The morning call., 1893-10-15
IN THE HANDS OF A RECEIVER.

The passage of the Union Pacific into
the hands of receiver is a much more
serious event than the DISPATCHES imply.
The public are told that the decree was
Issued in friendly suit, the plaintiffs be-
ing the mselves the largest stockholders in
the road. and it is observed that the re-
ceivers are the present president and two
Of the present directors of the company.
It is explained that the application for a
receiver was made necessary. not by imme-
diately pressing debts, but by the discovery
that the road was not earning interest on
its bonds. All this is no doubt so. but
those who are interested in the concern
will probably discover before the present
proceedings terminate that it is much
easier for a corporation to get into the
hands of receiver than to get out.
The present crisis confirms the statement
made by the late Jay Gould, when he
caused Mr.. Adams to be removed from the
presidency of the road. He said that if
Mr.. Adams was retained he would plunge
the concern into bankruptcy. He knew
his man and he knew the property. 1hir-
ty-one years ago the Union Pacific was
incorporated to build 104S miles OF road
that was its mileage when 1t was opened
in 1869. Eleven years later Jay Gould
obtained control of the Kansas Pacific and
the Denver Pacific and consolidated them
with the Union Pacific. raising its mileage
to 1882 miles After Sidney Dillon re-
signed the presidency in favor of Mr..
Adams the latter proceeded to extend the
Union Pacific system in every direction
and did not stop until he had obtained
control by lease, purchase or construction
of forty new railroads. with an aggregate
mileage of $3.50 miles. thus raising the mile
age Of the whole system to 5712 miles.
1t goes without saying that to administer
so vast a system proftably called for ex-
ecutive ability of the very highest order,
and that Mr. Adams did not possess. de
was superseded by MIR. Dillon. and he by
Mr.. S. II. II. Clark; but able railroad
managers as they were they could not earn
money on lines which bad no traffic. 1t is
not too much TO say that one-half the
mileage OF the system was operated at
loss. The main line of the Union Pacific
in Kansas and the old Kansas Pacific had
to carry the other lines on their back. 1t
was evident that whenever accident i'm
paired the earning capacity of the
former. the whole consolidation must
90 TO the wall. That is what has hap
pened. The diminished movement OF
grain caused by low prices and short
crops, and the business depression which
began last spring, reduced the business of
the Union Pacific to such an extent that il
ceased to be able to carry its connections
On the business of 1892 the system only
earned net So 069, 756, and during the eight
months which have elapsed of 1898 the net
income fell short of that of the correspond
ing period of 1892 by the sum of g. 5SS, COO.
In other words the road is earning nothing
either for its stockholders or its bond
holders. Under such circumstances a re-
ceivership was inevitable.
The disaster would not be irreparable
but for the circumstances in which the
Union Pacific is placed. The Kansas Pa
cifc fell into the hands of receiver in
1873 and got out in 1879. But the insol-
vency of the Union Pacific occurs at
period when Government claim of some
S50. 100000 or over is maturing 1t will
avail the company little to borrow money
TO meet its coupons II next day it is called
upon to pay what 1t owes to the United
States. 1t seems obvious that before the
stockholders regain possession of their
property they must settle both with the
Government and their other creditors.
While the corporation was paying its way
and rendering useful service by furnishing
Kansas, Nebraska and Colorado railroads
with an outlet for their produce there was
a disposition in Congress to deal lenently
with it. But now that the company has
gone into insolvency without the act Of the
Government there would seem to be less
harshness in enforcing the national claim.