The Dallas daily herald. [volume] (Dallas, Tex.) 1873-1887, 1880-11-06
Railroad Dividends,
Philadelphia Times,

The directors of the Pennsylvania CeHtral
railroad company are about to declare the
regular semi-annusl dividend. OF the views
of its directors or other officers in regard to
the rate Of dividend the company should pay
we are entirely unadvised, but 1t Is evident
from the sudden advance OF the shares on
Saturday that mary dealers in the stock be-
lieve that they have good reason to antici-
pate an increased dividend he shares fluc-
tuated from SCI 123 to $62 so, and closed
strong at SCI ga. The Times
took occasion to discuss the question
of railroad dividends very plainly
in May 1875, when railroad officials were 70.
luctant to eafn that money was not worth
ten per cent. per annum, and that the pr
ductive interests of the country could notsf-
ford to pay rates of transportation which
would warrant ten per cent. dividends on
the large capital Of our trunk lReO. Then
money commanded double the, rates in
legitimate business transactions that
it does now, and money was, therefore,
worth as much more as it is ut this
time. Gold was then worth ZIG; the five
twenty bonds commanded ll6 to l20; city Is
were worth l06, and money was worth six
ptI CtIb bn thlls ANbW EVlu POI iiioiNJ 10
abundant on call ai.three per cent; is offered
freely on long contracts at from four to five
per cent; city Gs are wor h 125; government
four per cents command ll0@, and b per
cent. is generally above the average return
on legitimate investments. During the last
few months the shares of the Pennsylvania
r ilroad 5mpany have ranged from 500 to
$50 because of the growing confidence that
they were certain to be q reliable six per
cent. investment, and at $50 they were an
inviting investment, inasmuch MS they as
sured 1--WE per cent. But the present year
has been one Of great prosperity for our
great trunk lines, and those VINO would glad.
ly accept five per cent. for their money in
any other safe investment, clamor for in-
creased dividends from tie company. II
the corporation had no costly improvements
to make and no Obligations to pay in the
hereafter, the increase Of dividends would
be iustihable because the present earnings
warrant it; but tho severe lesson
of the las, five wears should not be SO
soon forgotten. The Reading compBny re-
fused to enterttin the earnest appeal OF this
journal to reduce its dividends in 1875, and it
soon thereafter ceased to pay any dividends
and is now in the hands of receivers. The
Pennsylvania and Lohgh Valley have both
passed their dividends entirely in year and
recently commenced at four per cent, where
the Lehgh Valley yet stands, And not on
ly did these great companies find it neces.
sary to pass their dividends during the last
few years, but they suffered embarrassments,
of which the world had no knowlelge, to
maintain their credit. Now they are pros.
porous again, but America will not feed Eu-
rope MS it has done this year, and the part of
wisdom would be to adhere to six ger cent
dividends as long as money is worth
only four per cent in the market,
This is the season for great corporations to
make themselves strong; TO retire their I'M
menso debt; to increase their sinking funds;
to improve their lin and equipment, and to
pat themselves order for the less prosperous
times they must periodically meet aud they
should we'll appreciate the fact that an in
crease of dividends over six per cent. on
shares bought under 500, with much under
$50, some under $40 and some even under
$50, q i'll simply call for reduction Of rrans.
portation rates to make the capital ofpro-
ducers and transporters more equal in men
returns. 1t is not likely that Whatever pul-
pose the direction of the Pennsylvania rail
road company may have reachel on the sub
ject, will not bo changed by newspaper dis
cus3ion at this late day, but We shall b.
glad to learn shat it has been wise enough
noteto heed the clamor OF shareholders who
look only 10 present returns, and probably
to present spooulations, in demanding pay
ment Of divinends greatly above tAo actual
valua of money.