Show BUREAU SIDE DP or THEMen THE THE- CONTROVERSY Men Who Raised Objection to 10 the he Cutting of Huge Melon Make Public Their Reasons The Tho following is iB a format formal statement issued today by tho the Salt Lake traffic b bureau rca J of the Commercial club The people of Utah spent and three years of hard fighting to secure secure se se- se cure curo reduction in tho the high freight rats rates between Utah tal and th the East A A. scale of rates f found reasonable by the tho interstate inter inter- state commerce commission was con con contested tested in in the courts by tho the carriers the c courts affirming the tho dec decision ou of the tho commission ion These hese reduced ra rates were established November l 15 1911 loll to tb remain remain re- re reI I I I main in effect for a period of not less than two years ears In In 19 1912 2 tho tito carriers incited the tho Commercial club traffic bureau t to get ct together with them in the effort to publish a new ues tari tariff to Utah Utah in which new tariff tari somo redu reductions under the rates tatos than in f force reo Would Q Jd bo bo granted and some increases s over o the maximum prescribed b by tho the ct funi siou iou were proposed The carriers Jr that they thoy could not Dot go JO to hd commission commis sion with ith a looking toward the advancement of any of ot tho the rates s suggested that the proposal como como come from irom the tho bureau In Inthe the spirit of fairness and desire that both Doth sides s be given i en a a. square deal the bureau agreed to the carriers carriers' proposal proposal pro prod posa and made sUg suggestions along this lino to th the interstate commerce com corn I mission Their representatives who went to Washington to confer with various various va a va- va arious rious rious members of or of the commission afterward afterward after atter- ward went to Chic Chicago to confer with representatives of r tho carriers 7 A A tentative schedule Che of rates was drawn r up after tho commission IJ Lad bad d given Hs ds ts sanction to tho the plan After Atter the conferences had ended letters were were received d from the he interstate commerce commissioner who ho lad had handled the dc- dc Continued on page pago 2 rJ TRAFFIC BUREAUS BUREAU'S SIDE OF DISPUTE Continued from page e 1 l. tails and from a high traffic official ial o of the Union Pacific railroad warmly commending com com- mending 1 the he rca reasonable nail and fair spirit h by the tho bureau in re regard ard to thc new tar tariff a. a Trickery Is Charged This ne now new arity thrift was lra pot not published d byr the carriers but when the tho year two limit aJ applying plin ou on the tho commission cst established rates had elapsed th they y do- do ili bro f fait h with wilh the people of Utah do declare traffic bureau otie officials ts at atau au d pct t about to prepare and a t tariff adt aIlein ra rates s from fron t v 5 to 35 5 p per er tnt tent or fc f Several ever al molt months Ago a memo mem- foam foam- r or ber r ot of f the B board ot r directors of 4 the h Union Pacific T railroad and fr X s a a ranking f traffic offic official of ot that 4 X ime line in an Interview v in in Salt 4 Lato Lako City defended ed the he pro pro- ro 1 1 posed advances as necessary 4 I that his company earn sufficient 4 d- d to pay pat Interest est charges on its 4 1 bonds 7 4 1 At Just about tho the same time timed i- i 1 4 d tho press was full of matter rec re- re 44 4 4 c rating lating to the tho the extra 4 4 dividend declared to holders of 4 T Union Pacific common stock 4 Y v. v 8 S- S McCarthy M a jr mom er of the board of the ial lob chib traffic bureau Impressed by the contradiction en endeavored ored es' t to ascertain why the interest interest inter interest est char charses of the 8 Union Pacific were ere BO 60 heavy and nd tJ the e company wa r yet able to dec am t an extra dividend d of 37 per cent on its common stock About th the Bond Issue I oi t I His 4 His investigation i developed the theIn f l lowing ln facts f In In 1001 tho Union PS Pacific R company b books DOOKS of ot m Utah had laws placed which on on enabled the thc t t it to become an investment in company compan and an made possible the issuance f 00 of bonds pr privilege e of con version into into comm common lI stock or subject to call in m in whole in or at part a given figure fi r I The Tho Tho promise e was as made th that t trio the mone money raised d by this bond issue issue would t be a Used in p part rt for trio building of the tho Evanston cutoff the tho Double tracking of the road from Oma Om a ha i to Ogden aideD t the he building of the lino line to B at and a new line to California The Tho Tho purpose of the Evanston n cutoff was to ch change ng the main line of the Union Pacific to Salt Lake Cit City where it would connect with the proposed main mam line of the Southern Pacific elim dim mating the detour through h tory ton tort around tho the Great S Salt lt lake Jake 1 The real pu purpose oso of t this is bond issue is is best shown by bv v excerpts from the proceeding instituted b by tho inter interstate tate commerce conI commission mission of its own initio atho on November 5 15 5 1906 which proceeding pro pro- afterward led to tho the Union Pacific Pa cilia merger suit technically known knon as case caso No in in equity in the circuit court of the tho Unite United States State district of or the the United States of America cone complainant the Union Pacific Railroad Railroad Rail Rail- road company aD and others other defendants setter to Harriman On February 5 5 o. 1901 Kuhn Lo Loch Loeb ti Co wrote the Union Pacific as follows 29 2 Q and 39 Pine Pino street Kuhn Loeb C Co New e York February 5 G. 1901 1301 E 1 H H- Harriman E ESQ Chairman the tive Committee Union Railroad company Dear Dea I Sir Sir Referring Referring to g our letter of or ev even n date h herewith we we bee E to era say eay that In financing an nn issue of or this class of or bonds and In thus thus' Inviting Inviting- tho confidence of ot our clients In the tho securities It Is la of ot serious concern to us that we e assure ourselves ourselves' a That the th future financial policy rolley of th the t L Pacific shall be bo consistent with the plan now undertaken and tI that t It will be thus In support of the securities ties tie now Issued and B That the method of or placing new securities Issued In the further consummation m mation on of ot this policy OlIC shall be so under our out control that wo we may secure cure the stability and credit of ot the Initial issue l undertaken b by us In In the tho tore foregoing oln view vie we write e to sa say that our ur undertaking t to purchase tho the convertible bonds bond of or a total authorized Issue of or la 18 subject to the following further conditions n namely uney I 1 That so 80 long as as' any as-any any of ur such I Issue ue of or bonds bond are the railroad company company com com- pany pan will until May Ia 1 i 1 1906 1106 unless wo we other wise consent nUre such additional capital an as It shall from time to time Ume r re quire exclusively hel b by th the U issue ue of or such Buch convertible bond bondi namely the he bonds bonda of of said Issue convertible Into luto tho the common took stock of th tit he company compan at par ul ut l an any time I within years after arter their respective dt dates tes of of Issue Z 2 2 That we e arc arc re to have the right and privilege with r respect to any additional t bonds of or said eald Issue Issup which the Union Pa- Pa elite Railroad company compan mays may decide to sell prior to Ala May Ia 1 1 I 1906 OG to purchase se them at the same Pame price as nt the Initial issue of of such bonds will net the the- company compan after the payment of or the syndicate syndi syndi- syndicate cate commissions and nn own YourS Yours' trul truly KUHr LOEB CO That the lie above bove r requirements were recognized Is a apparently evident In Mr tr E. E II H. tI a letter or of April of-April 30 1901 to Kuhn Loeb J. J Co in tit which appears th the following y J Off Offered to Sell Sen BondIn Bonds Bond In the agreement ment be between between between be- be this evidenced evi i evidenced tween pan eon and yourselves b by your OUT letter of oC February 5 6 1901 to the underlined undersigned I am om authorized to otter offer on b behalf of ot t the e railroad company compan to sell th so bonds to you ou upon the terms mentioned In In your letter From the fore ln It is evident Ident that In addition to allowing the house hO of or KUhn Loeb Co the n y a commissions named Mr Harriman ure agreed d to deliver er th the Union Pacific bound h hand n and foot root so 80 far OB nil Its were concerned con con- corned Into Inlo the keeping of or Kuhn Loeb Co Of or bond bone issue Is u 99 was converted con Into Union Pacific common stock at It par lar in the tile amounts and on oil the dates Indicated Ye Year Tear r ending June 30 to 1901 Year ending June Juno 30 30 1902 1 1302 02 Year Tear ending Juno June 30 1903 Year end ending Ins June 30 30 DOS 1005 Month of Jul July July I 1906 OG 1200 O Month of ot A AU August gust Ut 1906 Cash to lo retire the remaining j O. O Ul outstanding bonds was deposited with the Mercantile Trust comp company n trustee and the bonds redeemed at during the lie liethe the same year car Tile Tho annual r report port of or the Union Pacific for tor tho tim year ending June 30 1903 1103 shows that 73 of or year twenty 4 per pcr cent c convertible n bonds were Issued and 23 face race value aluc of first lien Hen bonds were Issued and the total discounted d for approximately Bond Issue Outstanding In other w words ms the bond issue Issue Isue which enabled the purchase of f Southern In III a still outstanding as 1111 a capital lI liability liability- In th form of ot of common I stock with the exception o of or tl th tho In 19 1906 ii In III ad addition lio a to amount the tho 0 m In n bonds issued lUlled for foi forthe the tho year ear ending June JUlle 30 1908 were co uM sud l las as au soon HU as the tho decks decks k were cleared cleared by tits thy conversion converston of th the prig rl I 1 It was the consideration C of these thelle facts fact together with the tilt Union Pacific's claim that Increased cd freight rates were necessary necessary sary nO to Utah that caused Mr Ir McCarthy to nr first t bring to tho the attention tt of ot members rs of or congress conus the th fact that the Union Interest charges were ere i in raft fart art Drought brought about l by y a bond Issue th indirect Indirect proceeds of ot which bo be distributed dis die- d as a. en n extra dividend to holders holder of or common stock Some of th the members member of ot congress to whose who a attention this phase of or financing was s called expressed profound surprise and n could hardly hardt y b be convinced that such financial Jugglery y w. w was as Impossible The matter was presented by several rerat ral different senators to the lie Interstate curry com curr- y I merce commission and to the attorney general of ot the United Sta States tes both of or i J 1 which authorities agreed that since the Union Pacific was d a l Itah corporation the courts of Utah would b be the tho only bod body I no having Ing With this Information came the su suggestion BUg sug from m men n recognized Il ns as legal authorities au- au au that the lie matter be presented to the governor go of UL Utah h with the tho request that ho ho have ha the attorney general central take Immediate action One of ot these thelle United States senators senator considered the matter matler of Ir f such Immediate importance that his hla suggestion suggestion sug BUg was telegraphed On s l suggestion aUr and after atter Mr Ir McCarthy l decided the subject to beof bt lit of ot su such h public Interest that th the Commer Comfier Commercial cia cial I dug clog traffic bureau should take tako huh hold of oC It and secure action The bureau Il ac a- accordingly I of its board ul of cordingly through a aota vote rote directors decided to follow tollow the high and authoritative suggestions suggestion and a address dres the governor as ns indicated ted In their letter oi of June 2 2 1914 1911 which was printed In full tuH fullIn fullIn In THE TELEGRAM 1 on that date Some Sonic time after the tho original agitation to Flop the payment of this dividend the tho f following matter a appearing In the Literary Literary Liter Liter- ar ary Digest dated September 27 21 1913 was called to the attention of or this bureau It will be found upon page pase In the thc Issue of or Se September 27 21 1913 1913 under the tho caption The Expected Un Union on Pacific Pacific- Melon The article follows the tho terms of or orth n fly By tho the disposal under th the supreme court decision of oC Its Ita large holdings s in tn Southern Pac Pacific c. c Union Pacific Pacific Pa Pa- Pa- Pa has within a few fe months acquired l stock tock In the Baltimore Ohio road no now worth In the market about JO and cash from subscribers amounting to These Union Pacific holdings of South Southern Pacific were originally purchased purchased pur pur- chased b by the th Issue I ue of bonds The r recent cent ex exchange han e o of part put of this stock for lor Baltimore Ohio stock and tho the sale Pale of or the lie remainder to Union Pacific stockholders stockholders stock stock- hold holders has netted n to o the the Union anion Pacific Pacifica ae e eu a u substantial profit In the general opinion that a distri distribution to stockholders will be he made there are differences as to the proper amount of It Tho The lowest estimate Is based on the contention that the road h having Jn purchased purchased purchased pur pur- chased the Southern Pacific stock b by an anh Issue of bonds bond hits has no rl right t to re return to stockholders h d the tho entire n e amount t derived w from the exchange and sale pale but could properly distribute to them the profit Other estimates assume that the rood road will III decide to distribute to td stockholders the entire from the exchange and find sale ade of or Southern Pacific stork stock I h Serious question arises hero a ato to the th propriety o of making milking H H. larger distribution than the of profit would y yield Conservative opinion generally gen rally holds that not more than this his profit should be dis dis- Some experts have hae bed hed that it would not only be quite proper but a matter of actual right to distribute at least that sum Inasmuch R as profit In an enterprise belongs belong Ion s to the partners that partners that thatIs Is Is The rho ho stockholders en Not ot all however u take this view Ie The Wall Street Strout Journal belle believes that the opportunity opportunity op OP- that h. h has bun now arisen for the union Pacific company Is not that of ot fattening Its Ita s stockholders stockholders' bank ACcount AC AC- counts count but of setting all other railroad directors tora an art e- e example of or wholesome moderation mod moo ration and of or administering terl u Ii rebuke to the thousands of or citizens ui of ail all sorts orts And conditions who regard railroad n financiers I I as aa IK lit only to be distrusted It Is added I b by the writer that If It the directors of or orthe the Union Pacific take the tho latt latter r course coure their stockholders will vill have nothing to regret for 01 the benefit nt foregone will return unto them more surel surely and more Inore effectively effect ively than bread on the ater er e did It t 1 Is ne needless needier to say 34 that it Is a n source lIo of gratification to find so 50 high a 11 financial authority as 88 the Wall Vall Street Journal with beliefs bellers similar to those of ot this bureau The statement has been heralded far farand farand and land wide that the Union Pacific would reduce Its dh dividend rate on common stock to 8 6 per per cent allowing this extra |