The Washington times., 1906-02-18
SOUTHERN WILL ISSUE
S2OO,OOO,OOO BONDS
System 10 Be Developed and Strengthened.
Wonderful Growth CT Road In Twelve
Years Shown By Vast Earnings.

to be issued at the rate of not over
s.. 100000 year. Thus far only sl5,100o 900
OF these Dor ds have been issued. and the
remaining $4,900.000 are clearly mad
equate for the future requirements of
the enlarged system.
IL has always been claimed that the
Southern railway was spending a great
deal of money out of earnings for i'm
provements. President Spencer clearly
sets forth that, exclusive of equipment
the property has been improved out of
income to the extent of about $1,000. 600
during the past eleven years. But the
equipment of the rQsld has also had
very important conditions. the number
OF locomotives and cars now being
more than $50 per cent of the number
in 1885. OF course, each item of the
present equipment IS also Ear superior
to each article of the former equipment
In order TO pay for all of this equip
ment <3s,357 $50 of equipment trust bonds
have been issued. of which s26, ,769. .12S
are still outstanding and will mature
during the next fifteen years. OF the
total OF more than $3s, ,OO0. 900. sl5. .3S6. $50
has been or VIII be paid out of the rail-
roads income. Plainly. with the addi-
ton of the t5.O00.OO0 spent upon the
reinvested out Of earnings in actual
additions of new property during ten
years, and. of course. most of this out
lay has been during very recent years
Vast Increase of Earnings.
Naturally the company Will now he
placed in position TO save this money
in future for the stockholders The
progress of the company during the. ten
years is indicative of considerable profit
as soon as economical operation is pos
sible- Gross earnings for the current
fiscal year will exceed s51 .000, 600 and
net earnings above fixed charges will
exceed s., 900. whereas the system
half as large in 1895 produced only S17.-
n4.1sl in gross and but 1885. 745 in net
The gain has not been only in mileage.
for gross earnings per mile of road have
enlarged from si.134 TO over 81 600. Mean
time the bonded debt per mile has in
creased only from 81 .519 to So. 800.
The large growth of traffic on all
lines for the last five years. and the
rapid development of the entire South
necessitate improvements and oxten-
sions upon scale much larger than
heretofore. in the form chiefly OF double
track. revision OF grades and curvature
block signals, additional shops, en!arg
ed yards. and ether terminals for pas
sengers and freight. additional equip
nent' and the construction Of branch
lines and feeders
The first issue OF SI5,0cOOO0 of the $780,
o'',"oo ponds VIII be for three purposes:
o,Uo,voO viii be to refund PAYMENTS for
equipment heretofore made and 50 zoo
OOV TO refund investments in securities
he
be supplied with $. 500, 600 Of cash to re-
lIHburse II for portion of the past ex-
penditures that should have been cap
itaized' The remaining S6,J00.O0O Will be
for new improvements.
Wise Course to Pursue.
Old stockholders Of Southern railway
have appreciated the situation as here
set forth for years. There is nothing
but wisdom and good management and
surely nothing but conversation in the
plan 1t IS somewhat similar to the plan or
the Missouri, Kansas and Texas. recent
~ announced, TO issue half or $50. 900. 900
bonds. Such an issue marks the end Of
period OF rehabilitation and the be-
ginning of a period of operating for the
proht OF the stockholders. As long as
we can have bond issues that may pro-
l.
dends. our roads will prosper And even
the inauguration of dividends directly
following the issue of bonds may be ex-
planned, If the road has passed through
n long period of expenditures and is
issuing bonds to at length adjust its
finances. The actual basis of the issue
Is the factor determining its wisdom.
NO insistance can be too strong that
those interested in securities should
cease 10 apply common measure to all
issues of fresh capital. The greater part
of recent announcements takes the form
of refunding issues TO take up short
time notes issued two and three years
ago. When later on the financial mar
kets shall be called upon TO purchase
millions of bonds to provide for thous-|
ands of miles of new railroad projected
in the West, it will be necessary to scru-
tiniZe the ISSUES in a very different
manner. BARNABY