New-York tribune., 1907-05-10
PACIFICS' BIG ISSUE.
Il TOTAL OF S1I1 900. 900
Mr. Hartman Explains Why
Money Is Needed.

Rumors which have been current in Wall
Street for several weeks. but dscredited in
quarters usually well informed, that the Union
Pacific Railroad Company about to raise
S6O.O00,OoO some form OF security, as to the
nature of which there much uncertainty,
proved to have been we'll founded yesterday
when al the close Of the regular meeting OF
the directors President Hartman announced
that the board had decided TO ask the stock
holders to authorize the issue of S1OOO00.O00 OF
common stock and SI5.OOOOOO of per cent
bonds, the latter to be issued at 90 and to be
convertible into common stocl, at 1I5. Just
before the Union Pacific beard meeting the
Southern Pacific directors met. and decided TO
offer to the stockholders preferred stock to the
extent of 15 per cent of their respective hold
ings or to the amount Of about S36oOo.Ooo.
This stock is part of the S1O0OOOOo0 already au-
thorized. OF which s4OOO0O00 subscribed
for al par by the stockholders In 1904.
The news that the Union Pacific system was
about TO issue Sill 100000 of new securities
came as a surprise and a shock to the stock
market where Union Pacific, which was selling
at 1494 just before the announcement. which
came out at about o'clock fell rapidly to
141lA. on enormous transactions. closing at
143lk a net loss for the day of So points
Southern Pacific declined from s61a to sSls, re-
covering H. by the close. however, and the
entire market sold off in sympathy with the
weakness In the two stocks named.
HARTMAN HAS HIS JOKE
cbsrp criticism Of the action OF the Union
and Southern Pacific boards was heard in the
Street and Mr. Hartman. late In the afternoon.
said in a half joking way:
1T looks as though this were going to he Ike
last August, when l thought I was going 70 Ne
the most commended man downtown, but IN
stead was cursed and damned all over the
Street for handing out lemon instead OF a
melon"
The carrying out of the financial plans OF the
two companies President Hartman added'
would not result in any disturbance of the
money market. The Union Pacific bonds. ha
continued, were TO run for probably twenty
wears and we're TO be convertible into common
stock at 175 for ten years and redeemable after
five wears at 1927. The company has S1OoOO-
600 of preferred stock. no part of which has
been issued and Mr.. Hartman explained that
the for deciding TO issue convertlole
bonds at this time. instead of a corresponding
amount of preferred stock. that the latter
could not be issued at less than par The pre-
ferred closed yesterday at 93. The Union Pa
cifc bonds and the Southern Pacific preferred
stock are to be offered for subscription 10
stockholders of record OF the respective COM
to be made % per cent June Il. % per cent
on July 10 and 80 per cent on August 10. The
special meeting of the Union Pacific stock
holders to authorize the isue of S1OOOooOOO
common stock and SI5,0O0O00 convertible bonds
is to be called for June 15 Bonds which may
not be subscribed for by the Union Pacific stock
holders will be taken by an underwriting syn
dcate.
WHY FUNDS ARE NEEDED.
Mr. Hartman. after the meetings of the two
boards outlined in detail to the newspaper men
the financial position OF the Union Pacific and
Southern Pacific and the purposes for which
the funds about TO be raised would be expended.
As a preliminary he read letter from Julius
Kruttschnitt director Of maintenance and oper-
alton of the Union Pacific system. which had
been read to both boards of directors. In tHIs
letter. Mr.. Kruttschnitt said that in the month
of February 40 steel rails the lines of the
Union Pacific system had broken. OF which 40
were ninety pound rails which had been in tn.
track only five six months. He had discussed
The subject of rail breakage with the operating
officers of other large systems. and naG found
that their experience had been about TIE same
as that of the Union Pacific W. V. S. ThOTLe.
director Of purchases of the Union Pacific sys-
tenn. Mr. Kruttschnitt continued, would put in
a claim for allowance for the defective rails but
result would follow. His suggestion was that Mr.
Hartman take the matter up with the higher
officials ot the steel corporations. when he should
happen to meet them, and he believed that in
that way something might be accomplished.
Mr.. Hartman smiled he read this part OF
MIR. Kruttschnitt's letter, perhaps having in
mind the fact that Fl. c. Frief. who is melri-
ber of the Union Pacific executive committee
and had just attended meeting of the direc-
tors of that company, is also one of the most
influential directors of the United States Steel
Corporation. The matter of rail breakage. Mr..
Hartman said. of the serious condi-
tions which railroad companies have TO face.
SOUTHERNS PROSPECTIVE EARNINGS.
Statements submitted to the directors of the
Southern Pacific Company. Mr.. Hartman said
showed that the probable earnings OF that company
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