Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-08-18
BULLS AND BEARS
Special plsp..eh to The star.


NEW YORK. August 1S.-Although there
was any amount Of adverse criticism over
the declaration Of the Union Pacific and
Southern Pacific dividends. 1t was generally
believed that the market was now started
on one Of the biggest upward movements
In the history OF the street.
A conservative railroad man who IL thor
oughly familiar with the territory served by
the Union Pacific and Southern Pacific
lines, and who keeps in close touch with
business conditions throughout the west.
said that in his opinion the Union Pacific
was able to pay 10 per cent on the common
stock for an indefinite period. He adds.
however, that in his opinion 1t was not
wise policy to establish common stock on
such q high basis. He believed that the
conservative policy would be to pay per
cent on the common stock and to give the
common stock holders each year one-balf
of the surplus In excess Of the per cent
on that issue. In that way. he pointed out.
the, stockholders would each year share
literally in the profits OF the company and
a Substantial surplus maintained.
At the moment, however. arguments
along this line were regarded az largely
academic. It was believed fully that the
directors Of large corporations have sex-
perienced complete change Of heart and
that In the future the policy would be to
pay AZ large dividends az the earnings
would warrant and not to hoard up i'm
mense surpluses.
~
1t was confidently believed that when
next the Pennsylvania railroad directors
passed upon the semi-annuai dividend ques-
ton tho rate declared would place the stock
on per cent annual basis Increases Of
at least per cent on Atchison and Norfolk
and Western were taken as practical GER
taintfes.
Close observers are now looking for the
controlling Interest in the affairs Of the
United States Steel Corporation to lead
large upward movement in the stock of
that corporation. They believe that If this
be done there will be a widespread
movement in the Industrial list. 1t was ex-
pected that gradually attention would be
diverted from the qhigh-priced railroad stock
to the low-priced issues. 1t seemed to be
taken for granted that Union Pacific com
mon, would be bought by both inside inter-
ests and the general line of traders up to
Aoo, which. 7of course, Is only per cent
basis for the stock ~'l
-'-
It was Intimated that the St. Paul man
agement would finance it's Pacific coast ex-
tension largely by the issue of common
stock to the shareholders at par. While in
terests In a position to get good information
did not seem to credit the report that the
Southern Pacific is to acquire control OF the
st. Paul they admitted freely that the rela-
lions between the ST. Paul and Union Pa
cific are to be much closer than heretofore.
AS pointed out some weeks ago, the two
roads are to use each others lines for a
considerable distance in the aggregate in
reaching the Pacific coast.
Well-informed interests were still inclined
to believe that a large bonus would be
forthcoming for the Canadian Pacific stock
holders before very long.
X
Financing on large scale by the North
ern Pacific and the Great Northern was not
looked for In the near future. railroad
expert said that In the case Of the Northern
Pacific nearly as much money has been
put back into the roads for improvement in
recent years as the total cost Of construc-
ton originally. He said that from the Mis-
souri, river eastward the Northern Pacific,
when improvements now Under way are
completed. will have line with grade Of
only three-tenths' Of I per cent. and adds
amount of traffic which can be handled adj
yantageously by single locomotives on that
grade. By 1903 he believed that the North
ern Pacific would be double-tracked for a
great part of the entire system from st.
Paul to the coast. He understood that the
company proposes to build double-track
tunnel through the mountains. which would
be much longer than the present one and
800 feet deeper. This man was Of the opin-
ion that the expansion of earnings Of the
great western railroad systems in the next
few years would be sufficient to pay for
large proportion of the improvements con-
templated and to at least maintain div
idends at present rates.
81. ...s-. So
Some of the minority stockholders Of the
Northern Central Railway Company, ac-
cording to q Baltimore report, are interest
ed in movement which has been started
here to get larger dividends on the stock.
The Northern Central is controlled. by the
Pennsylvania railroad, which owns 81 per
cent of the stock, and 1t Is pointed out by
those interested in the movement that while
earnings have shown remarkable growth
the last few years. there has been no
change In the dividend rate. The banking
Arm OF Townsend. Scott & Sons is engineer
Ing the movement. 1t directs attention to
the fact that the gross earnings have in
creased from five to ten millions and while
Of other roads are benefited by
increased revenues, the Northern Central
stands pat. -"
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