St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1885-07-05

weak-mlnded themselves, make dupes of
other weak-minded folk to their advantage.
This is blind leading of the blind in which
they do not fall into the ditch, but, by a
happy combination of circumstances, ac-
tually escape danger and gain something to
boot"
AMERICAN RAILWAY SECURITIES
The last London circular of A. p.
Turner q Co., issued on the 22d of June,
says that the aspect of the market for
American railway securities has not i'm
proved, but has rather grown worse. There
is no buying by the al public, and
prices are being manipulated by the JAY
GOULD interest. in the hope of being able
to sell some of its enormous holdings of
shares. Every now and then prices squirt
up little under this manipulation, only TO
relapse, however, very speedily into extreme
hatness TURNER & Co. say that ii is i'm
possible to fix any limit to the decline in
shares. and are convinced that the end has
not come yet.
The London stockholders take a very
gloomy view of the outlook for American
railway securities. They say that so far as
they can see the condition of affairs now is
exactly like that which existed for several
years after 1873, minus the same hope of
improvement. Although the greatest pro-
ducer of breadstuffs for Europe, the
United States has now lost that completely
dominant position which it once held.
Business is extremely depressed, and there
is not the faintest indication of change for
the better; on the contrary the pinch is now
being felt severely by the working people,
who are beginning to show evident signs
of Impotence. They also allude
to the fact that the railways
are bitterly at conflict among themselves,
chiefly because their mileage is out of all
proportion to the volume of business
state of things which it viii take several
years to rectify. They think that from all
these difficulties the United States will be
freed in time, for the resources of the peO-
pie and the country cannot be Overestimated.
But they do not advise ordinary investors to
take the brunt of these risks by investing in
shares. In the absence of an exceptional
occurrence, such as a general war in Eu-
rope, they do not anticipate that. amongst
the Eastern trunk lines, there will be for
some time an intensely keen competition
for a reduced volume of business. which
will materially affect their position. The
appropriateness of the railways has been
gradually spreading from west to east, the
more eastward of course, holding out long
est against the stress of bad times, owing to
their possession of local traffic. In Iowa
there are practically no lines paying divi-
dends; in Illinois and Indiana it is the
same, the Illinois Central and the Terre
Haute & Indianapolis being the only
exceptions. In Ohio the country is
over-railrOaded to an enormous extent and
the result is no dividends earned by single
line. In referring to states like Iowa, etc.
they have of course not taken into consid-
GRAFTON the two or three great systems by
which those states are traYersed, like Chi
cago, Burlington & Quincy. st. Paul, etc).
Next the same causes are going to have
similar effects still further east. The
Pennsylvania Is now feeling very keenly
the stress of bad times, and it has begun to
fight for its own hand in right earnest. a
result which is rather likely to damage
some Of its neighbors and adversaries. But
very shortly the strife will be greatly in
tensfied by the completion of the new
Vanderbilt line, the South Pennsylvania.
This route will be made up of the Reading
lines between New York and Harrisburg,
and the new Vanderbilt from Harrisburg to
Pittsbmg. They say that a war of giants
seems likely to ensue which may bring to the
ground another one or two of the very few
roads now paying dividends upon their or
binary stocks.
The future of shares therefore seems
very obscure. 1t is as we have said be-
fore, not so much question of fighting
through the present difficulties and then
having a good time, but every period of
trial raises up masses of securities which
absorb the net earnings SO much TO the det-
riment of the shares. When the improve
ment does come, it may be found that no
part mures to the shareholders, because
fixed charges have grown faster than net
earnings. Until we see the end of this
process, which is mainly a result of unre-
stricted railroad building, we shall have no
confidence in shares as purchases for an
early advance in price.
TIE bonded debt of the railways of the
United States amounts 10 about 50. 600, 600.
and the share capital is about as much
more. The annual interest charge upon the
bonds at the end of 1888 was S17S, 1877, OG4,
at an average Of 5.01 per cent, but the to-
tai net earnings of the railways was equiv
alent to 0. - per cent. upon the debt, or an
excess OF 4.74 per cent beyond the interest
charges. The decreases in net earnings
for 1884 will of course reduce the average
margin of safety TO the bonds for that year,
and ii will still further be reduced for 1885.
but leaving it still ample. Ont of the resi-
due of 4.14 per cent. after interest came
the reduced dividends of 1884. There are
probably but comparatively few railways
which will pay full cash dividends from
earnings in 1885, and as new capital can
not be raised from the sale of shares at
par, money must come almost
exclusively from the further issue
of bonds. This all results from
the overproducton of railways,
reducing many grades of rates to unprofita-
bic points. There are more direct lines
than business, and as soon as the trunk
lines attempt to artiicially support rates,
the circuitous all-rail or lake and rail lines
not in the combination come in at a cut
just below the published rate. This will
last until there is as much business as rail
way. The public seems to think that the
rate trouble lies at the door of the West
Shore. 1t is not so; nor was the West
Shore, now hopelessly insolvent and unable
to earn operating expenses, the first offender.
The Canada Southern was built to be sold
To the NIichigan Central The Chicauns