The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1897-09-05

be condemned for following the gen.
eral fashion of the times. The new
branches in North Dakota, Minnesota,
Manitoba, Montana, Idaho and Wash
ington nearly doubled the original
mileage of the Northern Pacific, in
creasing it from about 1000 miles to
over 1000 miles, All of this construc-
ton added very heavily to the fixed
charges of the road. The branches
were financiered by organizing inde-
pendent companies and issuing bonds
which were guaranteed by the North
ern Pacific. There was a universal era
of expansion and speculation at that
time in all parts Of the West. Imni-
81 alton was rapidly pouring In, scores
of new towns were built, new mines
were opened, factories constructed, and
the fever of business activity every
where prevailed. The earnings of the
Northern Pacific advanced with great
rapidity and eliminated in 1891 at $685.
100000 gross. The bonded debt of the
company at the same time increased
enormously and now reached the grand
total of $156,O00,000. The fixed charges
amounted to nearly $100OO,O0O. For
several years the net earnings equaled
this heavy sum, but there was already
a cloud in the financial sky Immigra-
ton to the Northwest began to fall off,
The land sales of the company, which
had for several years been exceeding
ly large, decreased steadily. Poor crops
seriously diminished the earnings of
the road, and the financierS of the COM
pany saw that there was no way to
escape impending bankruptcy. This
was fastened by the general financial
crisis Of 1898, which produced a great
stringency in the money market and
forced large number of railroads into
insolvency.
APPLICATION FOR RECEIVER.
When it became evident that the Northern
Pacific could no longer earn its fixed charges
steps were taken to secure from the federal
court at Milwaukee, presided over by Judge
Jenkins, the appointment of receivers who
would be friendly to the interests of the
corporation Bankruptcy proceedings were
hurried through and a receivership was con-
stituted, consisting of Thomas F. Cakes,
president of the Northern Pacific; Henry G.
Payne, Milwaukee financier, and Henry C.
Rouse, practical railroad man living in
Cleveland. The receivers took charge of the
property and operated the road for about
three years. They unloaded all the dead
weight of improbable branch lines, throwing
these lines into the hands Of their bondhold-
ers. The actual management Of the road was
placed in the hands of J. W. Kendrick, its
former chief engineer. Many legal complica
tions grew out OF the receivership, the most
notable of which effort made by
Judge Hanford, of Tacoma, to seize upon the
Western lines of the company and TO create
for them an Independent receivership. He
appointed a receiver to act Within his juris-
diction. This gentleman wise enough,
however not to break the Northern Pacific
into two sections, and he consented to have
the treasurer and auditor in St. Paul act for
the entire line The recetyership was finally
terminated in the summer of 1896 by sue
cessful pan of reorganization formed by Ed
ward D. Adams, of New York, which was
carried into effect by the banking house Of
j. P Morgan & Co. Under this plan fore
closure suit was had and the entire property
of the Northern Pacific Railroad company was
sold to a new corporation called the Northern
Pacific Railway company. The old bonds
were called in and exchanged for new bonds
bearing lower rates Of interest, and the o-d
stock was also taken up and new stock is
sued The general financial result of the re-
organization was to induce the fixed charges
OF the company from about $9,0OO,OO0 per
annum to about S6,000,000 This brought the
annual interest charges down to hgure not
greater than the lowest amount OF net earn
ings made by the road in the year OF the
greatest business depression.
WISCONSIN CENTRAL LEASE.
During the Willard regime ambition to
make Chicago the eastern terminus of the
Northern Pacific led it's management to make
a long lease of the Wisconsin Central lines
extending from st. Paul to Chicago, and to
the latter city and for short lines extending
to the suburbs. a company called the chi"
cago and Northern Pacific was formed to
build and to acquire such lines and to con-
struct the terminal improvements. North
ern Pacific through trains now started from
Chicago. While some prestige was gained in
railway circles by this movement, the scheme
proved to be financially unWise. There are
six railway lines between Chicago and st.
Paul and the requirement Of the longest of
these by the Northern Pacific had natural
tendency to arouse unfriendly feelings in the
management of the other five, and it coused
them to divert great deal OF their Pacific
coast freight and passenger traffic from the
Northern Pacific to its rival, the Great
Northern; thus the Wisconsin Central lease
proved a financial burden instead of adj
vantage, and the receivers made haste to
abandon it.
The plan Of reorganization advised and
carried out by Mr.. Morgan and Mr.. Adams
was worked through expedtiously and with
complete success. 1t was entirely fair toward
all interests and the stock and bond holders
accepted it with general satisfaction. e.
W. Winter general manager of the Chicago,
St. Paul, Minneapolis & Omaha road, was
elected president of the reorganized com.
pany and the Northern Pacific started out
on what appeared to be new career of pros
perity.
HILL AsPIREs TO CONTROL.
James ]. Hill, Of st. Paul, president of the
Great Northern Railway company, is a man
of remarkable energy and ambition, OF very
thorough and practical knowledge OF railway
operations. In 1895 he conceived the l1ea OF
uniting his own road to the Northern racine
under one general management and OF thus
obtaining complete control OF the railway
Situation in the Northwest The united ;oads
would have over 10000 miles of track, and
would be the great dominant transportation
power in the entire country lying between
Lake Superior and the Pacific coast. For this
plan Mr.. Hill obtained assistance OF the
plan Mr.. Hill obtained the assistance OF the
Deutsche bank, of Berlin, the heaviest for
eign holder of Northern PACIFIC securities:
He proposed that tho Great Northern should
guarantee SO, 500 900 net earnings from the
Northern Pacific for its bondholders, and that
he should be put in full possession of the
great rival route which competed with the
Great Northern at almost every important
freight and passenger point In the Northwest.
This gigantic plan OF consolidation was in q
fair way of going forward to success when
it was vigorously attacked in New York city
papers in articles that pointed out It's Illegal
ity and quoted the statutes OF several Of the
northwestern states which prohibited the con-
sohdation OF parallel 9nd competing lines of
railway. At the same time the attorney gen.
eral Of tho satte OF minnesota, II. W. Chiids.