6 A
THE OMAHA SUNDAY BEE: OCTOBER 5. 1913.
UNION PACIWS SURPLUS
Considerations For and Against Dis
tribution Weighed.
RAILROAD NEEDS OF FUTURE
Gilra Dividend Proposal nnd Qhh
tlon of Its SUe Viewed from
Standpoint of Union
flc Sllnntlon.
What will the Union Pacific Railroad
sompany do with Its surplus money?
The question !n alt ltn bearings Is dls
cussed by the Wall Street Journal, as
fol'm.s:
Juige Lovett and his asoelate di
rectors of the Union I'ndflc have acted
wisely In pcrmlttlnR their associate stock
holders to understand that the decree
of the court, forcing the sale of the
entire Central and Southern Pacific sys
tems larKoly for cash and to outside
Int -rests, makes necessary careful con
sideration by tho board of the status of
the I'nlon Pacific with a contracted
geographical domain and an expanded
treasury.
Stockholders are entitled to know when
tho directors are considering cither In
creased or decreased distributions that
they may not part with their shares
without full knowledgo In the premises,
nnd alto be able to Judge of tho
wisdom of Important action concerning
their property by the representatives for
whom their votes are annually Invited.
While tho action of the directors can
not be foretold or even predicted with
safety, for divergent minds have yet to
effect their meeting upon this problem,
some facts may well bo set forth In this
connection. Tho capital stock of the
Union Pacific is $216,653,900 common and
W.'M.'oOO of 4 cer cent preferred.
Tho second paragraph of article 4 of
the company's articles of association
roads as follows:
"Such preferred stock shall be entitled
In prtferenco and priority over thn com
mon stock of said corporation to divi
dends In each and every fiscal year, at
auch rate, not exceeding 4 per cent per
annum, payablo out of not profits, as
shnll be declared by tho hoard of di
rectors, Such dividends ore to bo non
cumulative and'thn preferred stock Is en
titled to no ether or further sharo of
the profits. Tho directors may adopt
proper bylaws to carry Into effect the
provisions of this article!"
Preferred Stock Burred.
It Is altogether improbable that the pre
ferred stock will participate In any extra
disbursement plaif that may he worked
out. There was testimony In tho merger
suit regarding a big pool in the preferred
stock In which several of the Union Pa
cific directors were interested. The hold
ings of the prcferrod there referred to
hao not been decreased since that time,
but one of tho largest holders Is con
vinced that -no plan for an extra distribu
tion that can be devised at this time can
proxldo for any participation by the pre
ferred. The rights of the preferred wilt
probably be throihed out In the courts,
is it Is probable that there will be smaller
holders who will not be willing to take
the above view.
The Union Pacific has earned an ac
cumulated surplus of substantially 100
per cent upon lis common share capita),
or lEtt,000,CO0, but at present prices Us In
ettment securities- show a depreciation
of about a,0CO,GO) from the cost figure
at which they are carried on the books,
and on which the above surplus la fig'
ured. Following is a table of these se
curities, with their par, cost and present
values;
Present
Par. Cost. Mkt. Ilk. loss.
n, & O. com.. 33,334,200 120 55 $ R.0S3.K0
n, & O. com.. :i.J7S,C00 100 M 1,063,850
B, & O. pfd... 7.200,409 93.60 81 S23.739
II. & O. l)fd... 21.273.600 80 SI "212.736
III. Central ..2I.ROJ.000 1C3.40 110 12.015,000
N. T. Central. 17.S57.100 137.44 D6 7,399,082
C. & A Via.... 13.343.100 Ni.Wi 20 8,iS,lSl
St. Paul pfd... 1,815,000 100 133 J90,400
N W. com.... 4,018.700 1S4.97 129 :,2,Sa
Northern Securities, but the proportion
ate parts of Northern Pacific nnd Great
Northern. In the market In which Union
Pacific disposed of thceo stocks In IMS
and 1908, Northern Pacific resched 2MH
and Great Northern sold up to 34S.
Had Mr. Harrlman held the original
Northern Pacific stock in the Union Pa
cific treasury it would now show little
If any profit and at times would have
shown considerable shrinkage.
To the t5S,000,O profit In the Northern
Pacific transaction must be added J13.
000,000 net profit from a second decree
of the court, which forces the sale of the
last Southern Pacific shares from the
Union Pacific treasury.
Ponslbllltles to Ileckon With.
Prudence should dlctato that in any
consideration of Union l'acmc s uivibidio . ,uml finance and 80und railroading
surplus full Insurance should bo tnado . ahou,i jctRto the distribution to the
ngalnBt inesont or possible depression l' 1 shareholders of a reasonable proportion
Union Pacific's Investment account. Foriof th, surpU() aftfir fuU consideration
It must be remembered that this is ajof nll 10 factor8 t lne situation and
treasury asset and likely to call for cash particularly of the suggestion respectfully
only on a depressed market. submlited that any possible dividend re-
It should be further remembered that , ducton anould be considered and an
scparatlon of Central Pacific from South-: noUnced n connection with a division
shrinkage in asset values and a margin
for the extra distribution.
With an annual surplus after divi
dends of from 310,000.000 to 11S,000,CO)
Union Paolflc will probably have $20,000,
000 to 330.000,000 additional surplus by the
time tho supreme court would reach a
decree in a suit to compel the sale of
the Central Pacific This should be
ample to take care of Improvement ex
penditures meanwhile, Having the bulk
of tho above 381,000,000 available for dis
tribution. Union Pacific, (s entitled, tn normal
times, to have a theoretical value of 3200
per share, of which half Is the rail
road and half Is the treasury of the
company.
There can be no question but that
Total 31JS.651.700 Loss.. 437,718,839
'reditu.
Through the Tlallroad Securities com
pany Union Pacific owns an additional
in f.rt fl llllnnli Central stock, but of
this tS.CCO.CC0 Is pledged under JJ.030,000
outstanding Railroad Securities company
4 per cent collateral trusts. Here Is a de
predation of a few more millions.
Harrlmnn'a Forestall!.
A large portloou of the above 3220,000.000
Union Pacific surplus was accumulated,
through the fln&nclut foroslsht of K.
If. Harrlman, combined with some good
fortune. The effort of Harrlman to get
control of Northern Pacific, when denied
any participation In tho llurllngton own
ership, resulted in a profit of about 358,
000,000 from the fortunate sale at high
tJrices of the Northern Paclflo and Great
Northern stocks, which came back to the
Union Pacific treasury when the court
dissolved the Northern Securities com
pany, and "Mr. Harrlman was forced to
accept for Union Pacific, not the original
Northern Paclflo he had turned into
cm Pacific Is one of the possibilities to
reckon with. Attorney General Mcllcy
nolds has announced that suit to seek
this separation will bo filed by tho gov
ernment In the near future. Should thoj
government win, Southern I'ndflc would'
be compelled to find some market fori
Central Pacific, and Union Pacific could
not afford to let Central Paclflo go Into
other hands. Acts of congress (12) re
quire tho Central and Union Paclflo to
bo "operated nnd used for all purposes
of communication, travel and transpor
tation, so far ns the public and tho gov
ernment are concerned, as ono connected,
continuous line," but there Is no doubt
that Union Pacific might be seriously
embarrassed should Central Taclflc fall
Into tho hands of a strong competitor,
The Union Paclflo treasury should, there
fore, be In a position to take advantage
of any opportunity to acquire Central
Pacific nt attractive figures, which de
cree of the courts may provide.
Most of the lown lines have built west
of Omaha, so that their acquisition as
extensions of the Union Pacific eastward
would seem to oo out or me question.
As originally built, the Rock Island
would make a splendid extension of tlin
Union Pacific to Chicago, but as at pres
ent existing cast nnd west of Omaha Its
acquisition by Union Pacific could not
bo contemplated, nnd, moreover, Union
Pacific directly and through the Ilnllroail
Securities company onns 29 per cent- of
the $100,290,000 outstanding Illinois Central
stock, and this line covers the gnp be
tween Omaha and Chicago. Added to
this, through presence on Its board of
President Karllng of the St. Pnul system
and Chairman Hughltt of the Chicago
North Western, Union Pacific appears to
have such comprehensive provision for
connection with Chicago that further
out or extensions eastward may he con
sidered altogether Improbable.
A Circumscribed Territory.
The union I'acina is, therefore, In a
circumscribed territory. It Is not to fur
nlsh tho credit or financing for tho
Southern Padflo and need not be con
cerned largely with the development of
California's oil lands or the present bad
Investment by Southern Paclflo of 830,-
000,000 In Mexico; nor has it to look utter
the Southern Paclflo steamship lines on
the Atlantlo or the Pacific. Of Its 1,000
milts of Omaha-Ogden, main vline over
SCO miles are double track. Only a few
millions more can be expended- on thU
main line with prospect of fatr return,
It. therefore, btcomea apparent that
Union Paclffo Is now moro than ever an
investment proposition and approaches
a banking proposition. Railroads In the
banking business are adverse to the pub
llo sentiment of the present
Union Paclflo paying 10 per cent and
holding 100 per cent surplus in cash and
securities In Its treasury may be some
what of a menace to Itself, Its stockhold
era and the railroad Interests of the
country.
When the completion of double tracking
and Improvements and possibilities of
connection with Central Paclflo are pro
vlded for as well as possibilities of de
preclaton In Its treasury aasets, there
remans a handsomp margin in surplus
that may be well distributed to the
shareholders, with nostlblv nmii rrtun.
tlon In the present 10 per cent dividends,
Porch use of Centrnl Pacific
In tho merger dissolution plan which 'i
provided for transfer of the Central Pa
clflo to Union Paclflo the price agreed
upon was 3104,000,000. Were Southern Pa
clflo compelled to dispose of the property
by court decree this price might be
shaded. Deducting $100,000,000 from the
Union Paclflo $220,000,000 surplus as & re
serve against th possible purchase of
Central Pacific, and an additional 85$,0C0,
000 as the shrinkage In Union Pacific's
Investment securities at present prices as
compared with the cost at which they
are carried on the books leaves 383,000,000
for Improvements, possible further
from the accumulated surplus.
Stock Distribution.
The main facts to keep In mind are
that the distribution should be of in
vestment stocks nut needed In the oper
ation of the system and having sub
stantially steady value such as $24,000,001
of Baltimore & Ohio, preferred, which,
paying 4 per Cent, would find its best
lodging place In distribution among the
20,000 shareholders of tho Union Pacific.
A good sized cash distribution accom
panying the distribution of Investment
securities might insure a substantial re
tention of tho investment securities as
placed with the Union Paclflo share
holders. .
Hut the Union Pacific Itself should
keep a majcr part of the cash which has
recently fallen to Its lot or keep It so
Invested as to be quickly available as a
treasury asset.
When the Standard Oil company repre
sented no more In property than does
the Union Pacific system It was always
tho Rockefeller policy to have $50,000,000
where It could .bo available at any mo
ment The Union Paclflo and every other
railroad company should take a lesson
from the New Haven railroad situation
at the present time and when petitioning
state authorities for permission to Issue
securities, these should be securities to
go Into tho company's treasury for sub
sequent reimbursement for expenditures
out of cash on hand and not for Immedi
ate public Issue to meet pressing neces
sities.
It may be remarked that no railroad
company ever got Into financial diffi
culties until it had accumulated a float
ing indebtednel. This may be laid down
as a principle, but the history of the
Union Pacific happens to show the ex
ception to the rule, for the Union Pa
clflo was recelvershlpped with no floating
debt, but with nearly $1,000,000 cash on
hand. It Is Interesting to recall that this
was when the net earnings fell to $8,000,-
000 per annum, while the annual charges
remained at $12,000,000. Today net earn
ings are 335,000,000 and fixed charges
$16,000,000.
During the receivership S. H. H. Clark,
who had been with tho property from Its
Inception, and other old time railroad
men, declared that the prosperity of the
country surrounding the Union Paclflo
had forever disappeared; that Nebraska,
Kansas and the plain's of the west could
not compete with Argentine In raising
food, beet, pork, mutton Jor wheat, for
mo American people.
Nobody could have then dreamed that
the genius of a Wall street broker would
cause Union Paclflo to rise Phoenixlike
from lta financial ashes and In less than
ten years put Union Pacific at the head
of the railroad Interests In the United
mates. When It started upon a career
of expansion, geographically and flnancl
ally, continuing until It reached from
Puget Sound to the Gulf of Mexico with
body Imagined that when arrested and
sundered by the courts because of Its
size, tho financial problem on Us hands
would be the free distribution of Its ac
cumulated troasury, notwithstanding an
annual distribution to Its common stock
holders of $22,000,000, as contrasted wtth
1893, when there was only $8,000,000 of net
earnings with which to pay $12,000,000 of
I charges.
Tho Union Pacific directors should re-
I I I
"Mealtime Joys"
can only be experienced when the
appetite is keen when the diges
tion is normal when the liver and
bowels are working regularly.
If this does not describe your
present condition, you should try
OSTETTER'S
Stomach Bitters
for a few days. It will restore tho appetite,
assist digestion and prevent any after-eating
distress. It is for such ills as
member in considering the conservative
side of the problem presented that Mr,
Harrlman was wise enough to admit that
It was Harrlman expansion that made
Harrlman earnings.
If the Union Pacific directors conclude
to retain In the "treasury the equivalent
of $50,000,000 In cash, and securities that
could always be relied upon to yield an
other $50,000,000, we think they might find
In the balance something approaching $40
per share In cash or securities, or $86,
000,000. Coupled with any such announce
ment of a $30 to $49 dividend should go
a statement that annual dividends be
ginning wtth tho next quarter would be
at tho rate of 8 per cent Instead of 10
per cent per annum.
The modern Union Pacific the Union
Paclfla of Harrlman was created and
expanded and buttressed by keeping divi
dends well below the earnings.
Practical railroad men know, how diffi
cult it Is to bring cash returns out of a
territory when you have ceased to put
In the cash on capital account. ,
PICKPOCKET ARRESTED:
ALSO PASSED BAD CHECKS
Thomas B. Kirk, residing at the Ur-
bana apartments, was sentenced to thirty
days In the county Jail tor the theft of
a watch and fob, taken from a woman
patton of the carnival. Detective John
Dunn made the arrest, and upon Inquiry
found that Kirk had also parsed worth
leas checks on the Brandels stores, Hay-
den Rros. and other concerns through
out the city. At the former deportment
store he secured money" on a $30 check
and at the latter cashed one for 35. He
will be arraigned on the check charge
Monday morning.
The UNION Offers Plenty
Credit to You and Your F
f
mi By
Omaha homes nre furnished better than those in any
other city of equal size. The wage 'earner and salaried
man enjoy homo comforts which in other cities are for
the rich alone. You' may not know it, but this is
true.
The "Union's" big business was built by the people
who live in these homes. It's the sturdy, getahead fel
low who makes it a point to become acquainted with and
take advantage of the Union's liberal credit.
YOUR CREDIT IS GOOD.
GOLD COIN
BASEBURNER
AMERICA'S GREATEST RANGE
THE ESTATE STEEL RANGE
Modern and Howard
Overdraft Heaters
The
Largest
and Most
Complete
Stove
Depart
ment in the
City.
A Gold Coin Baseburner wilL One Dollar Down and One Dollar a Week Secures
relievo you of all winter's for You, an Estate Steel Range. -dread.
It will heat your home Absolutely the highest grade of range made the
on one-third less fuel and at tho most durable range. It is the range by which all
same time give you one-third other good ranges are judged. It absolutely protects
more heat. They will Inst a life the housewifo in point of perfect satisfaction and
tune and are priced (hQA Pfij life-time service. We will place one of these excel
as low as UaCusDl) lont ranges in your home on Thirty Days Free Trial.
Soft Coal Heaters
For those who have only one
or two small rooms to heat or
for those who cannot afford
to buy hard coal, we offer
you a large and well assorted
line of soft coal heat- gvp "71
era to select from JKfi B
priced as low as UlUs! U
SPECIAL HOME OUTFITS
3
ROOMS
Furnished
Complete
Terms, $4.00 Monthly.
694
ROOMS
Furnished
Complete
Terms, $5.09 Monthly.
$24.50
Fer Our Regular
$35 Steel Range
ThlB range Is complete "with
upper warming closet, has six
large eight-Inch lids, has guar
anteed non-warping baking
ovan, duplex grates, full steel
body and Is nickel trimmed.
Special Inducements to
Young Married Couples
$10.95
For This Massive
Turkish Rocker
Largo and com
uuitHtsicu ill iau-
ricoid leather.
12.90
For This $20.09
China Closet
Made of quarter-
sawed oak
with bent glass
ends.
$11.75
HIIP
Union
lUtfittingG?)
OMAHA
S.E.COR.I6&vJACK30N STS
CONSOLIDATED WITH THE PEOPLES STORK
SsYTll aA
In
sa I h nsssisiiHtPV
For This Beautiful
$17.50 SEAMLESS
BRUSSELS RUG.
This beautiful rug is 9x12
ft. in size, is full seamless
and comes in exceptionally
pretty patterns and colors.
ECHOES FROM THE ANTEROOM
Benson woodmen Dedicate new
Water Works Building Today.
CLAN GORDON MOVES ITS HOME
Ivy nebpknh Lodge Will Glre Card
Vartr Ueneflt Thursday Evening
at Independent Order of Odd
Fellows' Hall.
entertained 4.872 visitors durlptr Ak-Sar-
lien week.
Kouclousco camp 352 meets this after
noon at Twenty-seventh and L, btrcets,
Bouth Omaha.
Uthuanlan camp 411 will have a de
gree team and brass Dana xo miuaib
candidates.
POOR APPETITE
SOUR STOMACH
HEARTBURN
INDIGESTION
CONSTIPATION
BILIOUSNESS
DYSPEPSIA AND MALARIA
DON'T EXPERIMENT INSIST ON HOSTETTER'S
Benson camp No. ISS will celebratu
quite an event In tho history of the
oamp toduy, vhen thy will officially
lay the cornerstone of the new water
works building of the city of Benson,
having been asked to do so by the city
officials. The prado will form at the
Woodmen of the World hall at S:30 P
m. and march In a body to the nuw
bulldlnc. whue the exercises will takt
place at 3 p. in. sharp. All of the city
officials will be preient as well as tht
i sovereign camp officers. All Woodmen
camps have been Invited to participate
is me nrsi
been ex
tended to thli progressive order in Doua.
lnH county.
Benson camp will give anotner oc us
.l.nrlnc nartles at Independent order oi
Odd Fellows' hall Friday evening, ana
have secured a good orohestra. for tht
occasion. Ilef i eshmcnts In the way ol
temperate punch will be served.
John Kennedy, city manager, will be
the speaker at the dedleatlon ceremonies
at Fremont, Neb., today.
Sovereign K. P. Dahlman, city man
ager of St. Taut, and Sovereign N. In
man, city manager of Minneapolis, were
guests of City Manager John Kennedy
Ak-Sar-llen week.
John McOraw of the New York Giants
boost-
TWO BOYS ARE CHARGED
1A7ITU CTCAI ma A UriDCCn these exercises, which
n ..w,,ww, - Ulmj ,hat ,m.
Btd Lyons, aged 11 years, living at
Twelfth and Itcesa streets, and Oscar
Sravto, aged IS years, who resides at
Fifteenth and Grace, were arrested Sat
urday morning by Officer Camey and
charged by the officers as being "horse
thieves.'' The two boys had succeeded
In making away with a hunch of "hldu
and bones" belonging to am Welner,
Seventeenth and Dorcas streets, and
wert on their way to the Auditorium to
Join the Irwin Bros, show when the
qucsUon arose as to who should ride the
horse While quarreling over the dif
ference Officer Carney, who was psss-
In it. nvcrheard enough of the convrrsa
tlon to satisfy himself that the nimal
belonged to some one rise, and brought 'U one of State Manager I-owr
both lads to the station Thi'v were era in New York i"ity
tuned over to the luienll autliurltUs. I The Wtodroen of the World officials
Brotherhood .of Aiiitrlcun Yeomen.
On account of the Ak-Sar-Ben attrac
tlona Omaha Homestead No. HOI, Broth
erhood of American Yeomen, dispensed
with Its meeting last ween. fexi
Wedneday night will be devoted to the
Interest of the degree staff and all mem
bers are urged to be present at this
meeting.
Clan Gordon No. 3, Order of Scottish
Clans, has moved Its meeting place to
the Bwedlsh building, 1U Chicago street
and will hold Its first, meeting ther
Tuesday evening at 8 o'clock, upon which
occasion It i hoped a full attendance
of members may be had. Burns' cele
bration will be held In a large hall of
the same building Friday evening. Jan
uary t3, 1914.
Independent Order of Odd Fellows,
The Ivy club will give a card purty
for the benefit of Ivy Rebekah lodge al
Independent Order of Odd Feilows' hal"
Thursday eveiJng. There wl I be re
freshments and prlxes will be awarded
I. O. It. 31.
Fontenelle Tribe No. 78, Independent
Order of Red Men, met Monday evening
In their new wigwam In the Continental
blook In open oouncll. There were a
great many chiefs present who have not
been at the council fires during the last
season and the tribe wns very glad to
hae them present and only wish that
they would continue to come out to the
meetings every Monday sleep. The next
regular meeting will consist of Impor
tant business for the tribe and all the
chiefs shou'd make It a point tu b.- pita
ent and take part in the powwow.
New Tariff Law Will
Affect Lots of Goods
in Local Warehouses
A telegram has been received by Cus
toms Collector Taylor, Informing him of
ficially that the tariff law Is in effect.
Tho old rates will be collected, howover,
until the copies containing the new
rates are received. The telegram follows!
Tariff act effective October 4. Copies
mailod.
C. b. HAMLIN. Assistant Secretary.
Goods will bi received under the old
tariff rates, but the department will re
lease them from the warehouses at tho
new rates soma time next week. Goods
stored In the government warehouses are
not paid for, of course, until taken out,
whatever tariff law In effect at the time
of the withdrawal of the goods Is applied
to tho rate,,
The government warehouse at Tenth
and Jones streets Is packed to the celling
with goods of all descriptions, the owners
having left them there waiting for the
new tariff law.
It is Impossible ac the present date to
list authentic differences In the rates of
all goods. The complete list of changes
In tariff rates is expected to be In
Omaha the first part of the week.
OFFICER CUNNINGHAM, MUCH
BETTER, IS TAKEN HOME
Officer II. A. Cunningham, who wa
shot by Louis Wesley, the negro robber,
In the basement of Ed Mauera restau
rant, was taken home yesterday from St
Joseph's hospital. He Is considerably
improved and the attending physicians
now look for I1I3 speedy recovery from
the effects of the wound.
A hard stubborn Cold that
hangs on, Is broken up by
Humphreys' "Seventy-seven"
COLDS
"While on my vacation on a farm
I suffered from an old fashioned
Cold. Everyone had a different sug
gestion; finally threa 'greed on
'Seventy-seven' and it helped me,"
a girl writes.
Key to the Situation Bee Advertising.
I3IPORTANT CIIANGH IX TIME
on the
NOUTIlWtJSTEn.V LINE. .
Effective Sunday, October S, the Los
Ange?IJmlted will leave Omaha at
9sK p. m. Instead of 11:15 p. m., arriving
Chicago at 11:30 a. ni. instead or 12:10 p.
tn. The Denver Special lll leave Omaha
at S:4S a. 111. Instead of 1 a. m , arriving
Chicago at 4 p. m. Instead of 2:1L a. m.
The Sioux Ctty-Mlnnespolls train, whlen
has been leaving Omaha at ? p. m. has
been changed to leave Omaha at 6 15
p. in.
Mention any aliment from Sprue to
Gout, and everyone has a pet, remedy
to suggest.
Mention a Cold and near!
one recommends "Seventy-seven
tneir own particular remedy.
r4y every
seven" as
"Seventy-seven" is a small vial o
pleasant pellets, fits the vest pocket,
AH Drug Stores, 25c to $1.00, or
inled on receipt of price.
?.?.ml,,lr'' Homeo. Medicine Co., 1J
William Street. New York. Advert!.
I
