Omaha daily bee., 1902-07-16
RAILROAD TAXATION IN COURT
of Counsel on the Issues Raised in the n
Case Before Nebraska Supreme Court--R~r w
Part VI

road, the Oregon Short Line and the Ore
gon Navigation company by the very same
principle you used, all three were worth
less than nothing. and then they would
have put you at the head OF the railroad
tax bureau Of the Union Pacific railroad
and increased your salary.
Let us look at these figures that are here
to mystify us. ! am not here to charge
Mr.. Baldwin with trying to misrepresent
to the court. but l am here to point out
that these figures are deceiving and that IL
Mr.. Baldwin is not responsible for their
making he ought to expose the man who
by misrepresenting was trying to get an
unjust judgment here. l might point out
some things he takes into consideration;
for example: When they took this North
ern Pacific stosk they Issued 4 per cent
certificates and then they got the stock.
Now II / buy today a thousand dollars of
stock and give my note for a thousand dol
lars I am neither richer nor poorer when
the day closes. But Brother Baldwin by his
figures here even after they have paid of
and retired the stock figures differently.
He figures IL / buy 81 1000 worth Of stock
today and give my note for 1t / am 1000
poorer tonight. In addition to that he takes
the Southern Pacific stock, which is an
asset in the hands of the company; and he
treats 1t as a liability. Why, bless you,
Brother Baldwin, II you can get a-hold Of
a million dollars of that stock II would be
a million dollars Of your assets and not OF
your liabilities.
The Union Pacific railroad, according to
Poor's Railroad Manual, according to the
Interstate Commerce Commission and ac-
cording to their own report-I am talking
Of the Union Pacific, not these afiliated
lines which are operated under their WI
charters-has a total mileage OF 1887 miles.
That covers the entire line from Council
Bluffs to Ogden, Utah, and includes the
branch lines In Nebraska, Kansas, Colo
RADIO and wherever else they may be. l
want to get the value of this road, and I
intend to keep It apart from these other
two roads run under their own franchises,
and ! intend to keep 1t clear from the
Northern Pacific deal that they had when
they cornered the stock in Wall street. I
want to get the value OF this road by
itself; its main line and its branches, and
to show What It is worth per mile.
The bonded debt of the Union Pacific in
that way is 500, 500, 900, the bonds floated
1874. Coz, 800, not including the -s445 900 in
your treasury. The total mileage is 1857
miles. These bonds are worth a premium.
The preferred stock is a little below par, it
iuctustes. The common stock is at a
pT6mluus buI IN my uBuT6b i nave taken
the bonds and both stocks at par. / know
that is conservative. l know 1t is fair to
the Union Pacific railroad-it is more than
fair. but ] have taken them at par. Under
the rules laid down by every court that l
know of since the great decision of Judge
Miller In the Illinois tax cases In the
Second United States, the value of tho
stock, plus the bonded debt, measures the
value Of the entire railroad property,
franchise and all combined. Taking this
funded debt and taking this stock and
dividing 1t by 1857 we find that the Union
Pacific railroad from Council Bluffs to
Ogden. including all the branch lines In
Kansas, Nebraska, Colorado and Wyoming,
Is worth s99,124 a mile, practically 100000
q mile. &c SIR
But 1 do not need to stop. even ct these
figures to prove II is worth more than
800. 900 a mile in Nebraska / do not need
to go outside of its own report to prove 1t Is
worth more than 800, 900 g mile in Me-
braska. The Union Pacific bonds, on the
testimony here, bear 4 per cent. 1t is very
safe to say that in a safe railroad money
can be borrowed at 4 per cent. Money is
plenty in the United States at 4 per cent
per annum on absolutely safe investment
and covering long periods Of time. The
Union Pacific is doing business upon that
basis. Its boads are 4 per cent. It's preferred
stock is a 4 per cent stock; its common
stock on which dividends have been paid
according to the testimony here. have drawn
{ per cent and have been paid in the last
couple Of years. So the Union Pacific rail-
road is bonded and stocked upon a 4 per
cent basis. Now, the statements before
this same board show that the total mile
age of the Union Pacific railroad In Ne
braska Is 1,020 miles, and I have treated It
in my brief just the same way, because
1 ,020 miles is included in the earnings.
| am not treating 1t so in figuring the
value per mile when I take the bonded and
stock debt, but when 1 figure as based upon
the earnings ! am taking It as 94T miles of
Its own, and 1t is operating under some
trackage arrangement with the Omaha road
"A 94-1OO miles from Norfolk to Sioux City.
The net earnings Of the entire 1920 miles
In Nebraska for the year ending June 80.
1901, according to the report filed with this
board itself. was s4.S0 ,00O-I will give the
figures accurate. s4.sO7. 2ss.S7. Its net earn
ings per mile are s4,71l. That will pay
4 per cent interest upon $780, 900 a mile and
leave more than 500, 900 Of its surplus every
year. II we capitalize it right down on q
4 per cent basis, It shows that the Union
Pacific railroad is worth Sis 900 q mile,
and I believe that is a fair basis, because
that Includes not only all Of its tangible
property, but It includes the intangible as
well; IT includes its contracts for opePat-
Ing over this Omaha road, It includes the
revenues 1t gets for the use Of its bridge
from the Milwaukee and Rock Island roads
: and for the other roads that cross over that
highway; 1t includes it's mail contracts and
: its express contracts. IND when you take
; the value Of the tangible property and wher
you take the value Of the intangible con.
tract. when you take the value Of the fran.
: chise under which they levy tolls and col.
lect tribute, not only now, but in perpetuitS
when you take all these things together
you have got the value OF the road and the
only fair way BY which you can measure ii
: the value OF the stock plus the bonds.
= Upon the showing. and / know It cAnnol
be contradicted, that is. not only their OWL
showing filed with the board, but It is from
Poor's Manual as we'll. and II is the marke
reports in evidence, as well, Is this Unior
Pacific railroad paying a fair share Of thu
q taxation in Nebraska? Why, that NAH
. line that was but a bankrupt road In thi
: hands Of a receiver a few years ago is no
assessed. for one single dollar more TO-DAY
Z than at that time. though 1t is now tn
> best paying property west Of the Missouri
, river. II IS the greatest earning road o
= all the transcontinental lines, and yet II 4
u mot assessed for one RinRlad ollar mara fhf