The sun., 1901-10-09


4l-G1 Adjustment 1 per cent bonds " S. %
o-17-Common stock ............,..... AZ "
Again, as another concrete example,
take the securities Of the Southern Rail
way Company, which in 1897 and in
1901 sold upon the following bases:
s7-9a-First consolidated mortgage 5
90 90 per cent bonds s...............1i 1iI-l2d
22-3S-Preferred stock ................. 6l- W
1-12-Common stock ................. 1S- 80
In like manner a marked advance in
price has taken place IN the securities of
majority Of the railroad systems of
this country.
We have been told often by investors
during the last year or two that the
pendulum must swing, and that they are
unwilling to invest in railroad securities
which have shown a large advance in
price, because they expect within a few
years to see prices rcccde to the quota
tions of several years ago. We think,
however, that any one who studies the
conditions under which our railroads are
now operated must see that this is alto
gether too gloomy view to take of the
situation, and one which has already and
is likely in the future to lead to loss of
opportunity for profitable investment
There has been number of tendencies
must be considered in estimating the
future Of the securities, and which we
think will prevent prices of the securities
of our best-managed railroads from again
sinking to the low level of the years
1896. II may be useful to call atten-
tion to some of the conditions which
have been affecting the value of a large
proportion of this great class of invest
ment securities:
L. The first and perhaps the most inn
portant factor affecting. within recent
years. the value of our railroad securities
is the great number of consultations
which have taken place. Bigger systems
can be more efficiently operated, because
they attract a higher degree of engineer
ing and operating ability; they also OBJ
yously secure much more stable traffic
rates. and Furthermore avoid many of
the general expenses and other wastes
incident to a divided management.
9. Fixed charges. in the case of great
many of our large systems, have been
cut down. so that the stock. instead OF
representing Il comparatively smallelulty
above d big mortgage debt, now rep
resents large equity above COM
paratively small mortgage debt, and
therefore, the stock is not only intrlnsi-
cally oil more Naiue. but thS lVit ii"'
been placed in a position where 1t can
stand the stress of hard times without
the necessity of going into the hands
of receiver.
3. The new railroad mileage has now
for some years been built upon con-
seryative basis. and paralleling of exist
ing lines has for the most part been
avoided
A. For several years past all of our
best managed roads have been putting
into permanent improvements Il very
large proportion of their net income.
s. The use of the railroads by the peo-
pie has very greatly increased. For ex-
ample, as pointed out in a recent number
of the Railway World,' the number OF
tons of freight moved one mile per cap
ita in This country in 1880 was 645; in
1890, 1,211, and in 1900, 1,S61, and the
number of miles Travelled per capita in
this country in those three years were,
in 1880, III; in $780, 1888; in 1900, 2ll.
These figures show that the railroads
have been steadily gaining Il stronger
position not merely through relatively
small increase in railroad mileage as COM
pared with the larger increase in popu-
lation, but more especially because the
people Of the country are learning with
almost inconceivable rapdity to utilize
more and more the railroads they have.
The railroads entered into the life of
and performed service for every man