Omaha daily bee., 1896-02-09
UNION PACIFIC'S BIG DEBT
Syndicate Explains the Plan by Which it
Proposes to Pay 1t,
SCALING IT DOWN so PER CENT
Government Director Anderson Fn
yorcd Same Plan, which Would
Include Both the Union and
Central Pacific.


| WASHINGTON, Feb. S.-The hearings b,
the senate committee on Pacific railroads o
persons interested in securing the reorganiza
! tion of the Pacific railroads was resumed to
| day. Mr.. Pierce, representing the Union Pa
cihc reorganization committee was again be
| fore the committee and he was put through
| a sharp process of questioning by Senator.
Wolcott and Morgan. He stated in reply t
| their questions that 1t had been the purpose
of the committee on reorganization to leave
considerable latitude to the government, but
said that the plan proposed would give the
| government about so per cent of its debt
principal and interest, which would not
amount to quite as much as the principal It.
self.
In reply to question, Senator Wolcott
said that while Mr.. Depew was on the reor-
ganization committee, he could not say
whether the Goulds and Vanderbts were
interested in the proposed reorganization OF
that there was any Interior purpose to attach
any portion of the Union Pacific system to
either the Missouri Pacific or the North
western.
Mr.. Morgan pressed Mr.. Pierce to know
whether 1t was not possible under the
reorganization proposed for an alien syndi-
cate to get control of the road, to which he
replied that in the proposed plan Of
reorganization should be accepted, 1t was
contemplated that the reorganization COM
mittee should itself take the property. He
was doubtful whether IL alien purchasers
should secure the property they would be
able under the laws to hold It, He said that
his committee had made no definite PROPOSE
tion except that of per cent bonds for the
principal and of bonds to cover the accrued
Int 10 s.xA-
est
Mr.. Anderson,o ,one of the government di-
rectors of the road, said that as a govern
ment director, he was the advocate of no
particular plan of reorganization He
favored a reorganization which should en-
brace both the Union Pacific and the Cen
trail Pacific and he was confident from a
familiar knowledge Of the two roads that
they were not able to meet both the prin-
cipal and interest due the government. He
estimated the property OF the road to be
worth about $75,OO0,000 or $4,000, 900. In
1894 the net earnings were about $4,000, 900,
which he stated were the lowest in years.
To arrive at the value of the government
lien 1t Is necessary to deduct about $50, 900 900
due on first mortgage bonds and on other
accounts. He would, he said. recommend
that the government should accept a cash
offer Of $35, ,000, 900 and that it would be bet
ter to do this than to enter into any Of the
other schemes suggested. This suggestion
he thought that the Union Pacific and Cen
trail Pacific should be disposed of as one
line because they would bring more IL sold
In that way than If sold separately.
Mr.. Anderson expressed the opinion that
the Oregon Short Line would be foreclosed
within six months and be taken out of the
system. He also expressed the opinion that
foreclosure on the first mortgage bonds
would not only close the government out, but
would cut eff the equity of redemption.
10
Mr.. Anderson's opinion as to the increase of
the value of the Union Pacific property in
the next hundred years, In view Of the re-
sources Of the country penetrated, and asked
him II he did not think the investment of
$35,000,000 would in that time prove profit
able. To this Mr.. Anderson replied that he
thought that 1t would be a good investment
but mot enormously good" He said that
the experience of investors in the western
roads in the past had been the opposite Of
profitable.
Senator Brice asked Mr.. Anderson to ex-
plain how 1t was that with the net earnings
equal to twice the amount necessary the
management had allowed the road to ap-
proach the point of foreclosure. To this Mr..
Anderson replied that the road was to be
foreclosed because the bonds had reached
their maturity. He thought the interest could
have been taken care of, however. In the
net earnings was included about $1,000, 900
for business done for the United States which
had Deen Wlthheld, leaving only about $4,000
900 of actual earnings. 1t was also fact
that Judge Sanborn. in whose jurisdiction the
road lies, was opposed to applying much of
theSmoney earned to the interest account.
Mr.. Huntington asked to be allowed to
make his promised statement concerning the
Central Pacific at a later day and the per-
mission was granted. He took occasion, how
ever, to repeat his statement made at the
last meeting that the Central Pacific meant
to pay 100 cents on the dollar. He also re-
peated his statement that the Central Pa
cifc was in good condition and added some
facts concerning the cost Of the construction
Of his road. He said that less than 200 miles
Of the Central Pacific road across the noun
tains had cost more to build than had more
than 1000 of the Union Pacific from Omaha
to Ogden. He said the road had been built
with gold and that many Of the bonds had
been sold for 40 cents on the dollar. Senator
Morgan asked why silver instead Of gold had
not been used and Senator Stewart replied
for Mr.. Huntington that at the time the road
was built silver had been worth 3 per cent
more than gold
David Littler furnished the committee with
some additional details concerning the Sioux
CITY & Pacific road,