New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1894-08-13

tionment of mileage Doubtless this would nave
been done but for fear Of renewed clamor against
the diversion Of net earnings to branch lines
There was nothing to hinder It's being done at
the expense Of the Short Line. however so upon
the theory that the building OF the snort Line
worked injustice to the Utah and Northern oy
taking away the traffic between PocateHo ana
Ogden 1t was decided to allow the Short Line
only the actual cost Of hauling lnterchahseu
business between Granger and Pocateilo anu
credit the Utah and Northern with the difference
That is the Short Line did the business and the
Utah and Northern took the profit. The erect
Of this appeared in the report for 1886. which
showed a surplus Of $4,000 above all charges
though this was changed to deficit OF sliooo IN
the con,paratiye statement Of the following year.
while Short Line net earnings fell or S5oooo, not
withstanding diminution OF expenses ana large
increase in the train mileage. The new Utah ana
Northern SIS however. remained in the treasury
until through the decrease In operating expenses
on account OF the change of gauge the surplus
above fixed charges rose to s25l,OOO In lSSs' wheh
they sold
The newspapers In the mean time had ceaseu |"
publish the monthly statements OF the Hhor'
Line so that the outside stockholders oi 'ha'
co,nnanv had no definite Information concerning
roports The Investigating Committee Of 1881
however succeeded in turning things INSIDE out
n such an extent that 1t appeared that while
the Union Pacific upon the testimony OF us OH
GERS was deriving from It's Short Line business
an annual proAt Of 100000 more than IT was
called on 70 nav under its guarantee Of interest IL
was also charging up an annual deficit OF three
or four hundred thousand dollars against TINS
profitable feeder The innocent stockholder was
bewildcred The stock toppled down to Il ana
was In a fair way to % out Of sight.
Early in 1886 some Of the minority stockholders
Of the Oregon Short Line. becoming aware that
the traffic contract disregarded In the actual
OPERATION OF the road, took alarm The hoa'lhg
debt 10 the Union Pacific for advances on inter
est account was now nearly slooocoo. ihey
said that this debt not under the contract
a legitimate obligation " the Short Line Dut
belonged 20 the Union Pacific II pay. Their pro
test which was somewhat Informal In character
was laid before the President Of the Union Pac!hc
but no action followed. The necessity which has
already been alluded to FOR floating the bonds
to be issued for the widening Of the gauge of the
Utah and Northern fully occupied the attention
of the officers and IT was necessary for the
furtherance Of that scheme that the sacrifice
OF the Short Line should continue
VII.
In January 1857 as "a final result Of long
negotiations and much wrangng between the
Union Pacific and the Northern Pacific AMI the
Oregon Transcontnental-the story Of which,
though Of considerable interest need not b.
rccited hore--thc Oregon Railway and Naylga-
lion Company was leased To- the Union Pacific
upon a 6 per cent rental. That IS 10 say. the
Union Pac,ac used tn oregon short Line again
as a packhorsc for carrying It's obligations II
d!d not lease thu Navigation lines directly.
The lcasc was made 70 the Oregon Short Linz,
which company assumed all the burdens and
risks and payment u ~, rental was guaranteed
by the Union Pacific. 1t was thought AZ tn time
that this transaction would b. an advantage -
the Short Line property as f. gave ful control
II the business originating on tho Pacific Coast
at Portland. and The Navigation Company had
been earning handsome dividends for several
years II already hal q surplus in It. treasury
above the peg cent which IT was annually pay
Ing - It's stockholders
The luck y the Navigation Company turned
Immediately upon The signing q the lease. Is.
operations resulted the nrs; year in a deficit u
$4,000 and his has been incrasng every year
since until I'm 1899 Il amounted T. 81 99245s
The lease Of the Navigation C'mpanys lines
having increased the cmharrassmcnts - the Short
Line Instead Z relieving them. %" minority stock
h .licrs again called the attention u the I'M %
Pacific managers 10 the re!au rs between tn
two companies and the utter disregard II con-
tract obligations 10y the parent company. Tn" In
vestlgaiion Of 1857 had brought ont the tact TIN;
the statements in the annual reports ~ Ia" In
dcbtcIness to the Union Pacific dli not fully rep
resent the debit that while the account there
stated showed the indebtedness upon the arbi-
trary mileage basis already referred IT, which
was unauthorized. the books - the company
showed "A much larger debt upon a straight mile
age basis In the annual report FOR lsSs the di-
rectors themselves. through Mr. Adams. the
president. stated that the book account pub
lished IT. the regular annual reports did not show
the facts. The book account. they say, ind
Gates that on the 3ist Of May last the Short Line
owed the Union Pacific in account current f1r
advances made under the contract %. January IL.
1882. the rum Of sl.sOOi5S s3. A division the
basis OF the contract would show that the Short
Line then owed the Union Pacific a further sum
OF 1863 324 %; to this would have 10 be added a
stn further sum for interest secured under the
terms ~ the contract. making a total amount
due from the Short Line to the Union Pacific IN
the 3lst Of May last Of considerably over $780,
DO0"
This a state Of things which to the mind ~
the minority stakeholder In Oregon Short Line
hoping for some eventfu profit from his Invest
ment was absolutely appalling Under the
weight Of the obligations imposed upon II by it's
parent company IT was sinking year after year
into n hopeless morass Of debt with inevitable
bankruptcy at the end. In memorial 10 the
directors Of the Union Pacific they represented
the injustice Of this treatment. setting forth N
some length .-.e reasons for immediate action |
revising traffic contracts In accordance with the
spirit Of the original contract Of 1852. and fixing
an arbitrary mileage which should he sufficient !
to meet all the fixed charges OF the company !
and wipe out eventually II not Immediately. the |
debt which had been scored up by bookkeeping |
In favor Of the parent company.