The morning call., 1894-02-04
NORTHERN PACIFIC MONEY.
Who Is Responsible for Its Having
Been Wasted.
HOW BRANCH LINES WERE BUILT
Their Construction Authorized by
the Men Who Now Condemn
the Extension Policy.


to-day by the Farmers Loan and Trust
Company. Sheldon & Co., p. b. Winston
and Receivers Oakes, Payne and Rouse. In
the Circuit Court of The United States. six
separate answers to Ives petition for the
removal of the Northern Pacific receivers
The answers present exhaustive replies to
every charge made and comprise over 800
printed pages. They not only meet all the
specific charges but explain and refuie the
iDslnuati0ns. 1t is shown that the branch
line policy originated during the Ives
Harris administration, and the receivers
bring proof 10 show that by rejecting the
branch line leases they have saved more
Than Si.000,000 per year. The receivers
have already paid $1,000. 900 of preferential
debts and about S2.00O.000 of interest, with
important economies on operation.
Oakes answers every charge specially,
fling exhaustive documents and proofs,
and Ralston vigorously scores his accusers
and refutes every allegation. In bis
answer Oakes specifically denies that he
was partner in or profited by the con-
struction of any lines, nor the guarantee
bonds of the same. He also denies that
the directors pruflled thereby, and shows
management thC SiOSo
earnings increased from So, 00O. 900 TO S24.-
co., 900, until the recent extraordinary de-
preston, which was the sole cause of the
bankruptcy of the company. He reviews
the history of the purchase or lease of
various railroads, and shows that they
were necessary for meeting competition
and contI olliDg business and protecting
territory. The Northern Pacific directors
and stockholders unanimously adopted
this policy in 1881, and readopted it in
1886 and in 1889. Pursuant to This policy
branch roads were constructed or acquired
to meet particular exigencies. In each
instance the subject was carefully eX-
amined. referred 10 special committees.
reported upon by various departments
of the board, and all the tNenty-three
branches now in operation, with the eX-
ception of five. were commenced or author
lied by the Ives-Harris board. The ac-
QUESTION of branch lines was necessity
in railroad management. and upon the
whole was beneficial to the system. The
branch lines now constructed, or acquired
during the period when Oakes was a
director, furnished business to the North
ern Pacific Railroad Company aggregatIng
over S4.0O0.000 annually. The Central
Washington. Green River and Northern,
Spokane and Palouse, and Northern Pa
cihc and Montana roads were all con-
strueted. or their construction provided for,
under the Harris-Ives management. On
the Spokane and Palouse road the business
last year exceeded S360.O0O and the net
revenue paid all the interest on the bonds
issued Oh account Of extension. The Green
ho, h,,t he
Ives-Harris faction and the directors con-
tract of construction was signed by Robert
Harris.
The answer shows that no director was
interested in the construction of the united
railroads of Washing gton. They cost the
total amount Of the bonds issued thereon,
and no profit was made in their construc-
ton. Not a cent Of money was paid to the
Oregon and Transcontinental Company
for its services in purchasing the Seattle.
Lake Shore and Eastern.
Four directors of the company were in
terested In the syndicate which owned and
controlled the Rocky Fork mines and rail-
road. The company purchased stock of
this company and made contract with
the Rocky Fork Company for 800 tons of
coal daily for ninety-nine years at So 30
per ton, with certain rebates. For three
fiscal years ending June 80 last the COM
pany saved by virtue of this contract over
100000. or sum equal to about $1,000 a
day.
As to the Northern Pacific and Manitoba
Railroad, the answer shows tha: a syndi-
cate was organized by Willard to construct
this road, but he had DO personal interest
in it. The entire road, including terminal
properties at Winnipeg, Portage la Prairie
and Brandon and the Winnipeg transfer
road, cost So, 600. 900. and the profit for the
year ending in June, 1898. was over
$4,000
As to the Chicago terminals and the
Wisconsin Central lease the answer shows
that before the lease or any traffic contract
was entered into the value of the proper
ties was thoroughly and carefully exam
ined by independent experts not only rep
resentlng the company but also represent
ing bankers who expected to make large
investment in Chicago terminal bonds.
These experts uniformly placed the value
of the leased properties largely In excess
of the value under which rental was paid
under the lease. The Ives-Clews report
last year placed the value of the Chicago
terminals at about S2S 100000 while they
were acquired under the lease by the
Northern Pacific on a rental value OF about
S1S0OO,O 600. and Oakes had no interest,
direct or indirect, in the acquisition or con-
troll of these properties.