The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1902-04-12
NORTHWESTERN BUSINESS GOSSIP.
500 Stocks as an Investment Future Regarded
as Very Promising ---SmaI Banks in
Small Towns Merging Giving Stronger
Institutions.

On June 80, the end of the present
fiscal year, there will be round million
or velvet" to the credit of the 500 road.
This Is conservative estimate, but an
| additional 200, 900 might be added without
getting beyond safety limits The 500
! has never had by several hundred thou
sand dollars as large a surplus to spend
as 1t Will have this year Whether con-,
siderable portion OF this Is to be dis
tributed as dividends is. creating discus
sion wherever stocks, are bought and
sold. The statements Of General Manager
Pennington, President Lowry, and Presi-
dent Thomas Shaughnessy of the Ca
madam Pacific, which owns majority of
500 stock, indicate that utmost conserva-
tism will dictate the policy Of the board
in beginning it's dividend paying record
500 gross earnings for the present fiscal
year will touch $5,500,000 which is about
100000 greater than any year since the
500 was built. About fifty per cent Of
this will be spent ia operating the road.
For the first eight months the operating
| expenses have averaged 44.S per cent Of
| the gross receipts. In operating expenses
are included money spent in maintaining
| and improving the track, road bed and
equipment. From now until the winter
season the Soo's expenditure In these lines
will be large and by June 30 the average
| expense may reach the figure named The
| fixed charges which include interest on
| bonds;r taxes, rentals, etc, amounted last
| year, to 81, $751; S5 and will probably be in
the neighborhood Of that amount this
year, which indicates that a credit of
million to the surplus account can be
considered conservative.
500 Young Giant.
The 500 in western railroading is a
young giant which is rapidly gaining the
respect Of men who deal in transporta-
ton. Its possibilities as a future divi-,
dend payer have been little understood
because they have been indifferently
studied For years after the 500 was
completed from Portal, N. d., to Sault ste.
| Marie and the common stock was so far
| down in the list that the average railroad
man and financier had forgotten it's ex-
| lstence, the 500 was known as one of the
few western roads without land grant
and traversing 4 portion of the great
| American desert" There was little faith
| among the wise men Of the east that this
| country would become reasonably pro-
ductiye in fifty years if 1t could be made
to produce anything. The wonderful
change in the fortunes and prospects Of
| the northwest in the past ten wears has
!
500. 1t has been found that the territory
| tributary to the 500 is Of the most pro-
ductive in the west, and 500 stock and
reputation are moving up the scale.
| The capital stock Of the 500 amounts
| TO 81 100000 of which $l4,OOO, 900
| is common and the remainder
| preferred. The preferred will draw
II per cent dividends before the
common will be allowed to par
ticipate in division of the surplus No
dividend has been paid on either stock,
| btu for several months both preferred and
| common have been steadily gaining in
price. The preferred is now quoted at
| about $40 per share and the common at
about half Of that amount.
Various reasons have been given for the
advance in 500 common. One party in
sists that it is manipulation by traders;
another that venturesome buyers are will
| ing to take chance On the directors pay
| ing dividend on common as a result of
! the prosperous year. Whether these
statements are correct or not, it is
evident that ar element among investors
mas been buying 500 stock because they
| believe 1t worth the money. They have
planted their funds in the real thing. the
certificates not options, and many of them
VIII Keep these certificates in the belief
That the earning power of the road will
| Dc greatly increased as the results of this
years development work. When Cen
eral Manager Pennington chilled the
hopes OF those who are talking dividend
FOR 500 common, these investors were not
disappointed. In their estimation 500
common is worth just as much money as
a future asset, whether the Soo's surplus
THIS year or next goes into dividends or
| betterments.
Preparing for Lean Years.
In times of prosperity it is the policy
OF every Well-managed road to prepare
/ TOT the lean years. The railroad manager
| usually eXpends enough money on the
| property TO make its condition such that
| retrenchment in maintenance of Way and
structure and maintenance of equip
ment may be possible when general
| prosperity is no longer in evidence. If
Is acknowledged that the North Western
! ana milwaukee, systems could pay much
| larger dividends. But millions are being
| spent in track improvements, new bridges
| ana enlarged terminals, as we'll as in
providing fund for future contingencies,
| Inc 500 is as carefully and conserya-
| t1Vely managed as any railroad property
| IN the country, and the management in
Inc next twelve months will spend larger
! SUMS IMAM ever before on betterments
Authorities say that an average of 5000
| per mile each year is regarded as a suffi-
| Client expenditure for maintenance of
| way on western and southern railroads.
| me 500 has been the subject of some
| criticism because its expenditure for this
| purpose has been much less than 5000 ner
mile for several years, it being argued
that the amount expended did not show
proper progress in the physical condition
! OF the road. The statement for the ma al
| hscal year shows that $472 per mile was
expended. The character of the country
| through which the 500 runs makes an ex-
pendlture for this purpose less than IL
| required on the average western road
| Ihere is little difference in the climate
through the entire territory from Portal
10 the 500, and grades are small: this
| mas an ERECT on maintenance of wavv
/ ana through that on operating expenses
| But the sums spent on improvements this
year will undoubtedly be much larger ner
mile and will better to great degree The
physical condition of the road. The 500
| can afford 1t. This means as much of on
| increase in the real value of 500 securi-
ties as dividend declared on the stocl;
1t has direct bearing on the future
earning power.
Wisconsin's Contribution.
| The country along the 500. one wear
with another, will yield steady increase
IN trafflc. The extensive mileage of the
road in North Dakota no longer traverses
an unsettled country. The same tide of