New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1894-08-13
Made by Colgate & Co.,
Used by the best families,
1906 Laundry Soap.

I0UO LdulIuIy 0UoP'
enough II agreed to divide the earnings on inter-
changed business on straight miiease o"'-'
until otherwise agreed That Is the tiai'io
contract which was to put the Short Line IN such
an advantageous position that 1t couid earn us
interest charges handicapped 1t instead; 1t was
the only road In the system mat s'ar'eu VII
without q constructive mileage allowance. This
ought certainly TO have disarmed CRITICISM oN 'e
sda NJ the Government That was unquestion-
ably It's object With a short turn toward t"e
bondholder. whose interest payments depended
on this traffic contract. II was then agreeu t"a'
whenever It should be found that the Short Line
earnings under this division were not su'iicient 10
nav its interest charges. the basis should be
changed 40 as to effect that purpose This car
ried out the guaranty and satisfied the bondhold-
ers Facing about once more TO the government
It quieted any suspicion that might arise from
this clause in the contract by providing that an
account should be kept OF all payments to the
Short Line above what would be due on
straight mileage division which with Interest
thereon should be a charge against the latter 10
be paid out of It's first surplus above fixed
charges Then, as II there had not been enough
of this doubling and twisting II was further
provided that all these covenants and agreements
inter parties and subject TO be altered at any
time by agreement between the two parties TO the
contract; which. when one considers the rela-
tons Of the Union Pacific and the Short Line to
each other. and Of both to the Short Line bond
holders and to the general government, makes
an interesting complication.
w.
The next step was entirely practical The
lawyers had got through. The operating and
accounting departments now took the business
In hand. With great directness and simplicity
they ignored the whole ENHANCEMENT and pro-
ceeded as II there were no contract. Regardless
Of the first article OF that document the basis
Of division on interchanged business was estab-
lished upon a constructive mileage allowance OF
one and three-quarters per mile to the short
Line and all the accounts were made up on that
principle 1t was a perfectly fair division there
could be no complaint on that score. The only
objection TO It that It violated the terms of the
traffic contract. Does some blooming boniholder
inquire how this could be done with impunity|
1t was easy enough and safe enough. my dewy
morning glory; the contract was public. the book
keeping was not Andrew Fletcher said II he
could write the ballads OF a nation he did not
care who wrote its laws. which was a very pref
tly expressed bit CT pure nonsense. But one
might paraphrase 1t with absolute truth regard
ing the railroad situation to-day. Let me keep
the books Of railroad company and care not
who writes its traffic contracts
II resulted from this allowance that the first
years operation Of the Short Line showed
deficit Of over 100000 on its fixed charges, not
withstandng the report Of the Government
Directors made on the strength Of the presidents
assertion that It was paving from It's proscn,
business the interest on It's bonds" By the con
tract It was then necessary to revise the mileage
allowances and make them sufficient 10 meet
this deficit Under a strict con-tructon-inde"i
under any construction-a new adjustment was
necessary every yea. in order to carry out the
agreement 70 make the Short Lines share Of the
Joint earnings sufficient TO pay Its interest But
the contract was pigeonholed The annual def
cit was between $500 900 and 1900 0oo for the
next two or three years Had this been provided
FOR as required by the contract. by changes IN
the basis Of division there would have been no
ground for the charge so loudly dwelt upon 10y
the newspapers and members Of Congress IN
gagged In the bear movement when brought
about the investigation Of 1857. that the Union
Pacific was wasting i's resources in bui'ding
Improbable branches Meantime. the snort
Line stockholders. knowing how essential that
property WIS TO the main line az It's only con
nection with Portland ard Puget Sound. ana
knowing too that under separate ownership l,
could not be otherwise than profitable through
It's connections held on In the expectation that
In n short time. during which the fixed charges
would be met under the traffic contract the
natural growth OF business would put 1t on
dividend paying basis. They did not Know 'hat
the annual deficit under the terms OF the con
tract was much greater than appeared Dy me
annual reports nor that 1t was piling up against
the company as an interest bearing debt TO the
main line.
Haety legislation had accordingly brought
about this state OF things. 1t had forced the
Union Pacific to resort to indirect and evasve
methods to carry out a perfectly legitimate and
necessary purpose one result Of which was that
the holders OF about $4,000 900 OF Short Line
bonds, who had paid the cost OF building the
road and given to the Union Pacific ssOOO.eOO
out OF Sl4 600 900 Short Line capital stock for
traffic contract which by guaranteeing interest
PAYMENTS should give the stock some value.
found themselves holding bonds worth about 20
in the market, for which they had paid par ana
Ave shares Of stock with each bond, that under
existing conditions had no real value. present or
prospective. In short, the bondhoders had
given the Union Pacific COO miles Of road on
condition that II guaranteed the interest on the
cost OF construction for thirty years. Under the
arbitrary mileage allowance the debt OF the Short
Line to the Union Pacific the first OF June.
1885, according TO the book account. appeared as
81 s0O0 900 but the actual debt under the straight
mileage provision was nearly s2,6OO.0OO.
VI
Meanwhile this same restrictive legislation had
given rise TO another embarrassment The Utah
and Northern was a narrow gauge road from Og-
den to Butte about seven-eighths OF the stock
OF which was owned by the Union Pacific. Prior
to the building OF the Short Line 1t had for sew
eral years earned and paid per cent dividends
The Short Line ntersected 1t at Pocatello, thereby
d,vertnp all It's through traffic at that poInt !