New-York tribune., 1900-12-02
financial
The Financial World.

according TO the Developments OF general busi
ness That great rush OF speculation after No
vember :. showed how high the dam had bsen
raised by political distrust: a wave Of greater
height and volume than any one expected
dashed through when the dam gave way and
all records Of Stock Exchange business were
broken The stream will now flow more sran-
GULLY. We have to look at prices. and vbat
the railroads and other corporations are doing
to Justify them.
The most striking feature OF .he railroad sim
alton to-day. compared with the past il the
remarkable consolidation OF ownership. Tbs
powerful moneyed interests in one great system.
are the powerful interests in others: 50 tba,
the leading railroad systems Of the country ara
to-day. governed by practically one board 40
directors. This has been effected by eoncentra-
tion Of stock ownership. and the latter has bee,
made possible by the vast growth in wealth 20
individuals and institutions during the past
twenty years. Three things result: 1. unI.y 70
management; 2. stability Of rates: g. economy q,
operation.
Because Of this. and OF the natural growth Of
the country. railroad properties are yearly grow
ing in value Old established systems earn more
than they did; and properties still in the forma-
tive stage make earnings 50 great, in compari-
son with what their disjointed individual units
made that it is sometimes difficult 70 believe
the reports to be correct. One OF the most con-
spicuous examples Of this is the Southern Rail-
road.
Or. again. look at the Atchison system. sjnea
IL passed through reorganization the successive
questions in respect to it's securities have been
first. Is It's mortgage interest safe: then can
IL earn the-eontingent interest on its adjustment
bonds next how much can II earn on it's pre-
ferred stock; and now. how far of is a dividend
on the common stock? Not so very far. prob
ably. The upward movement OF the securities
has kept pace in the market with the answer
which the growth Of the company's earnings
has given to each successive qusry. The Atchf-
son to-day is earning gross at the rate OF S52-
100000 per year; that at least is the rate made
between July and October. and II is said the
November earnings win be quite as satisfactory.
OF course, the road will not make the full 20
millions because the best months are from TuIy
to December. and leaner ones follow But il Is
estimated that the earnings will be about so
millions. The adjustment bonds it was as
serted last week, were going up--into the 9Os
They have since reached 90. The preferred
stock should be a close second.
The Union Pacific and Northern Pacific are
examples Of the same class. But we may take
an older road also Of the West-the Burlington.
Here we have an example OF constant expendi-
lures TO convert the typical single track West
ern road. into double tracked line between its
two main termfni in Eastern fashion: expendi
tures to reduce grades so that the hauling ef-
hciency Of the engines is increased 30 per cent:
and then come the refunding operations where
by the old high rate bonds Of original issue.
when the credit Of the road was low, are re-
funded into bonds which az half the old rate OF
interest are bought at a premium by the East
ern investor. When the old 7s Of the Burling-
ton are wholly converted into the new 312s, the
saving VIII represent something over per cent
he TyJ7a E2ITrTi II fo,1
last year. and it is more worth that price to-day
than when it sold there.
1t was recently noted here that the new stocks
of the old Chicago Alton road which came
into being on the financial and other remodel
ing of that property when the stockholders
committee sold it to the syndicate might be
considered a permanent addition TO the trading
stocks on the railroad list. They are demon
strating this by their present activity. From
good bond people il comes that the new 80 per
cents are sure Of rise Of eight to ten points
from present quotations.
In the matter Of development OF new territory
and railroad systems. in line with remarks
above. the South offers a peculiarly fruitful
field. We know that this year the South feels
rich from its big cotton crop and almost doubled
price for the product: and when the ST. Louis
Southwestern earnings for October appeared
showing a simply phenomenal Increase il was
natural to suppose that these earnings were
made chiefly on the roads cotton traffic. But it
not The fact developed that the IN
crease came as much from the enlarged lumber
traffic from cotton. This is significant OF the
activity Of building operations in the territory
served by the road; and tells than a big
crop of its prosperity. for the big crop is OF one
season. but the building Of houses and stores Is
the cumulative effect of many crops and is per-
manent.
How territory will grow, and how the South
ern section of the country is growing finds its
illustration in quoted remark OF President
Spencer, of the Southern Railroad. The chief Of
fcers of this company have been on a tour OF
inspection, and President Spencer in a speech
at Louisville. said that the properties belonging
to the Southern earned gross 20 millions in 1895
and 81 millions in 1900 an increase OF 81 per
cent. The Southern has had progressive Wig
orous management under General Manager Gan
non. and the steady advance in the price Of its Sc
curities during the past years is the best testimony
to this end OF the more marvellous transformation
in the economic conditions OF its territory This
is a matter which has been often referred 70 in
this column The stocks have been sluggish at
times for long spells. but they can move well
enough when they get going. Thev have been
going the past week week or two ago. II
was noted that the preferred was being largely
bought, and the report was current that the
dividend would be raised from to per cent
when next the directors met to act upon il.
The common stock has since also attracted at
tention by the magnitude Of the operations in
it. and its advance. Stories have been current
that the Pennsylvania was buying for control;
but Of this we know nothing. The common
stock has the same future that Atchison COM
h,1