers plying upon the waters OF the Sound.
dIverting large volume OF business from your
company. In this purchase you acquired nine
boats. Two OF which year prior had cost $780,
Geo. or two-thirds OF the entire purchase price OF
this line The acquisition OF this line became
imperative, a. your company was then under a
msndamus from the courts compelled to accord
to the Union Pacific railroad company transpo,-
tation facilities between the Sound and Port
land. which virtually placed that company
upon an equal footing In securing your sound
trsflc Without this steamship line your COM
PAW would have lost large part OF its sound
traffic. The Union Pacific would have diverted
/; via Portland. Your company would have had
the benefit OF q haul OF only about $50 miles.
By the acquisition of this line you controlled
your sound traffic and secured tho long haul to
St Paul and Chicago
The ompa.ativeiy small earnings commented
upon by the committee were due to the fact
that during the period referred In. namely, four
months ending October 81, 1897. owing to the
nH,at depression in business. only one OF the
feet was in commission, but the one boat
earned small profit over and above the subsi.
dies, in addition TO the insurance and main
knsnce OF the other boats. more favorable
seowing will result az soon as business rcvives.
The earnings referred 10 rep!esc Mt only the eur
rent competitive steamship rate, on the sound.
She business originating through the boats and
Delivered 70 your company is ali important item
In the earnings of the main line. This should
be borne in mind in discussing the wisdom OF
this purchase The amount of business con-
tributed 10 the main line for the year ending
June ~, 1892. was 92S3 coo. II this steamship
earnings so contributed. which IL $i39. 500, a per-
ccntage approved by the committee reason
able, this purchase would show net profit to
your company OF more than % per cent. upon
its entire cost.
In reference 20 tho criticism passed upon the
acquisition OF the seattle, Lake Shore d East
ern railroad, II should be borne In mind that an
aggressive policy was at that time being pur-
snsd by rival lines When II was decided 10 be
for the interest and for the protection of your
company to acquire this line, the Great North
sfn was rapidly constructing its parallel line to
the Pacific coast. making Seattle its objective
point: the Union Pacific on the south was
DuttoluR u Iafdtei W your TaclHc DIVISION from
Portland TO Seattle, and the Canadian Pacific
was constructing line TO connect with this
road. The Seattle, Lake Shore a. Eastern line
attic 70 the i n l Boundary Ine .0 dis
lance OF 126 miles. The seattle company and
the Canadian Pacific were then negotiating for
en- interchange of traffic at the boundary line
and the running OF Canadian Pacific through
trains To Seattle. In the belief that the extern
Atom OF the three rival lines mentioned
10 Seattle would result i'll large
ri fxAV nj f4tN
and that there was further imminent
danger that the country north Of Seattle
would be taken possession OF, IL was regarded
by your board OF directors as of the first impor-
lance to secure, by lease or purchase the control
OF this Seattle, Lake Shore Il Eastern railway
line. After months of negotiation. it was
by a purchase OF its capital stock. The pur-
chase was made, aud the price mentioned in the
report of the committee was paid for 81, 6a6i ,
shares OF the capital stock. The price SCENE j
at that time reasonable, the road was then
earning its fixed charges AMI n surplus. We
are confident that the wisdom OF this purchase
and tao acquisition Of this property can easily
be demonstrated. The road could not have
been constructed for anything like the price
mentioned by the committee, or for much less
than the price paid for the property. la acquir.
Ing TINS property your company was Obliged to
purchase IL in its entirity.
This purchase forced the Great Northern to 80
change its location that the valuable country
north of Seattle WAS left in possession OF your
compsuy. In the estimation of competent and
di interested persons thiA strategic move brough,
about the abandonment at that time by the
Union Pacific OF its proposed line from Portland
to Puget sound. Tn. deficit for the six months
ending December 81, 1892. was &ilssg2 IL Main
line earnings from business originating on tn ID
branch line Tor the same period were 500. l6o.
SILKY per cent OF such earnings, the ratio np-
proved by tue committee is s3S6. 0od II thi,
branch be credited with such percentage il
shows net profit 20 the Northern Pacific Rail-
road tomnany OF S2lz.29S -. or about II, pei
cent. on the cost of the stock after pay ment OF
interest on the bonds. Ia the opinion of yout
board OF directors they would have been guilty
o. ON act OF ''stnpenGous ana incredible fotiy'
bad they not at the time in question acquired
this property.
The plan Tor the construction OF the Seattle
Belt Itne was decided upon before the afauisi.
ton OF the seattle. LAKE shore & Eastern aud
wss made the subject OF contract with ,ha,
company. by wa,eh, through the construction oi
twenty-five miles of road along the eastern
shore of Lake Washington. a connection wa.
formed with the Seattle. Lake Shore & Eastern
line on the north shore of this lake: the bel
lire thus created 10 be operated in The common
Interest OF tac two companies. IL was con,id
cred at the time very desirable contract. rs !,
brought about a community q. interest be
tss.n ths tso properties aud supplied raj
ro5d iaei!ities much nee ed hy the rapid aeyel
optnent of manufacturing and other iuans,r,c,
which were being located Il onS the shores al
the lake on noih side Aitor the acquisition o.
the seattle, Lake shore Il Eastern genera de
pfess4on In business occurred. and IL wa,
thought TIA; tie competition oi the work coulc
safely be deferred TO- few years. oniy ter
miles Of road remain Ia he cotapieted and a
the proper time, tAe rails can be laid and IN.
Original = su perfected. The possession OF thi,
teit line viii IL Of much importance 70 Tn,
eninmsreisi interests 81 your company, Il
gives u command ot the traffic that il srtaa Z,
he developed tn the next few wears and the .o.,n
ton 81 the l.ne is - good taa. II cannot ,,
duplicated except al great COST on the peyt o
nny competing line.
The purchase u, the Rocky foik 4 Cook Git,
read = shown 10 have resulted Ia a saving o
scope year In the eos, OF tue, and II cred Re,
with - per cent Of the earnings OF business or
fgiuat'ng On II, the basis adopted ~ The com
nnssee. tie sesi IS shown to have made u nc
pToat nj Ter cont on it, stock
The Nerthera Pacific ( Manitoba i, deo3s-e.
IN lie only part al hcauch, OF which the Iu
iuth 4 Manitoba Is the other half aut j. IN n.t
taaRhec showa 10 have made net profit 81
Tee eea'- allie Il ls.admltiea thai the yos.
Was huls sad sold 81 the Northern racldc Ayi
syadicate organized by lleary Viiiarl,i il Is de
nIed 'aat he had any interest In the syndioate
The rUnaing ci tae Winnipeg hotel IS de!endc,
being ia acco-t WITH the Engli.a sn,. "a
sas' All system. ana the house Is sad to h. nav
Ing expenses II Is claimed tas, the termtna.
.: Winnipeg could not oe duplicated 10. th
iaes sstue eft the boads
Il is shown that the lessee Of the Wlscnn.gl
Central WAS rendered necessary hv tae tnYas,o,
o. he Northern Pacific territory hv the cthe
iiaes eetseea Chicago sad ST. PaGl. that il wa
adv sadie because tast road controlled vaguso.
terminals In Chicago, and attention Is called {;
tae sci thar the Jesse vas uuaai rnoualy dec des
upon hv tito directors sud unanimously in
doEsed by tie sioekaol4ers 1t Is claimed Tia
sae .sceusia Central has made ne; uroat :.
The No,shsSn Pacific from the date If toe cas-
81 December 81. isa of si9i, soa 81 xnd the state
fNsfs ~r of -