The sun. [volume] (New York [N.Y.]) 1833-1916, 1878-02-10
English and French Railway Invest.
ments.


mcnts.
Mr. +. L. CoNpER, an English civil cngi-
ncer. contributes to Frdse's MnDd>nc for
January an article which he entities, " How
to Invest Money with Safety" The object
of the paper is to examine the value Of the
bonds and stocks of the railways of Great
Britain and to give hints to people who design
investing in them. The facts and figures
presented by Mr.. CoSDER have much in
tercst for us here. since they enable us to
compare our railway securities with those
OF Eng land.
Parlian ent has authorized the creation Of
shares and stock 10 the amount OF -, 49,
100000 for the construction OF railways 1t
has further empowered the railway com
panies to borrow S960,OO0,00O. Roundly
speaking the English companies are author
lied to borrow about one-third OF their share
capital. In France on the contrary, the
companies are allowed TO borrow three
times the amount of their share capital.
Thus. in 1872 the actions. or shares of the
French roads reached the sum of S3l3OO0.O 900,
while their obligations, or loans attained
total OF sl.ls5. $4,000. The vast amount of
money the French railways have been able
guaranteeing the bonds, and 50 making them
securities Of the best class. has so far Injured
to their benefit that in 1872 their net reve-
nue. allowed Of the division Of 1914 per cent.
by way of dividend and sinking fund on the
average share capital of the six great COM
panies-the North, the East, the South the
West, the Lyons, and the Orleans lines. The
ratio in that year of net income TO total
capital was SO per cent, against only A. in
England. The cautious and thrifty French
prefer the certainty Of the small interest
paid on the bonds guaranteed 10y the State
to the risks of greater profits on the unguar-
anteed shares. Railway property, therefore.
was, as a whole, about 81 per cent. more pro-
ductive at that time in France than in
England.
Since 1850 the productive value Of railway
property in England has shown slight inn
provement, while Its amount has enormous
~ increased. The paid-up capital in 1860
was Sl,7i0 100000, and the net receipts Of
that year We're enough 10 allow a distribu-
tion Of profits at the rate Of 4l9 per cent.
In 1876 the railway capital had swollen to
S3.29JOO00OO, on which an average dividend
OF 436 per cent was earned. This indicates
that the entire property. besides its aug
inentation in amount, had increased in value
by the annual figure of OH per cent. Of div
idend, or by per cent on the earning pow
er of the capital. The most prosperous year
with the railways during that time was
1872 In that year the total capital expend-
"a on these constructions in the United
Kingdom was Sass 600 900, being at the rate
Of $4,000 per mile OF line The gross re-
oil tln
the working expenditure. which in 1850 was
a. per ccntyof the receipts. has risen to 40
per cent, and the proportion Of net income
to paid-up capital was 474 per cent Since
1872 there has been progressive deteriora-
tlon ia the earning powers OF railway prop
erty in England. Business spurted up Il lit
tie in 1915, but with that exception the de-
cline has been continuous. The ratio Of
working expenses has increased from 80 to "a
Per cent Of gross income, and the capital
cost per mile has risen over $4,000. Thus
English railway stock. while it has solargely
increased in amount, has steadily fallen
OF in value. The decline in the earning
power OF the roads represents a loss to the
owners Of the railway property Of the large
sum Of 1922. 100000. In the four years named
the addition TO the capital has been siij-
100000; 50 that the shareholders have got
back rather less than bali pound for every
pound OF their additional subscriptions.
The prices of shares in nine different rail-
ways on the 9th OF March, last year, the par
value being 500, showed an average pre-
MUM Of $50. and the average dividend on
them was ABOUT SO This gives a return Of
somewhere near Az per cent, Oh the invest
mcnt not a very heavy return for the risk,
After examining the reports of the differ
cnt roads Mr.. CoNDER reaches the conclu-
sion that the best railway investments are
In those lines which derive their incomes
from passengers rather than from the trans
| portation of minerals. He argues that the
rates al which the mineral traffic is obtained
really impose serious loss on the companies,
while passenger fares are remuncratiVe.
These are Interesting facts, and they are
we'll worth studying ut this time when there
is so much interest ielt in our own railway
investments.