Year: 1875




NEw-lORK, Feb. "A, 1S75)


To THE BoypHoLDERs OF TIE UNION PACIFIC
RAILROAD COMPANY: In view of the late gratifying
success of the Union Pacific Railroad Company, in
refunding an important amount of its bonded debt,
the President feels it proper that he should acquant
the bondholders with the facts bearing upon that
NEGOTIATION and upon the business and future pros
poets OF the Company.


OF the SlO,00O,O00 of Income Bonds which the Com
pany offered to convert into Sinking Fund Bonds
there are outstanding only about S25O,OO0, the
balance of S9,750000 having been exchanged for the
Sinking Fund issue. And the Company has infor-
nation showing that the maj0 portion of thishmal
unconverted balance belongs to estates III litigation
OF otherwise in dispute. The President has much
pleasure in announcing thus virtual completion OF
the conversion of the Income into the Sinking Fund
Bonds and in calling attention to the steady en-
hancenent in the value of the New Issue, realz-
ing the expectations held out to the bOndholders
while the conversion was in process last Fall.


1t may be proper to explain that tbeSinking Fund
Bonds are a second mortgage on the entire lands OF
the Company and third mortgage on the whole
road and its equipment. AS the Land Grant Bonds
are retired the security for the Sinking Fund issue
becomes more complete and valuable; and the rapid
progress made in the liquidation of the Land Grants
makes 1t evident that, at comparatively early day
the Sinking Funds will become the first lien upon
the immense land grant of the Company. OF the
original issue Of $40 100000 of Land Grant Bonds
900 bad been Cancelled up to Jan. J. 1875, leav
ing $7,91G, 900 outstanding at that date. The Com
pany has now hand g. 79l33 of land notes, to be
applied at maturity toward further cancellations OF
Land Grant Bonds. 1t will thus be apparent to the
holders of the Sinking Fund Bonds that the time is
not distant when they will hold a first mortgage
upon this valuable portion of the Company prop
erty. after the Land Grant Bonds are extinguished,
the proceeds of the sales of land will be applied to
the purchase and cancellation OF the Sinking Fund
Bonds.


The prospective value of this lien may be inferred
from the following facts Up to Jan. l, 1873, the
Compapy had sold 1.CSl,431 acres Of its lands, for
which it realized S49iOO52, being an average per
acre of 81 So and yet there remain unsod 1O995OSS
acres, or over ten times the quantity already mar
keted at the value noted Hitherto the Company
has pursued the policy of selling only its agricul
tural lands from the conviction that the firss thing
TO be done is to encourage settlement the line of
the road. The large and growing local traffic of the
road shows the wisdom of this policy. The reten-
ton of the mineral lands in the hands Of the Com
pany has proved to be eminenty to its advantage
as it is now ascertained beyond all doubt that these
lands contain large deposits of coal, iron ore sui
phur, &c, of immense prospective value.


The late decrease in the tide of immigration has
not affected the demand for the Company's lands.
The satisfactory accounts sent by settlers to their
friends induce Others to join them, and several col
onies Of farmers are expected in the Spring. One
fact of great importance in connection with the
new population Oh the line of the road is that it con-
ssts almost entirely of the best class of settlers


The coal mining on the lands of the Company is
becoming very important. Coal is now mined at
cost of less than 81 per tOn which not only enables
the Company to supply the population along the
route at comparatively low prices, but also effects
very important economy in the cost OF running the
road and supplying fuel for the Company's work
shops. The coal mines will ultimately supply fuel
for the entire population on the line of the road
they already supply the smelling furnaces of Utah.
1t is only necessary to cite the cases of immense
wealth realized by the coal railroads in other States
to show what is implied in this Company owning
the coal supply for the vast future population of
the plains and OF the Pacific coast.


The increasing bullion traffic of the road is be-
coming very important source of revenue The
amount Of ore and bullion received at Omaha for
the year 1873 was $21.500,00o, and for last year
s41, 100000, showing a doubling of the business
within one year. The value of this traffic will be
apparent when il is considered that the road has to
carry supplies TO the mines and bring back the ores.
The President has much satisfaction in pointing
to the steady increase in the gross earnings show
ing the prosperity Of the Company. The receipts
have increased from 81 625 27 in 1870 TO S1O599s80
in 1874 The yearly progress in earnings is shown
by the following figures:


l670-S7.625,277


1871 1921 ,GS2


1872 S,S82,605


1876 10,2G6.103


1870 10,589,SsO
The increase in 1874, year of great commercial
depression and of general deehne in the earnings of
Eastern roads, is especially gratifying; and the I'M
provement applies to the net earnings we'll the
gross The Company is free from the depressing
effects of the violent competition which is waged
between the roads of the East and of the West The
raising Of the road-bed the plains has protected
the Company against the interruptions and the de-
tentions to which it was formerly subjected during
the Winter months, so that this year there has not