The Washington times., 1906-02-11

bearing upon future dividends, the
spectacle of steadily increasing earn
ings has become so common that there
is little point in calling attention TO the
constant growth merely as an indicator
of railroad values. In short. everyone
knows that real worth has increased
and is growing constantly. The coun-
terbalancing factor entering into stock
market consideration is that the prices
of securities have risen also TO gam
ANYTHING from the contemplation or
earnings IL Is necessary to understand
not only that earnings are better Dur
very clearly how much better they are
than they have been and consequently
how much values have Increased.
Great Northern Gain.
During the past week the Great North
ern Railway. the earnings of which are
not generally watched. reported its
business for January The total was
81 ga, e51 against 2,s47. 1876 in 1905. The
latter years results compare with
81. 90. 27s in 1904. the increase this year
being much greater than last year For
the seven months OF the fiscal year
ended January 81, 1904. the gross IN
crease was $2s.640. e64 and this total
increased TO 81. 352. $40 in 1905. upon the
same mileage. 500 miles OF road. IN
the seven months Just completed, SSl,t",-
14e were earned upon $3.50 miles II IS
doubtful if many people know the enot-
nous extent to which railroad earnings
are Increasing in the Northwest al
though II may not be that the adVanc-
ing prices of related securities are mere
" in reflection of these good earnings
Tn so Ear ps current earnings must ne
reId To account for current secufltS
-rt,as II - rossibIe to duplicate the
record of Great Northern in numerous
49, cases The Union Pacific and the
Southern Pacific are the most notaoie
e,aponlss of railroads scoring uhpFeCe-
dentod increases in earnings. The IoI-
80 sboUs for the last six months OF
1qos in the figures published this week
o-osr earnings Of SIS, 81. 0s4. upon very
little more mileage than produced VOL
goo 2eo An 1904. and 81, se1, 3S7 in 1905 The
Southern Pacific increased its gross
earnings In the same period Of 1895, from
$40 A7o 134 in 1904 to SIS, 602. l79. whereas ID
1868 the total was actually a little less
than in 1904 The entire year of 1900 was
not as favorable as We're the last three
months. In the full calendar year
however. the Pennsylvania railroad
made a record which is poor substance
for pessimism. The eastern hair OF the
system amassed a total of siS4,s1srZsa III
gross earnings. which compares with
SI1s, i45. 0s4 in 1904. while the western half
was making a gain OF ss,o2l.2oo,
Profits in General.
1t NAV with truth be claimed that all
OF our railroads are not making such
records, although many of them are do
ing proportioIfately about as well as
those mentioned. But in the case of
every railroad of that vast increase in
gross which recent years have produced.
toward the final profits of the system.
In reviewing this point. IL is well 10 re-
member that capitalists want only evil
dence of a probable condition, and they
will anticipate the result In short, the
spectacle of rapidly increasing gross is
well enough for the spectator TO en-,
thuse over What the investor wants lie
proof that gross earnings. whether they
are to become larger or not, are to be
more largely represented In final profits
and not ali swallowed up in OUTLAWS, as
have the vast increases Of the past
seven years.
/ The best evidence OF the future course
4
equal to or greater than present totals.
! IS furnished by the records OF those
railroads which have already turned the
corner of large OUTLAWS and by the
natural deduction that others will FOL
/ low The roads mentioned as examples
I Of gross gains will serve as illustrations
( of net increases. Union Paci7c's net for
the six months was S17,195. s44. as com
pared with SIS. I'll in 190+. Southern
/ Pacific showed $19.112. 1853. against 17.294,-
/ 40 in 1904. And for the calendar year
! PENNSYLVANIA gained s7.e50.00O in net
whereas in 1904, there was a loss of a
mere S264. 900. from the total for 1903.
Pennsy's Reserve Fund.
/ The Pennsylvania system in 1901, 1902
/ 1903 and 1904. recorded almost the same
totals for net earnings. between S3s, 900.
/ 900 and s37, COO, 900 for the lines east OF
/ Pittsburg, while gross earnings were
increasing from s10i, s2e. 7S5 TO s11S. 149. 094
/ This long continued policy of using
earnings to better the plant has not
! been done away with, out there mas
( been so much progress that it has be-
come possible to reserve a portion OF
the gross for net Just so Southern Pa
cifc has used up its whole revenue in
! OulidFS LOT years. II Is using just as
much money now but is using no more
and yet is earning more and applying
it to the credit of profits.
Stockholders Reap Benefits.
How this development works out 10
/ the advantage OF stockholders is well
illustrated in the report of the Chicago
and Northwestern for 1906. Upon the
same mileage as in 1904, gross earnings
increased over 5000, 900 and net earn
ngs, which had f1uctuated narrowly for
some time. increased 100000 from SIG.
So. $50 to s1s.S71. sol. The dividend fund
for the year was So, 326 c07, with which
to pay $3.50, Z32 in dividends. Hence I,
was not difficult to appropriate s.. 500
600 for new construction improvements
and permanent additions to property
and at the same time have left a sub.
stantal surplus
1t is absolutely impossible to discover
from our railroad reports how much
each road is putting into betterments
included in operating expenses. Henc,
II is impossible accurately to gauge tn,
enlargement in profits that may som,
day result from the curtailing of thes,
OUTLAWS. But II is quite practical I,