The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-09-05


ing passengers and hauling wheat. The pas
senger gets on and off, but the wheat does not.
Attorney Martin-It would hardly be right to
take the cost of train that runs without
injury, as most trains do, and apportion to
that train the cost of a washout of another
train.
Stanton-It seems to me, then, that all the
rates are arbitrary.
Attorney Martin-That brings up the subject
introduced at the beginning of the investiga-
ton. Is it not better TO take the entire freight
traffic and consider it at one time? Ii the reve-
nues are too high apportion the reduction on
the traffic of the road. This investigation,
after taking up this one item, illustrates the
difficulty of dealing with particular commodi-
ties of traffic. / will ask TO introduce verbal
testimony from the operators of the road.
lansing think Mr.. Smurr can explain the
principles of the practice.
Attorney Martini do not like to leave any
subject with any cloud upon it that can be
removed. An inquiry was made by you, Mr..
Chairman, with regard to the losses OF these
roads to the Southern Pacific Company that
contained the idea of absorbing the earnings
without making the dividends. You remem-
Der the inquiry?
La Rue-Yes, I also asked if, regarding the
diverting of the traffic from the Southern Pa
cific to the Central Pacific, VIII en- if they had
received their full share of the traffic would
they not be able to meet their interest.
Attorney Martini will ask Mr.. Lansing il
the Southern Pacific Company's guaranteed
revenue equal to a dividend of per cent was
not Cancelled?
LdnSlNS-1 eS, SIT.
Attorney Martin-How is it with the leases
of the other roads to the Southern Pacific Com
pany?
Lansing-The leases are generally in terms
that the Southern Pacific Company shall
operate the railroads, collect all the income,
pay all the expenditures of operation and fixed
charges of the railroads and give TO the re-
spective railroads what they earn-the net
profit, if there is any; if not charge the roads
with the net loss.
La Rue-Does the company charge the roads
with that loss, or does the Southern Pacific
stand it?
Lansing-It is charged on most of the leases.
Some of the roads gain ana lose alternatively.
But it is very rarely dividend is paid. The
Southern Pacific Company is not only the
lessee, but owns and controls the capital stock
of great many of those lines. The Southern
Pacific Railroad is an independent road.
La Rue-In other words they run their own
property?
Lansing-Yes, it may be stated in that way.
La Rue-Owning the stock they make both
sides of the contract?
Lansng-Yes, and so they stand in together.
La Rue-What becomes of the stockholders
outside of the Southern Pacific Company? is
the money diverted from them to loan to other
parties?
Iansing-The Southern Pacific Company
does not own share of Central Pacific stock,
but the other lines are run together and they
have common interest in the traffic.
La Rue-The individuals who own the South
ern Pacific may be individual stockholders in
the Central Pacific?
Lansing-Yes, they may be and no doubt
they are to a certain extent do not know
whether they own the control or not.
Martin-Is there any such thing as q diver
sion of the earnings of one of these leased roads
to the benefit of another?
LanSlng-NO.
La Rue@I meant the diversion of the traffic.
Lansing-That subject has been thoroughly
Investigated by the Government committee,
Stanton-You say you can apportion the
earnings of the different companies. Then
why is it not also possible to apportlon the Pa
cifc system in such way that you can get the
earnings of the lines in California?
Lansing-Because we show the earnings of
the railroad companies or try to do that. 1t is
quite an expensive thing 10 do.
Mr. Lansing told all about the process
of arriving at a conclusion by the use of
certain items on certain basis, and finally
DR.. Stanton said he was getting off the
track and switched him back by asking
how he could determine how each COM
pany owned percentage OF Its interest.
Mr.. Lansing explained that if one man
owned one load and another man another
road and operated them together they
divided on basis of mileage. Then they
got into the dividends and Mr.. Lansing
said that the division of earnings was not
arbitrary because it was agreed to. The
diversion of traffic was again exploited, re-
sulting in the assurance by Mr.. Curtis that
it was always subject to interstate traffic.
The subject of stockholders was introduced
by DIR. Stanton, who asked:
Mr.. Lansing, who are the stockholders OF the
Southern Pacific Company
Lansing-Well, l cannot tell them from mem
DRY. There are some l remember-Mr. Hunt
ington, c. F. Croker, D. Fl. Hubbard. There
may be 100 others.
Stanton-But you can give the names OF
those who own the stocks and bonds in the
different companies.
Lansing-No; cannot. There is nothing to
show who they belong to. They are negotiable
and pass from one to another. That is a trans
action OF which no record is kept. The origi-
nal stakeholder may have sold his stock and 1t
may float around, but it still stands in the
name of the person to whom 1t was originally
issued. A great deal was sold in Europe and
in New York. SO it is maintained in the names
of persons who do not own it. I don't know
about the control OF the Central Pacific stock
know there is q good deal held in Europe, in
London particularly.
La Rue-When you have a meeting OF the
stockholders Tor any purpose you are governed
by the books; or do you have any stockholders
meetings
Lansing-Yes, by the stock on the books.
La Rue-Whether they own the stock or not
Lansing-The stock of the character speak
OF is voted by proxy.
La Rue-Who do the proxies come from?
Lansing-The parties in whose names the
stock stands on the books.
Inc commission then ADJOURNED I'LL
o'clock.
When Lansing resumed the stand in the
afternoon he was asked whether the
Southern Pacific Company, as the financial
institution of the leased lines, operated
them as one system. He replied that they
did.
Martin-Does this increase or diminish the
cost OF operation?
Lansing-It diminishes the cost.
Martin-Is the construction work done
charged at exactly COST or is there some COM
mission allowed on it?
Lansing-It is charged at cost.
Martin-When will you furnish an explana-
ton of the bonded Indebtedness?
Lansing-To
Clark-What is the present valuation of all
the lines owned and operated by the Southern
Pacific Company in California?
Lansing-The valuation would be differently
estimated by different persons. There is
valuation for taxation and another for invest
ment, and maybe for other purposes.
Stanton-What is the valuation for taxation?
Lansing-I don't know The amount of taxes
paid by the companies is about 81 900, 900.
Sometimes it is more and metimes it is less.
Last year they were less than the usual
amount.
La Rue-What do you mean by stating that
there are different valuations Tor taxation and
for investment?
Lansing-H a person were to invest in the
stock of the company he would value il on
different basis than that on which it is valued