St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1893-12-29
A STRONG KICK At CAKES.
NOR THERN PACIFIC RAIL WAY COMPANY
WANT HIM REMOVED.
mISMANAGEMENT Is ALLEGED.

Collusion to Work the Various
Lines to the Private Benefit OF
the Receivers Set Up as the
Main Cause and That the Road
Cannot Be Reorganized Under
Such Management.
CHICAGO. Dec. 2s.-The Northern Pa
cifc Railroad company, by Silas w.
Petit, of Philadelphia, its general coun-
sci, filed today in the circuit court of
the United States at Milwaukee. before
Judge James g. Jenkins. its petition for
the removal of Thomas f. Oakes, Henry
c. Payne and Henry c. Rouse. its pres
ent receivers, and the appointment of
other receivers in their places.
The petition sets out that Mr.. Oakes,
as president of the company, appointed
r. G. Roston, the president of the
Farmers Loan and Trust company, of
New York, which is tr ustee of most of
the main and branch line mortgages of
the Northern Pacific Railroad COM
pany, chairman of the finance COM
mittee of the Northern Pacific di-
rectory. The petition then states
that when the Oakes Rolston
board took charge of the Northern Pa
cific it was in good financial condition
and in high credit; that it had S2.00O,0oO
i'll cash in its treasury, and that its sur
plus earnings for the first half of the
fiscal year commencing June, 1889,
amounted to about sl,500.000; that in
addition to the division mortgages
amounting together to about S75, 900, ,000),
which were all the fixed charges of the
main line at thattime, the Northern Pa
cific Railroad company was then also
liable as guarantor of the bonds of
twenty-one branch lines, amounting in
the aggregate to about S26. 900, 900, and
that for the purpose, among other
things. of taking up these main and
branch line bonds, and of building such
other branches as might be necessary
for the development of the business of
the company, the consolidated mortgage
was authorized by the stockholders to
secure $780, 900 of bonds Intended
and believed to be sufficient
TO PAY OFF ALL
the existing main anu branch line bonds
of the road for many years to come. and
so that the said Oakes-Rolston board
started off with q paying property. a
large sum in cash on hand, and with the
consolidated mortgage bonds to draw
upon, with which to meet all expenses
which should be properly chargeable
to the capital account, and Of which the
stockholders subscribed for and took
$4,000, 900, and so that the said board
"should, and. in fact, did, have ample
capital with which to conduct and prop
erly develop the business of the COM
pauy." The petition then goes on to
say that the OakeS- -Rolston board man.
aged to iucrease the interest charges of
the Northern Pacific company for
branch lines from $4,000, 900 to up
wards of $50, ,000 900, all in one year, and
for the acquisition of properties no
one OF which Except small line costing
less than S1,000000) ever has paid the
cost of operation and fixed charges, and
many OF which do not even pay the cost
of operation, and the petition further
charges that in several instances, and
those the most disastrous to the COM
were themselves interested in selling
the properties at an eXorbitant profit to
themselves. The
STORY OF THE COLLAPSE,
OF the Northern Pacific is then set out
i'll great detail, naming particularly each
of the railroads which were acquired
by the Northern Pacific company, and
which, the bill declares. completed its
ruin within one year of the Oakes-
Rolston board getting into power.
The petition AYERS that in the con-
struction of the United Railroads of
Washington the members Of the board
derived profit of Sl,750.0 ZOO, while the
operation of that railroad cost the
Northern Pacific Railroad company, in
the year ending June 80, 1893, $155, 800
The petition ayers that the Rocky
Fork IL Cooke City railroad was owned
by a syndicate of which Willard was
president, and in which many of the
members of the board of directors of the
Northern Pacific Railroad company
were participants, who divided among
themselves S4,00J,000 of trust certif-
Gates, 100000 of which represented
the Rocky Fork Coal company, which
owned certain coal lands which had cost
about O.000, and the other 81, 600, 900 of
trust certificates represented the OWN
ership of the Rocky Fork & Cooke City
railway. which cost not over $500, 900.
That the directors of the Northern Pa
clflc Railroad company caused the
Northern Pacific to buy from themselves
as owners of the Rocky Fork & Cooke
City railway for Sl,400,00Q In cOnSoli-
dated bonds, and then made contract
between themselves as representing the
Northern Pacific Railroad company and
themselves as representing the coal
company, whereby the railroad COM
pany agreed to buy 500 tons of coal per
day at the price OF 81. per ton, de-
livered at the mines; and that to better
DISGUISE THE TRANSACTION,
an agreement also provided that the
profits made on the coal should be di-
vided one-half to the coal company, one
sixth to the Northern Pacific company
for itself. and the remaining two-sixths
to the Northern Pacific company TO be
applied to the purchase of trust certifi-
Gates al par, so that in addition to the
profit made on the sale of the railroad,
which has never paid the expenses of
its operation, and in addition to one
half of the profits arising out of the coal
contract, the syndicate will eventually
get g, ,000,0 600 from the Northern Pacific
company for the purchase of the trust
certificates representing the coal mine,
and which cost it not to exceed $500, 900.
The Northern Pacific & Manitoba
railroad, the petition AYERS, was organ
lied by syndicate composed of men,
bers of the board of directors of the
Northern Pacific company, which
they purch ased at a cost of
not exceeding $4,000 q mile, and
that this road they then, as
directors of the Northern Pacific Rail-
road company, caused that company to
hUV for h0nGC fhp rata Ot D0A a
mile; and in addition the Northern Pa
cific Railroad company assumed the in
terest on $3.50, 900 of terminal bonds Sc
cured upon the terminal property of the
company at Winnipeg, and which was
at least 25 per cent in excess OF the cost
or value of that property. The petition
shows that this properly mas never paid
the mere cost Gf operation, and that the
Interest charges which the Northern