The Yakima herald. [volume] (North Yakima, W.T. [Wash.]) 1889-1914, 1897-08-19
Northern Pacific paying pi,idends

Northern Pacific Paying Dividends
Under the heading. Northern Pacific"
the New York Commercial Advertiser had
this to say on August of the prospects
Of dividends in Northern Pacific preferred
stock:
mo system, perhaps, in this country
has succeeded in attracting and holding
public attention in various WAYS The last
three or four years to such an extent "a
has the Northern Pacific. The affairs OF
this company, however, alter a long
period of chaos, are at last arriving az q
point where something like day light can
be seen.
"Of late there has been a good deal Of
talk in the street generally about the
poss ibility OF dividends being earned on
the preferred stock OF the Northern Pa
cific. The people who have iathered the
idea are among the very smariest rail-
road men in the country Their state
ment that under proper management and
with improving business Northern Pa
cific could earn per cent on It's preferred
stock is made deliberately and OF set pur-
pose. 1t may be OF interest to the public
generally, now that the matter has come
out somewhat prominently, to consider IN
a little detail this proposition and what
it involves.
The reorganization plan stated that
the fixed charges of the company, assum-
ing complete conversion OF the first mort
gage bonds would be somethin. over &c.,.
050,0O0 per annum. In view OF the fact
that large portion of the frsts have not
converted, and in view OF the likelihood
of capital expenditures on the property,
it is probably unsafe to reckon the actual,
fixed charges of all kinds Excluding rent.
alsl at less than So 400, 900 annually. At
all events this is conservative. Couse-
quently, to earn 4 per cent on the prefer
red, calling for 100000 additional.
Northern Pacific must clear over aud
above operating expenses, taxes and
rentals the sum of 50, 400 900. Now " hat
are the chances for the company to do
this? The answer to this question in
wolves quite little figuring.
The official statement issued hy the
company last December, gives II 81 statement
OF earnings and oper ating expenses for
six years, ending with June -, 1896. We
take the last of these six years for pur-
poses of comparison and examination,
For details, however, We have 10 80 TO
the Minnesota railroad commission re-
port, and we find slight differences be-
tween the statement there given and the
official statement. We use the sworn
statements as being more convenient.
THE gross earnings Of the Northern
Pacific for that year were little over
$50 900, 900, " lille the operating expenses
were something over 81 200 eco, leaving
the net earnings from operation some
thing over 81 900. For our purposes
We may deal with these figures alone,
leaving out Of the case rentals, taxes, etc. 3,
az being really in the nature of fixed
charges. The results Of the year, accord
ing to the official statement, were such
AZ to leave available for interest, under
the plan. sum of something over f. 5O0,-
600, which would leave available Tor pre-
ferred stock, according to our figuring,
81, 100 900, IL is evident that the only
place in which we can look for the other
81 800, 900 OF the 5000 ,0O0-is in operating
expenses.
at may be said that the year Just
ended is left ont of calculations as being
manifestly an abnormal year ia all re-
spects. The company will have done
we'll if it shows its fixed charges earned
in that period, with perhaps little over
We deal with 1896 AS being something
more like an ordinary year.
Operating expenses were Just about 10
per cent OF gross earnings on the basis OF
1900, 900. In the same year Great
Northern earned in excess Of $40 $40, 600,
and it's operating expenses On that basis
were only 81 per cent. Clearly, If the
Northern Pacific had been operated ia
1896 at Great NOrthern's ratio, the net
earnings from operation, instead OF bein.
only about 81, 800 900, would have Teen
in excess of 100000. TIE difference
between these two sums is just about & l..
800 900, or almost exactly the amount 70.
quired for the foil dividend on the prefer
red stock
Operating ratios, as readers are we'll
aware, are things which depend en-
number OF circumstances. NJ one viii
for a moment suppose that the ratio 90
one road is any standard to which others
should conform. Taken by itself, the
ratio is an almost meaningless statement
that derives whatever significance it may
ultimately acquire from the peculiar CON
ditons from which il arises Neyerthe-
less, We make the broad stat-u emit adj
visedly, and We shall try % sga-'lntiate
it by good and solid evidence, jts. there
is no valid reason why Northern Pacific
should cost any more to operate. as re-
CARDS percentage of gross earnings, than
does the GreaI Northern system, and We
may say at once that the hope Of dNi-
dends on the preferred stock Is based al
most entirely on the possibility Of bring
ing down the cost of operating
They Were Both LeyeI-HeHded.