The San Francisco call., 1896-03-05
Fears That They Will Not Ex-
ceed $I4,ooo,ooo Annually
in the Future.
SCHEME OF REORGANIZATION
Outstanding Bonds and Liens to Dis.
appear Before a New
Mortgage.

UhOhINOION, ~. w., Marcn 4.-J. a.
Munroe, freight traffic manager of the
Union Pacific Railroad, appeared before
the House Committee on Pacific Railroads
to-day. He gave statistics showing the
earnings from freight traffic of his road for
several years past. He had no argument
or suggestions to make regarding the
settlement of the differences of the Pacific
roads by Congress. He assumed that the
earning capacity of the roads, particularly
in the future, would be an important
figure in the settlement. The gross earn
ings of the Union Pacific, he thought,
would not in the near future exceed S14,-
DOC, 600 per annum. OF this amount not
more than 25 per cent could be considered
as net.
w. S. Pierce, representing the reorgan-
ization committee of the Union Pacific,
told the House committee that it was the
purpose of that committee to exchange for
every class which is charged upon the
properties embraced in reorganization
new securities in proper proportions to
those issued by the reorganized company,
SO that under the new mortgage of the re-
organized company ali these properties
would be included-the lines of road, the
the appurtenant property of the Union
Pacific proper between Council Bluffs and
point five miles west of Ogden and be-
tween Kansas City and Denver and be-
tween Denver and Cheyenne, including
the Omaha bridge, subject to no existing
liens. and subject only to the new mort
gage.
In other words, all outstanding bonds
and mortgages were to disappear, and the
railroads, terminals, lands and equipments
of the Union Pacific we're to be subject to
no other charge than that imposed by the
new mortgage to be issued by the reor-
ganized company. All outstanding bonds
were to be provided for in the reorganiza-
ton by the issue of new bonds and pre-
ferred stock. The new bonds were to bear
4 per cent interest, to run fifty years, and
be secured by first mortgage upon all
the railroads and property now embraced
in the mortgages which it was proposed to
retire. The amount of the new bonds was
placed at $51 ,244, 720, imposing upon the
new company an interest charge of 50, ,O49..
78S against an interest charge on the same
bonds as they now stand of about So, $685.
234, the saving amounting to about 81. .64S..
446 per annum.
There would OF course, he said, be no
question as to the issue Of new per cent
bonds to retire first mortgage bonds.
which were a lien ahead of the Govern
ment on aided parts of the road. AS to the
issue of $18, ,401, 720 of new per cent bonds
in retirement of all mortgages on nom
aided parts of the road there would be no
question if the value of the property COW
hxvt tho nd
to the new security was equal to or in ex-
cess of that sum.
The net earnings of the Union Pacific
for 1894, about $4,315, 900, had been taken
by the reorganization committee under
the progressively declining conditions
which had affected this property as the
outside limit of net.earnings of the entire
Union Pacific Railway. upon which it
would be safe to rely in reorganization,
and the plan of reorganization contem-
plated that provision for all outstanding
securities and moderate provision for fu-
tuse corporate requirements should not
result in a fixed charge ever exceeding
81, 10000 It was believed by the commit
tee that any reorganization upon higher
ultimate basis of fixed charges would be
unwise and would afford no guaranty
against future insolvency and the neces.
sity OF future reorganization.
1t was the purpose of the reorganization
committee to meet the representatives of
the Government upon any practical basis
of adjustment, Notwithstanding it might
accord to the Government relatively better
terms than those afforded to other security
holders. Under the conditions referred to,
and which continued TO prevail and in
crease, it was obviously unsafe to reorgan-
ize the property at any greater present fixed
charge than about $3,600,0OO per annum
and if it was to be reorganized upon this