The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1897-10-26
S31,192, 600 Will be Made at
the Peoples Expense.
UNION PACIFIC SCANDAL
HOW 1T WILL BE WORKED BY
THE REORGANIZERs.
UNITED STATES MUST LOSE $40, ,OOo 900
Syndicate Owns the Bonds and Will Pay Itself
Literally For Them-- Securities Bought
For a Song viii Realize
Huge Returns.

For Song viii Realize
Huge Returns.
New York World)
The United States will not be the only
sufferer in the Union Pacific Railway
sale. The stockholders have got to help
pay the Wall street syndicate headed by
Morgan and Schiff The government
will lose over $20,000000 if the "blind
poop deal is carried out The blind
pools profits VIII be at least S31 1872, 600
Who gets this? Why, the organizers
Of the syndicate, of course. They have
been in on the ground floor these many
months, buying the Union Pacific Sc
curities cheap and laying them aside
against the day when the reorganiza-
ton should come.
The scheme now in hand has two
main ideas. One is that the govern
ment, which in years gone by adj
vanced millions to the Union Pacific,
shall scale its $53,000,000 just claim
down to $33 100000; the other is that
new bonds at per cent. and new pre-
ferred stock shall take the place of all
the outstanding liens and mortgages now
in the shape of bonds and collateral
trust notes.
While this new preferred stock and
these new per cent. bonds are not
issued yet, Wall street has been gam
bling on them. They are dealt in every
day in the week, deliverable when is
sued" The per cents have sold as
high as 90; the preferred stock as high
as 5S. A fair average figure is 91 for the
bonds and 54 for the stock.
Now for the syndicate's scheme.
There are seven classes of securities
which the syndicate proposes to care for:
the old first mortgage bonds, the sinking
fund bonds, the Kansas Pacific consols
"a thira mortgage on the road), the gov
ernment's claim, the S10,000,000 first
mortgage bond synd:cate's certificates,
the Kansas divisional bonds and the
collateral trust notes. To these must be
added the commission allowed the reor-
ganizers, lawyers fees, printing, ETC.,
and the S9,000,000 assessment paid by
the complainant stockholders, who will
get no return for it,
NEW AND OLD SECURITIES.
These securities and claims are to be
taken up with the new bonds and new
preferred stock. The basis is
For the old first mortgage bonds, 100
per cent. in new bonds and so per cent.
in preferred stock.
For the sinkink fund bonds, 75 per
cent in new bonds and 100 per cent. in
preferred stock.
For the Kansas Pacific consols, 80 per
cent. in new bonds and 110 in new pre-
ferred stock.
| For the government claim Ito be scaled
down from $53,000,000 to $33, 100000,
| the syndicate will put up the money and
take 100 per cent. in new bonds and so
per cent. in new preferred stock in pay
ment, $40 100000 to the syndicate in Sc
curities worth $40,000,0O0 for payina
$33, 100000 to the Government.
For the 100000 syndicate (which
guaranteed the first mortgage bonds)
new bonds for $10,000000 and $6,O00,-
900 in new preferred stock.
For the S5,000,000 Kansas Pacific di-
| visional bonds, $2,500,00O in new pre-
ferred stock, though the railroad has
paid off 63 per cent. Of them and is able
| to pay off the rest.
| For the collateral trust notes, 49,
100000 in all, 20 per cent In new pre-
| ferred stock as commission to j. p.
Morgan & Co.
To this must be added reorganization
expenses. Judged by other reorganiza-
| tions the bedrock figure will be $1,000,
600. Now to recapitulate.
THE MORTGAGE AHEAD OF THE
GOVERNMENTS.
OF the first mortgage bonds there are
Istill out only $37 100000; Of the sinking
fund bonds, $3,730,000, and selling at
ia; of the Kansas Pacific consols, S11,-
650.000; of the government claim, $685.
100000 must be paid; the $10,000,000
must get $6,000,000 in stock at 54; the
S.. 100000 Kansas Pacific divisionals
deposited as collateral security must be
redeemed by the payment of $2,500,000
in stock; Of the collateral trust notes
SS.SO0.O00 are still out and must get 20
per cent. commission in stock.
Figures tell the profits each will
make, as the table shows. The old
bonds get 100 per cent. in new bonds at
81 plus 90 per cent. in new preferred
stock at "a, which means 100 plus 81, or
11S per cent, profit of Is per cent.
The sinking fund bonds get 75 per
cent. in new bonds at 81 plus 100 per
cent. in new preferred stock at 54, which
means 6S plus "a, or 122 per cent, a
profit of % per cent.
The Kansas Pacific consols get SO per
cent. in new bonds and 40 per cent. in
new preferred stock, which, figured up,
means 105 per cent, profit Of 5 per
cent.
For paying the government claim Of |
$33. 100000 the syndicate will get 100
per cent. in bonds at 81 and so per cent. |
In stock at 54. plus per cent. commits
sion (the minimum), or 91 plus 27 plus |