The Topeka state journal., 1902-12-25

Excluding earnings of water lines.
The Santa F'e charges above include
twelve months interest on the serial de-
bentures, the annual report having in
cluded but five months interest. For
purposes of comparison the $500, 900 an
nual sinking fund requirements have
been regarded as share earnings, since
Union Pacific has no corresponding
charge.
Perhaps the most striking feature of
the ia BILE is the much lower operating
ratio" of Union Pacific. which enables
the company to show almost as much
net earnings as the Santa Fe from a
much smaller amount of gross. This is
owing to the fact that Union Pacific can
handle its traffic at a much lower cost,
the proportion of its expenses of con-
Quoting transportation to gross earnings
in 1912 having been only % per cent,
against the Santa Fe'S 81 per cent. Per
haps after the Santa Fe has completed
its short line in New Mexico, its ex-
pense ratio will compare more faVorably
with Union Pacific's. since the latter
company has already made many such
improvements.
A comparison of maintenance charges
and of maintenance requirements, meas
uring the latter by traffic density, shows
the following:
Maintenance way per miles i.94l Isl
Maintenance equip. mile 500 1.OOl
Total maintenance mile. $ l,sn $ Isl
Passenger per mile 70100 1900
Thus, with movement of passenger
traffic per mile slightly greater than
Union Pacifics. and with tonnage
movement per mile equivalent to only
20 per cent of that company's, the Santa
F'e charged only $50 less per mile for
total maintenance. Union Pacific S
equities in Northern Securities and in
the Southern Pacific should, however,
be considered. These equities for 1912
are figured as follows:
Earned and
undistributed. Equity
ssOO0o.OoO So. Pacific stock Sc s., 900
$50, ,49l, 81 n. Sec'rities st ok $50 2,474, 900
Total equity ACKNOWLEDGEMENTS. ~, vcO
Adding this amount to the surplus for
the common above, the Union Pacific
earnings applicable to the common stock
amounted to over Is per cent; or assun-
ing that the $91, 1852, 600 convertible bonds
have an equity in these earnings, the
total earnings Including interest on the
convertibles) amount to over II per cent.
This consideration would turn the COM
parison in favor of the Union Pacific.
Another consideration, and one Which is
very important for investor, is in
volved in the question of the continua-
ton of dividends on the common. Each
company has yet to demonstrate its abil-
ity to pay dividends through period OF
depression. As bearing this, the Union
Pacifc's surplus for the common, disre-
garding equities in other systems. last
year amounted to p per cent of gross
earnings; while the Santa Fe's amounted
to II per cent. In the next twelve years,
moreover, the Santa Fe will have sinking
fund charges of 81. 500 900 per annum. which
/ amount has been included in the surplus
/ for the com mon These charges will have
/ to be met before payment of dividends.
On the present amount of gross earnings,
/ therefore, the Santa Fe's real surplus for
the common amounts to only per cent
of gross although this position will be
| improved in time by the operation of the
shining fund in reducing charges. 1t is
| clear. therefore, that in case of a. shrink
| age in earnings the Union Pacific would
be better able than the Santa Fe to con-
| finue dividends on the common.