New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1905-12-10
The Financial World

.ot,,,Jt,1 a roa1eannated Copper, for example, an.
nroacbing mar. on transactions Of over 10000
shares. while American Sugar-a strictly In
vestnent stoek-gains points. Many other In
dustriaIs were heavily traded In and Invariably
showed Improvement in some cases moderate
in others large. The week can be justly termed
an industrial week. But at the very end leader
ship was reassumed by standard railroad stock
Union Pacific Yesterdays buying Of It wss
on q vast scale. and It records gain Of ovss
roints for the week There is in this movenant n
I spfratIon for conservatism, for nervousness "a
not felt when the market Is led oy a standard
railroad OF recognized Importance and estab-
And that Union Pacific IS such security car
not be questioned. It's annual report, just pub
/ IIshed for the fiscal year reveals phenomenal
prosperfty. Gross revenues reached $6600e060
+ a gain Of 100000 for the year; and more
striking still is the retention OF SooVVOoO Of this
gain in the net, while no lesser sum than S7.zs6-
600 passes to the credit Of surplus account sftsr
liberal appropriations for betterments and
equipment. Just on earnings Union Pacific
+ shows nearly liz per cent. earned on is CON-
mon stock And this does not take into account
4 accretion IN value Of its Southern Pacific hold
! tngq nor of it's share Of the tremendous profits
& accrued in Northern Securities assets. Sueb
I leadership is guarantee Of the genulnensss Of
market character.
I In the railroad list the most striking De-
velopment appeared in Nickel Plates gain
reaching at. one time nearly 20 points. That
advance is natural was due long ago. reflects
an intrinsic value which for years has been
staring out at MISREPRESENTATION policy in
Omaha. as pointed out here last Sunday. being
repeated. duplicated. in Nickel Plate.
And as in Omaha rounded out. as In Nickel
Plate rounding out, so In every railroad Of the
Vanderbilt group-accentUated just at this time
by the progress mot now denied Of Nsw-York
CentraPs vast uniication plans. The Junior
- -7-1-
Intrinsic value-and that recognition viii dis
close earning capacity not hitherto fairly com
pretended by anybody outside innermost Official
circles.
Take, for example, the Cleveland. Cincinnati.
Chicago and st. Louis Cknown popularity both
as Three C's' and big Four'), whose current
developments, unnoted in Wall Street are on
so comprehensive a scale that dividends have
to be increased Since 1900 when common stock
disbursements started. 221z per cent has been
paid in diyidends-1612 per cent has been
Parned. While in recent years gross earnings
nave increased SO, $50 eco 90 per cent?, the %
tai fixed interest charges and rentals Of The
company have risen only S275,0OO. or less than
10 per cent--whtIe out OF earnings expenditures
for maintenance Of road and equipment have
increased 50 500 900. This is the character OF
france that builds for permanence.
Operating expenses made to include vast
investments for betternents, such investments
as nine out Of ten railroads regard as charges
to capital ACCOMPLISHMENTS work. Fer
illustration, out Of surplus Of 81, 126000 earned
In the six months to January last 81. 100000
was appropriated as a reserve fund.- for re-
neWalS Of equipment. Thus the per cent
paid to common stock no Iers in dividends for
that six months was actually out CT more than
o per cent earned. Just the Nickel Plate
In Big Four operating expenses are kept by
abnormal conservatism far above accepted
standards. There is no other road in Big Four's
territory that so spends its earnings for per-
manent improvements fully 70 per cent from
the total common capital stock having been
actually turned back into the property within
the last few years.
al hos sic c.Er %f1ese
would have been shown for the stock for the
year ended last June a full 8 per cent. beyond
what was shown. The stock can go upon
regular per cent. basis (now paying Il and still
aliot another per cent to the further perfec-
ton Of the property through ''maintenance'
funds or in any other conservative guise-but
that 10 per cent and more is earned becomes
now indisputably plain.
And this makes no count Of results already
In sight from the extraordinary development
projects Of the company-over S7,500OOO being
spent upon new extensions, freight terminals
at Cincinnati. Columbus and Indianapolis. with
100 miles Of road double-tracked, and the Cairo
Danvtlle division given by expansion an Impor-
lance not hitherto anticipated by even ultra en-
thuslasts, for there Is to be developed for Big
Four traffic a group Of coal mines whose output
VIII be used by she entire Vanderbilt system Of
railroads west Of Buffalo How great this one
1 deveIoDY1ent may he Is sTJgoeSfad in an estimate
(Which is Officially that 1.-The saving to New York
Central lines in fuel alone viii show a profit
upon the total cost Of the new construction"
and it indicates somewhat clearly, too, what use
awaits the 30 new heavy locomotives and the
3UDO freight cars that have been Ordcred-th6
Lake Shore building a connecting line whereby
Big Four trains can have Vanderbilt trackase
straight into Chicago, giving to Big Four Writ
ually its own Chicago entrance. And this
pansfon Is financed without the issue Of a
bond, without the creation Of any Indebtedness
or the addition Of one penny to the company's
fixed charges.
The 10 and II per cent earnings Of the present
are sure to be succeeded by 10 and 20 per cent
To invest IN such a Vanderbilt proposition is
merely to be forehanded.
Indications accumulate OF readiness on the
part Of various banking interests to authorize
official announcement Of large transactions de-
veleping during the year: and It may be that
the present month viii become notable for such
announcements. What has been accomplished
in National Lead control Of the company
changeD will be among these announcements
and disclosures may also be made Of the CON-
pletion of negotiations for the assumption OF
control of the United States Reduction Company
by American Smelling interests-Cnited States
Reduction preferred stock Selling at IV) beng
now established as q regular 6 per cent. dtvl-
dend payer-its market cheapness the phenons-
non among Smelling securities.
In the Industrial department more and more
stress is likely 10 De put by investors > +bat
the test OF dividends. Such test II IS ue'
strengthens the character Of securities Ike m
ternational Paper preferred. whose aDsoEptlo5i
by conservative buyers is very clearly indicated
in the markets course. The same test makes
Distillers' Securities an exceptional bargain a.
so. yielding at that price per cent TO holders.
these dividends being not new, but estaDiisi'S'
for years past.
Through resumption OF common sense dispose
ton at Chicago. Peoples Gas. too. moves Tor
ward into position where investment approval
is bound quickly to acknowledgements o
tween the corporation and Municipal authoFi,
ties about to disappear-the long estabhshed
per cent. dividend ready now beyond peradvent-
ure to be made lasting. incidentally, Mr.. James
r. Keene has become a large personal aOleeI -
Peoples Gas stock. Mr.. Keene's followers ~