The San Francisco call., 1896-02-09
DEBTS OF THE
UNION PACIFIC.
Reorganizers Give Their
Views to the Senate
Committee.
MR.. ANDERsoN's OFFER.
The Receiver Recommends That
the Government Accept
$4,000, 900.
HUNTINGTON ALSO APPEARS,
Says He Used Gold to Build the Central
Line, but Then 1t Was Cheaper
Than Silver.
HUNTINGTON ALSO APPEARS,

Senate Committee on Pacific Railroads
gave another hearing to-day to those in
terested in the settlement of the debts OF
the Pacific railroads. Among those pres
ent were Coils P. Huntington, president
OF the Southern Pacific, w. J. Coombs and
Z. Ellery Anderson, Government directors
of the Union Pacific, David II. Littler,
representing the Sioux City and Pacific,
and General Counsel Pierce of the reor-
ganization committee of the Union Pacific.
Senator Wolcott, who had not been
present at the hearing last Saturday when
Mr.. Pierce explained the plan of reorganl-
cation, closely questioned the latter on the
details and purposes of the reorganization.
The Government in subordinating its
lien to the first mortgage bonds was re-
garded as being in the same position as
any other creditor. Ii it desired to pro-
tect its lien it must come forward and do
something. Otherwise the first mortgage
bondholders might, if they wished, fore
close. The reorganization had several
plans of settlement with the Government,
any of which would be acceptable to them,
or they would probably agree to any fair
and Just business-like proposition that
might be made by the Government.
Replying to a question relative to the
plan of dealing with the sinking fund,
Mr.. Pierce said that fund was treated as
being an amount applicable to the reduc-
tion of the debt. The statement of the
debt has been excessive; it amounted, he
thought, to no more than $52,00o,eOo.
ahe friends of both the Vanderbilt and
tile Gould interests were represented on
the committee of reorganization. Mr..
Pierce was not able to say, of his own
Knowledge, whether if the receivers of the
Union Pacific had not diverted the receipts
and earnings they would be able to meet
the interest on the bonds. Receivers were
at times opposed to reorganization
schemes, but in this case he thought the
receivers were favorable to reorganization.
No assistance in the way of legislation, he
asserted, was necessary to foreclose the
lien of the Government.
When asked by Senator Morgan what,
if the road were sold, would become of
the four Government directors, Mr.. Pierce
said he thought they would go out of Of
flee, despite the law requiring their ap-
pointment.
Senator Brice remarked iocularly that
the Government directors would, no
doubt, be sold with the road.
Subsequently Mr.. Pierce said, in reply to
Senator Morgan, that he could not reach
the conclusion that further legislation was
indispensable, although further legisla-
tion might be desirable. Pierce contended
that as the case now stood he believed
they could foreclose the first mortgage
lien without further legislation, but there
was no need of foreclosure. The matter
should be settled by an agreement between
the road and the Government.
E. Ellery Anderson, one of the receivers
of the Union Pacific and formerly Gov
eminent director, favored an adjustment,
but was not prepared, as one of the receiv-
ers, to adopt any of the plans proposed
until he had thoroughly investigated the
subject and knew what the best interests
of the Government demanded.
The sale of both roads would, he was
confident, bring less than the principal
and interest of the Government debt and
all prior claims. The Government held a
lien on the Union Pacific, representing a
certain amount of the principal advanced
and unim bursed interest, approximating
S33. 600 600, after deducting about fifteen
millions now held as sinking fund. The
question 10 be answered was, what was the
Government lien fairly worth? He did
not regard the claims of stockholders as to
any alleged misapplication of funds as en-
tering into it, for the reason that such
claims did not constitute tangible asset
Regarding the property of the Union
Pacific itself as the only source from which
ANYTHING was to be expected, there were
two things to be considered-the available
value of the property and the amount te
be taken out before the Government could
realize anything. The available value ol
the property, Mr.. Anderson said, could
not easily be estimated. Much depended
upon commercial and other conditions
all of which initiated against the earning
power of the Union Pacific. The Union
Pacific property, considered IN various
ways, was worth about $70,OO0,OO0. BASED
on the value OF it's stocks and securities II
was worth about $67, 100000, to which.
the preferred stock is added (the common
stock having no market yalue) the tota
would be about $92. .000,00
After paying all expenses the earnings
for 1894 amounted to $4,300,00O. which
was the average earning capacity OF the
road. This represented the interest on an
investment amounting to about $50 ,oOo,ooo
BY any process of valuation of the road
the conclusion was reached that the falr
market value of the Union Pacific was be-
tween SIS 900 900 and $50, ,000,00
Continuing. Mr.. Anderson said that
taking everything out in the shape OF a
lien in order TO get at the basis of value oi
the Governments claim he fixed it as be-
ing worth between $30,00o,0Oo and S40,-
00O,c00. He would recommend that the
Government accept $4,000, 900 in cash for
its claim. The Central Pacific and the