The Morris County chronicle. [volume] (Morristown, N.J.) 1877-1915, 1905-08-22
RAILROAD NOTES.

| The loss of the Lackawanna termi-
nal at Hoboken recently has raised
the question, How do the railways
carry their own insurance? Many Of
the leading lines assume the greater
part of their own fire risks without
purchasing insurance in the regular
companies. The Pennsylvania set
the standard of railway insurance
about twenty-five years ago. Up to
that time all insurance on railway
properties was carried in regular I'M
derwriting companies. Now the roads
accumulate their own insurance
fund"
| The plan is simple. A kind of
8 blanket insurance" is placed on all
the property of a road The railway
company pays into special fund each
an equable premium on the value of
the risks carried. In this way the
entire property is protected. This
general insurance, however, is limited
to some small amount, sufficient to
cover, for instance, the stations and
sheds at unimportant points The
congested risks are reinsured. On
New York terminals, for instance, as
well as on steamship fleets, system
shops ETC., the insurance department
of the railway takes out policies with
regular insurance companies, which
are divided into two sections known
as the Eastern Syndicate" and the
Western Syndicate. On very large
risks, such as the Hoboken termin-
ais, no one fire insurance company
cares to take the whole risk Half
dozen companies have policies on such
a property.
Small fires, such as happen almost
every week at some point on the Penn
sylyania are looked after by the rail-
roads special insurance fund. The
Lackawanna fire, the Illinois Central
fire at New Orleans, the Grand Trunk
fire at Toronto, or the general destruc-
tion Of railroad property at Baltimore
usually fall upon the fire insurance
companies. The railways do not as
sumo such large risks. The insurance
on equipment involves Different prob
lens. Many railways do not carry
any insurance ofthis kind outside their
special insurance and sinking funds.
When another line IS cars are destroyed,
as in the Lackawanna fire. the COM
pany on whose tracks the, cars stood
at the time must foot the bill. The
expense comes out of the general ex-
pense fund. Rolling stock pledged to
secure equipment notes is generally
insured against fire and wreck When
1T is destroyed it has to be replaced as
as security for the collateral.
An influential director of Delaware,
Lackawanna 8 Western says there is
noiptention of increasing the dividend
on Lackawanna, that a rate higher
than 10 per cent. was never thought
of and that the present dividend poll
cy is likely to be permanent. Asked
whether the capitalization might not
be increased to facilitate the payment
[of larger returns to stockholders with
tout increasing the rate of dividend he
Ereplied That is possible. 1t may
come some Time, but is not at present
receiving consideration.
j Earnings for the first six months Of
| the year showing a surplus equal TO
E27 per cent. on the stock afsef appro-
Epriati0n Of 81 100000 for betterments
indicate that results for the year will
show about so per cent. for the stock.
For number of years the company
has been putting a large amount of
surplus earnings into the property and
as this invested surplus has immensely
increased the earning power this is
now out Of all proportion to the capi-
talizatiOn which has nos been changed
for many years Invested surplus OF
right belongs to stockholders and will
in time be restored to them through a
distribution of additional stock,
Should the present capital stock be
doubled by giving the $50 shares face
value OF 800, a 10 per cent. dividend
: on the increased capitalization would
lstill call for distribution Of only about
one-third of the surplus earnings d
the present fiscal year.
Q 1t viii be seen that a large melon il
S in prospect for Lackawanna stock
Q lholders, although the actual distribu
: tion may not come for considerable
time.
I The Summit !" Herald Is asking fol
/ more stairways at the Summit Lacka
a wanna station Itclaims thai passen
5 gerslose two minutes time in getting
e to the trains by the present route, bu'
THAT the railroad plan was jammes