Omaha daily bee., 1901-02-05
ABSOLUTE AND PERMANENT
Union Pacific Seeks Control for Central
Line, Not Whole Southern System.
PLANS FOR FINANCING THE PROPOSITION
Collateral Trust Notes Common To Rc-
cent Mergers Are Not Likely to
lie Favored In This Deal
Feasible Means Proposed.

NEW YORK, Feb. i.-(SpCCial Telegram
Tho Hartman syndicate is not giving out
freely information regarding the Union
Pacific deal, but 1t is leaking out gradually
Prominent members of the Stock exchange
discussed the situation today. a suggeB-
tion was made for plan by which the
Union Pacific would be able to assume abb
solute and permanent control Of the Gem
tral Pacific without assuming any liability
for the whole Southern Pacific system
One member of the Union Pacific interests
freely admitted that the fundamental inter
est OF the company in the Southern Pa
cihc is in It's control of the natural and
only possible outlet for the Union Pacific
TO San Francisco. He said:
The Central Pacific and Union Pacific
were conceived as one route. Their di-
vision into separate companies was an
natural and harmful TO the best intercstq
OF the companies themselves and to the
transportation facilities of the public. The
two companies often worked In opposition
The Southern Paciflc's other lines are
naturally allied with the interests of Cali
tornia and the southwest and fogm the
transportation system complete and val,-
able In itself, even without the direct own
ership of the Cenertral Pacific.
The plans OF the syndicate now holding
the Southern Pacific for the Union Pacific
TOR financing the property will not be
definitely formed until the Central Pacific
lease has been carefully gone over to see
II that property can be segregated from the
lines under feasible conditions. The
adoption OF the plan of issuing collateral
trust notes, as in other recent mergers. Is
not likely to be accepted until other plans
have been thoroughly canvassed. The
control OF the Southern Pacific will not be
held in any way which will create any bur
den on the Union Pacific The terms under
which the Central Pacific Is held are
definitely fixed by the Southern Pacific 4
per cent collateral trust bonds issued in
1899. The section of the mortgage says:
The existing lease OF the Central Pacific to
the Southern Pacific shall terminate in case
the pledged stocks be sold i'm consequence oe
default. The Southern Pacific will not as
sent to any other lease on its properties
unless such lease shall have been approved
by the holders of a majority of its bonds
outstanding, or shall contain provision
terminating the same in case such pledged
stocks shall be sold.' This would seem to
afford ample authority and feasible means
for the Union Pacific assuming the Central
Pacific lease If 1t should be decided to turn
that property directly over to the Union
Pacific.
How the Deal Was Made Possible.
Two members of the syndicate told today
how the great Pacific deal was made pos
sible. In the Kuhn Loeb company's Of
flces II WA. aaid tbtt ,thongh the NAL neeo-
tiations were quickly made the possibility
of securing coRts~tSof the Southern Pa
cifc has been in view practically since the
death OF Huntington.
said "to broach the idea of the sale TO
Huntington. He had a sentimental attach
ment to the property which nothing could
shake. He used to say he would rather
sell the coat on his back"
Another authority interested in the final
negotiations said tonight: "The deal was
practically outlined when Mrs. Stanford
sold her shares. The plan was made then
| don't like to say it was a case of wait
ing for dead mans Shoes but
| knew thore was no chance
while Huntington was alive. II was
natural for the estate or widow 10
desire to exchange shares in a property
however valuable and promising which
were not divdend-paying When Mrs
Stanford exchanged for investment on IN
income basis it was figured the same con
sideration would appeal to the Hunting
ton estate. Speyer, up TO Huntington's
death, refused to be directly responsible
for the management of any railroad prop
erty. He was assured of getting these
holdings on that account. He waited thC
proper time after Huntington's estate was
settled and then fell out with the control
ling interest Everything was in Harrl
mans hands. The negotiations were car,
ried on quietly for some days. Friday
morning a certain broker famous on tn,
street walked into Speyer's.
"'What yer take fer Sunset he asked
Fifty-fye,' was the reply.
" How much you got?'
"He was told.
"'Taken.' And there you are
Il guess it was the biggest railroad dea
on record and it was made in about sixty
! seconds"
Burts views on the Deal.
NEW YORK, Feb. 4.--President Horace
G. Burt of the Union Pacific railroad, who
is now in this city in the course of al
Do