The record-union., 1897-10-21
Reorganization Committee Wins a
Great Victory.
Said to be Directly Due to the Defeat Of
the Funding Bill.
Firmly Be1ived That the Oppo-
nents of Funding Played Into
the Hands of the Committee,
and Aided Materially in Bring
ing About the Existing Condi-
tions.

NEW YORK, Oct. 20-The financial
and commercial authorities are begin
ming to appreciate the fact that Sem
ator Thurston of Nebraska was some
thing of prophet when he announced
on the floor of Congress in 1895 that
the Union Pacific policy of reorganiza-
tion was based upon a plan to pay the
Government debt in the ratio of 40
cents on the dollar AS the price now
proposed and likely to be consummated
is only s., 100000 in excess of Senator
Thurston's minimum estimate, the CO.
incidence is inevitable that he knew
what he was talking about two years
ago
1t is also current gossip in financial
and commercial circles of this city that
the defeat of the funding bill was the
triumph of the Reorganization Com
mittee, and that while the Central Pa
cific was most interested in the fate
of the funding bill, they are included
in this deal and will profit by the out
come of the present situation. In
short, it is now firmly believed that the
opponents of refunding played directly
into the hands of the Reorganization
bringing about the existing conditions.
The first mortgage bonds of the
Union Pacific Road amount to S33, ,0OO,-
600; the first mortgage Indebtedness of
the Central Pacific amounts to $2S, ,000,-
600, including a sinking fund of S10.-
600, O00 The total Indebtedness of both
roads secured by a first mortgage is,
therefore, SCI, 600 600, less the amount
Ftav civ
The second, or Government, mort
gage covering both roads amounts to
S120,000,000 against which is credited
a Central Pacific sinking fund of S13,-
00000 and a Union Pacific redemption
600 redemptory reserve to be deducted
from the debt, leaving a second mort
gage debt of $50, 100000
The plan of reorganization contem-
plates a stockholders pool to satisfy
the Government claim, under foreclos-
ure. or on as favorable terms as may
be secured, and consolidation of Cen
trail and Union Pacific interests The
total bonded Indebtedness under this
operation, it is estimated, will amount
to S110,O00.0O0, but the new issue will
probably reach S120,0O0, 600 to include
eating the deal. The new organization
will thus control over 5000 miles of
road, main line and branches. The
branch lines are valued at 100000, 900
and the debts of these branch lines will
be consolidated with those of the main
lines, the old debt will be retired and
an entirely new issue ordered, amount
ing to $210000000
he cTn Of hn f1a1 iS
quoted to-day in London at $4,000
600; the value of the Union Pacific in
the same market is about $4,000 900;
or a total quotable valuation of $27,-
100000. The par value of this stock
is S130000.000. A successful adjust
ment of the financial affairs of the two
roads as proposed by the Reorganiza-
tion Committee would send the value
of the stock fifty cents ON the dollar or
two and one-half times the present
value.
1t is not believed here that any com
bination can be formed strong enough
to outbid the syndicate of stockholders
for control of the main lines, and no
combination. however strong financial
ly. would undertake to operate the
trunk lines without control of the
branch lines. 1t is regarded as virtu-
ally settled, therefore that the owners
of the branch lines of the Union Pa
cific and the Central Pacific will secure
these roads without opposition and
upon such terms as may be prescribed
by foreclosure. Moreover, there is one
element that does not appear to have
been considered in this matter as seri-
ously as it deserves to be, and that is
the amount of indebtedness of the
branch lines represented in the consoli-
dation. 1t is not likely that the stock
holders of these branch lines will sacri-
fee 10O000000, or risk any portion
of it by permitting the trunk lines to
fall into other hands than their own.
Considerable sarcastic comment is
prevalent in the street concerning the
Governments slipshod way of trans
acting its business. especially when it
is influenced by the clamor of the
newspapers. 1t is asserted that the
simplest sum in commercial arithmetic
will demonstrate an inevitable loss to
the Government of S40,000000 by fore
closure. The roads wifi be sold for So0,-
100000, and the interest value OF this
amount at 3 per cent. will amount to
$l,500000 a year. The funding bill, on
the other hand, proposed to pay the
full amount Of the principal S90,0O0-
600. in eighty years at , per cent. which
would have netted to the Government
S1,S00O0O year. At the end Of twenty
years the Government would have re-
ceived S36. 100000 in interest and S22,-
0OO,Oo0 of the principal, the latter at
the rate of 81, 125, 600 a year, a total of
$5S,000,000, or SS,500000 more than
Will be received under foreclosure. with
a remaining debt of S70.000,000 to &C
cumulate interest during sixty years.
Is it strange, then, that shrewd finan-
ciers are laughing at the Government
methods of business and asserting that
if the Union Pacific reorganization COM
7nittee did not engineer the defeat of
the funding bill any denial they may
make Will not be generally credited by
those who observe the immense benefit
which the stockholders of the bonded
roads are deriving from the action of
Congress in the premises?
SUIT FILED BY HOADLEY.
NEW YORK, Oct. pa bill of COM