The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1896-04-02
AN ENORMOUS cAPrTALrzArrox.

=
einc railroad IL . matter Of exceedingly
great interest to the states through which
II passes Upon It's policy to a very great
extent depends the development OF the ter
r!tory tributary TO It. Interest upon It's
bonds and dividends upon It's stock can, Of
course. only Be provided for by the reve-
nue. derived from the products os the state
sent from II and the imported goods from
other states 1t consumes. The object Of
the management Of the road would be TO
secure so large a return from trafic as to
insure liquidation OF the fixed charges A
certain volume OF revenue Is necessary
and I; can be raised either BY imposing
a. high rates as can be wrested from its
freight and passengers. or 1t can SO pro-
mote the development OF territory as to
secure a large 'rafic with a moderate and
stimulating tariff.
The road went into the hands OF re-
ceiyers because Il was unable 10 pay inter-
est on its capital. The present fixed an
nual interest and sinking fund charges
amount TO SO. 1850. while the adjusted
net income from all sources applicable to
ending June 20. 1895. ss.0l5. $40. This sum
would be only barely sufficient 10 meet the
Interest on the prior lien and general lien
bonds under the system of capitalization
proposed which calls for interest amount
ing 10 81. 052. GO. This leaves out OF ac-
count s.. 5000 to meet the proposed Per
cent dividend on the preferred stock and
4
for the common stock holders.
Poor's railroad manual for 1894 gives the
total liabilities Of the Northern Pacific on
June 80. 1895. as $3.50, 23i. "a, with charge
to profit and loss for that year OF ss,5ls. sci.
Under the proposed reorganization plan
the entire capitalization will amount to
ss25. o0o 60. an increase within three years
OF -. 40. At the close Of the fiscal year
OF 1893. the total net income was found TO
be s.si0. lG4. but the following year 1t fell
on TO 81. ii9 500. and In 1895 II was s s57, 49,
To offset this enormous increase in capital
lxatiou. the interest has been scaled down
from per cent. and per cent. to per
cent. and per cent, but even with that
reduction the earning capacity OF the road
must be greater than the best In the past
five years In order to meet theaxed charges
and allow a dividend OF only IL per cent
on the common stock. Beginning with a
capital stock OF only $500 600 to which
was added preferred stock amounting to
s@6iio.iSi. the capitalization has been roll
Ing ~ until now It Is represented on paper
by SIS. 600 90. The schedule as published by
the reorganization committee. takes into
account only $751; oco. o00. that being the
amount TO ba Immediately covered by the
new issues OF bonds and stocks and cx-
eludes that portion reserved for new con-
s,ruot!on. etc. which leaves a working
capital OF slL0Oo.ooO. but this will eventual
~ form part OF the capitalization. Even
now. emitting that part. the capitalization
IS equal to s6s.oSo per mile. Figuring upon
A basis OF 4.5osis miles OF railroad. this
VIII require that every mile through good
country and bad country must earn within
few dollars Of 5000 per mile per year.
ana even then the stockholders Will get
nothing.
II Is a vast scheme. ard the result. IS by
no means reassuring The committee OF
| reorganization has been compelled 10 meet
the conditions. every interest naturally
refusing its assent 10 any plan which ala
not al least upon its face make full pro-
| vision for each class OF securities 1t will
BE- task deusaIfliHg ability OF the very
| highest order 70 50 manage his railroad
| that 1t shall repay the investors without
unduiy taxing the states along its line.
| The only way TO DO this is to settle up
| She land aleas its route by tempting terms
| % immigrants. ard offering Inducements
| % enterprise by reasonable tarin TO open
up he mineral resources. which should
/ form. even with low rates OF t-ansporta-
/ ton. the roads best source OF income.