The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1904-12-24
SANTA FE is CAUTIOUS.
Public Seems to Have Confidence in
Conservative Financial Attitude.

| No large company has been more
cautious in its financial expansion than
4 the present Atchison, Topeka & Santa
1 Fe, says the Railway Age Hence the
/ announcement of new borrowings now
| contemplated, to an amount not ex-
| ceeding $50,000,000, has for standing
ground sustained conservatism of
| management as well continued
prosperity. The earnings of the sys-
tenn have increased almost without in
terruption for about ten years, and by
| degrees the company's general mort
gage bonds and adjustment mortgage
| bonds have gained the esteem of in
vestors. and the preferred stock also
has become well established. The di-
rectors express confidence that the
additions and improvements which
they now desire to make will prove to
be more than self-supporting, and I'M
doubtedly their judgment hitherto
must be accepted as sound.
The Atchison's funded debt state
ment is extremely simple. At the
close of the fiscal year 1904, on June
80 last, the items We're as follows: s
General mortgage As. 49,. $14S,799, 500
Adjustment mortgage As. 51,72S. 900
Serial debenture As. 25,OOOOOO
S. F. & S. J. V. 5s..... 100000
Eastern Oklahoma As.... 5,645,0OO
Chicago & ST. Louis 6s... 1900, 900
Miscellaneous bonds 49,. 759,55O
OF these bonds, one-third of the first
item and the third, fourth and fifth
items represent mainly additions to the
capitalization since the present COM
pany came into existence. The serial
debentures, payable at the rate of $2,-
100000 per annum, were issued in 1902
The San Joaquin Valley bonds were as
sumed upon the acquisition of the At
chiSon'S San Francisco line. The East
ern Oklahoma bonds, of an authorized
amount of $4,000. 900, date from 1908.
The proceeds of the serial debentureS
rearsr, sod -, - g.
equipment. For extensions and general
bettermentS, properly chargeable to
capital, practically no funds are now
available except surplus revenue. The
directors, in the annual report for 1904,
in which the present bond issue was
plainly foreshadowed, pointed out that
since 1896 more than $50, 900 of sur
plus net income had been applied to
the development and enlargement of the
property.
According to the official announce
ment to the stockholders, the manage
ment proposes to issue Immediately only
a part of the $50, 600, 900 of convertible
bonds now to be authorized. The money
realized is to be expended for the COM
pletion of lines in course of conStruc-
ton, for the building of certain addi-
tional branches and feeders, and of sec
ond track, for the reduction of grades
upon parts of the main line, and for the
purchase of equipment. The under
standing is that foremost in the pro-
gramme of the company is the compile
ton of the Abo Pass line or Belen cut
off across eastern New Mexico from the
Texas boundary to a connection with
the Santa F'e Pacific south of Albuquer-
que. This line ultimately will become
the Santa FEES main transcontinenta1
route, traversing Southern Kansas, Ok
lahoma, the Texas Panhandle and east
ern New Mexico to the Rio Grande Val
ley, both shortening distance and i'm
proving grades as compared with the
or.N viz
Pass.
While the terms of the new bond is
sue are not yet announced, the pre-
sumption is that the proposed securi-
ties will bear 4 per cent interest. The
bonds will be convertible into common
stock. The conversion feature is the
only aspect of the transaction that has
come in for intelligent adverse crltl-
cisn. In some good quarters the con-
version feature of bond issues, SO pop
ular of late years, is objected to as an
unnecessary confounding of certainty
with chance, and as giving to bonds
less stable character than that TO
which investors were formerly accus-
toned. Doubtless, however, the con-
version idea helps sales.
Assuming, as probably may be done
with safety, that the Santa Fe COM
pany can maintain it's present strong
position, the new bond issue will not
affect adversely the dividend prospects
of either the preferred or the common
shares. Doubtless more or less addi-
tional net income will result at once
from the contemplated expenditures of
capital But without further gains in
revenue. the company, on the present
basis of traffic and earnings, is we'll
able to support the new charge. In
the fiscal year 1904 the system de-
veloped $27,0O0,000 of available in
come with which to meet fixed charges
of less than $12,000,000, the proper
ton of the income absorbed By the |
charges being 431S per cent. Interest
at per cent on the full issue of $780,
100000 of convertible bonds would /,
add $2,0O0,0OO to- the fixed charges of
1904. About 9 y per cent was earned