The San Francisco call., 1913-10-06
BIG j. ?. SURPLUS
OF MUCH CONCERN
Directors Are Puzzled as How
to Distribute Many
Millions

What to do with its huge surplus is
just now OF great concern to the d.
rectors of the Union Pacific railroad
and OF considerable interest to the
after dividends for the year ended
June 80. 1913, s66 900, 600 so far re-
celyed from sale of its Southern Pa
cific stock and some s20,00o.oo0 pre-
yiously on hand Union Pacific now
mas IN the treasury approximately
Sl0o,0o0,000 in cash. Its profit and
loss surplus, even after allowance of
S3S.00os0O0 depreciation IN book value
OF investment securities, is crowdfng
5000, 600, 600.
This is a larger surplus than an
American railroad can afford" seems
TO pc the popular eastern newspaper
opinion. 1t is pointed out that when
engineers and firemen send a COM
mittee to demand higher wages and
are told that the roads. on the basis
OF present rates and prospects, can
fremen's committee puts its finger on
that surplus in the records. And
when the various commissions take
up the matter of rates and ask why
Pacific is a stumbling block for the
argument that the lower rates would
be eonfiscatory.
On the other hand, it is shown that
regard must be had for the possible
need of funds for purchase of the Gem
tral Pacific and that sufficient cash
must be kept on hand to relieve Union
Paclnc of any risk of having to bor-
row money in stringent markets. Some
of the Union Pacific directors have
expressed regret that occasion should
have arisen to consider any extra dis
tribution plan at this time. but realize
that 1T must be done. 1t is asserted
that the present deliberations of the
hoard confer around the distribution
OF $50. 100000 surplus cash and $685.
651,700 par value of investment secu-
o. \. rof
s125.577.16s. At present market prices
the four big items in this investment
list are $50. ,410 Baltimore and Ohio
common. s23,osSso0 Baltimore and
tral and s17,142,S16 New York Central
Union Pacific will probably plan to re-
tain a profit and loss surplus OF some
s5o,ooo,ooo as a margin of safety
The placing of wheat on the free
list with a countervaiiing duty OF 10
cents bushel Is a protection to the
American wheat grower for the pres.
Canada taking off its import duty, so
those who have studied the situation
there say. The railroad interest in
Canada. which Is most important, Is
opposed to it, as 1t would cut down
their revenue. Then there Is the bank
ing interest which cuts figure. and
the Canadian miilers are also against
IL. Argentina has an import duty,
Wiitii. Il 10 odlur Will DC iciiiOscu. ne
new tariff is expected to act as an
evener on speculative conditions and
prevent too radical advance in values
in times of short crops in this country
when Canada or Argentina have big
surplus.
n n
San Francisco members OF the Investment
Bankers Association of America have been
notified that among the speakers st the annual
convention in Chicago. October 2S TO 30. will
be James ]. Hill, who will speak on Railroad
Financing OF the Future. Samne insult. presi
dent of the Commonwealth Edison company OF
Chicago. who will speak on Electric Ffnan-
cling Edmund D. Fisher, deputy comptroller
OF the city OF New fork, who Will give an
address ON Municipal Financing; Prof. VIII
Ham A. Scott. University of Wisconsin.
"Investment Versus Commercial Banking