Omaha daily bee., 1902-07-16

down here pays as much tax, almost, as the
entire Burlington railroad. The Lindell
hotel or the Lincoln hotel pay more taxes
than all the railroads. terminals and all. in
Lincoln combined, and yet they say that
they have done justice In this case, that
they have not committed fraud in this case.
that they have tried to do right in this case
as best they knew how.
II we take II on q one-sixth basis and say
1t Is only worth 5000 0 a mile, then the
Union Pacific railroad should be assessed,
both the main line and the branches. at
about 81, 900 a mile; IL should be assessed
about three times as high as 1t Is for every
single mile, main line and branch line. in
Nebraska. This great crime is not COM
mitted on one mile, but on every mile of
that road in this state.
1 Another argument ought to urge morally
strong here and that is this: / have said
this road Is worth at least 500, 900 a mile.
The ~undisputed testimony before you shows
that it's property in Nebraska, including its
terminals in Omaha can be reproduced for
$50, 900 a mile, that is their statement In the
brief they submitted In the federal court in
the penalty case In 1899, The tangible prop
erty. the physical property of the Union
Pacific road in Nebraska, with the Omaha
terminals and all combined. is worth only
$780, 900 a mile, but the road can be sold on
the market for 800, 900 a mile. The fran
chise, the right to take tolls or tributes,
which amount to $4,000 a mile in the value
OF this road of a 800, 900 a mile for which
you can selPit. You can duplicate the road
for 10000 a mile, the other $40, 900 a mile
represents nothing but wind and water on
which the stockholders and bondholders are
drawing dividends. That is what the fran
chise is doing for them. The bonded debt
against the Union Pacific railroad in Ne
braska will pay for replacing the property.
The bonded debt against the Union Pa
cifc railroad will duplicate the property,
terminals and all, and leave SO, 900 a mile for
profit, so that the entire preferred stock
on which they are drawing dividends, the
entire common stock on which they are
drawing dividends, this $40, 900 a mile which
represents the franchise-that is, the result
of their power to take tolls. and that $780,
600 a mile has been absolutely untaxed by
the present respondents.
Let us take the Burlington. I cannot
In the brief time permitted for this argu-
ment say all that should be said to. show
why this assessment should be increased.
But l want to take up the Burlington road
because the same effort to get a wrong
judgment by misinformatIon is contained
in the brief Of the -Burlington-perhaps
unintentionally, I don't charge counsel with
Intentionally trying to mislead the court,
but here is a condition, as proved by the
evidence here. The. Burlington railroad
all It's stock. almost, 9s per cent Of Il, was
sold to the Great Northern and to the
Northern Pacific. It was delivered to them
and placed with a trustee In New York
City. To pay for It they issued their Joint
obligations. the Great Northern and the
Northern Pacific railroads. bearing 4 per
cent, and this stock was deposited as col
lateral. They paid for the Burlington
stock 81 for 81. When the assessments of 1897
and 1898 were made in this state the Bur-
lington stock was below par. The Burlington
stock when this assessment was made was
worth twice as much az II was worth IN
1897 and 1898. ! say that that stock at $500
q share was a cash transaction. why? Be-
cause the proof here shows that any man
that did not want to taxe the obligations
OF the Great Northern and the Northern
Pacific, that the cash was ready. 1t shows
that they set aside $50. 900, 900 in cash to
pay 5000 for each 500 share OF that stock
to any man who did not want to take the
obligations OF these companies bearing 4 per
cent interest. i'9 i1s
But, your honors, that is not even a fair
test. although It is the FIRST test / am
going to apply to the Burlington railroad.
The mileage given here is utterly incorrect;
the Interstate Commerce commission has II
right; Poor's Railroad Manual has 1t right
and II you will take up their second report
and take out the leased lines you will get
It right; take out the second track. The
Burlington railroad owns 1884 miles Of
railroad, or had when they were assessed
this year. l see by the newspapers that
they are getting hold Of narrow gauge and
widening 1t out and the other day, I be-
lieve, in Missouri, the newspapers say they
are getting hold Of the X, C. q O., But none
OF these companies are covered by the
stocks or bonds OF the Burlington and,
hence, are not a proper matter to be taken
into consideration. To get at the value per
mile we will first take the stock at 1896.
/ took 1t half way between counsel's figures
and $500. That gives It, taking the stock
OF the Burlington, at 1896. After that add
to It the funded debt and divide It by 1884
and you viii get the value Of the Bur-
lington railroad to be 345, 800 a mile. In
other words, on a one-sixth basis 1t would
be assessed at nearly $4,000 a mile instead
OF about 1890. as 1t is.
But that is not a true test. The BurlinRl
ton railroad is worth more than that and
before l pass from the mileage I want TO
say TO counsel / have included not only
every mile Of road that you gave when you
made your last report 10 Poor, but have
included the road that was under construc-
ton In Wyoming then and l suppose is in
operation now. ! said this stock was all
sold to the Great Northern and the North
ern Pacinc. said 1t was sold upon a 4
per cent basis. Now, when the Burlington
earns all Of It's operating expenses and
when 1t earns enough money to pay inter-
est on It's bonded debt and enough money
is earned to pay 4 per cent on these Joint
obligations Of the Great Northern and the
Northern Pacific, the whole surplus goes 10
those who still own the Burlington stock.
So when you figure this stock at $500 a
share we are not figuring It right at all. II
b worth a whole lot more than $500 a
share. You can't buy any Of 1t. It is not
in the market, but the obligations given
for 1t bear 4 per cent and were taken at
par. but this does not represent the net
earnings, because there are millions of
stock OF the Burlington on top Of that.
Let US take another basis, which think
is a fairer one. Take their net earnings
for the last year and capitalize that upon
a basis of 4 per cent. Put the value OF
the property at $500. 0oO. 900. which is more
than $4,000 a mile. II will pay 4 per cent
interest on that and leave you 81. 800. 900
Of a surplus every year. So tha on the
very basis on which the Burlington rail-
road was cashed in the market within q
wear and faLtnR tie nraaanf rate ~ uat