The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1907-01-20


marvellous growth of the country from
ocean to ocean, say that the present
prosperity Is too costly. Every time the
spectators hear that a railroad is 10 Is
sue new securities they Immediately
pounee upon its stocks in the market and
depress them. When Congress appropria-
tons FOR the national government first
reached the S1,000000,000 mark the whole
nation was aghast.. The loud cry went
up that We were plunging into an abyss
of extravaganza and going straightway
to the devil. Thomas Bracket Reed. then
speaker of the House, turned the tide of
criticism by the apt phrase: I'VE are now
billion dollar country Thereupon
everybody got chesty and lamentation and
alarm gave place to self congratuiation
At first blush the announcement that
Pennsylvania is about to ask for another
large increase in its already stupendous
capitalization, strikes people something as
the news of the $1,000 600 600 appropriation
referred to. When the first shock passes
away there Will be a realization that
Pennsylvania Is approaching that point
In its history when 1t can lay claim to be-
ing billion dollar proposition. The call
| for fresh capital to complete its colos-
sal Improvements requires no apology II
should be an occasion for congratulation
rather than weak explanation or attempts
to plaeate public opinion as expressed IN
Pennsylvania is more or less true OF
| other leading railways. 1t Is unfortunate,
! of course that railroads are always forced
| TO spend the most money for extensions
and Improvements when labor and ma
| terials are the highest, but this Is one of
| the penalties of prosperity, and, too, 1t IS
one of the checks on over expansion.
| When the Pennsylvania made Its big in
crease In capital stock in 1903 an agrees
| sive bear campaign carried the stock
| down so violently that some people began
| to fear for the solvency OF the company
| A peg was put In the stock at 10 but It
| broke through 120 and through 1lo, and
| the enthusiastic bearss predicted that 1t
would break through par. But the bears
| overplayed themselves. There was point
at which not only the banking interests
! behind the Pennsylvania, but the smaller
| Pennsylvania stockholders themselves,
| felt that the stock could be bought ana
put away in strong boxes for the future.
| During that bear campaign in Pennsyl-
yania it was a matter of current rumor
that the decline was helped along by the
boys at e6 Broadway. They were bears
on the market anyway at that time and
there was no reason why they should not
be bearish on Pennsylvania along with
the rest of the market. They had mad
! the cream off the bull market that ended
in 1902 with the collapse of the Gates st.
/ Paul movement and they were ready to
see stocks go down to bargain prices
where they could load up again. The "
Broadway crowd bought quite chunk
of Pennsylvania below 100, but the greater
part of 1t they have since unloaded at
handsome profit The only member of this
clique who has any large amount of Penn
sylvania stock Is II. c Frick. who has
recently become a member of the board,
and who may at some time become pres
dent of the company, or chairman OF the
| executive committee. Mr.. Fflck TO-DAY Is
undoubtedly the big man in Pennsylvania
and the 5000 100000 increase in the COM
| pany's capital must be taken as a Prick
plan. When Pennsylvania broke 20 1909
in the big bear market of 1903 1t was
| 6 per cent stock. It Is now a per cent
stock, and is selling in what must be
| still considered "a bull market, abount 1876
Selling Preferred Stock.
| Market critics notice the selling of rail-
way preferred stocks. The reason for this
! is not difficult to discover. Holders of
railway preferred stocks are selling them
! for the same reason that they have been
| selling bonds for some time. Preferred
! shares are like bonds in that their rate
of dividends Is fixed. Union Pacific COM
| mon might earn so per cent but the pre-
| ferred would continue to pay per cent.
| As a result of the gold imitation, CONNER
| cial profits are increasing, and investors
! whose returns are regulated by the prof1ts
| in the enterprises they represent. They
| are selling bonds and preferred stocks,
! which have fixed rate of return, and
| are putting their money into common
! stocl-in railways. industrials and mines.
! The increased cost of the necessaries and
luxurles of life invites the holders of
securities to sort out from their strong
| boxes gilt edged securities giving mod
crate return, and to replace them by
more speculative securities returning
] larger dividends.
Conservative men in Wall street, men
who recognize that, because of our abund-
ant prosperity, and the rapidity with
which private fortunes may be aeeumu-
| lated in this growing country, there are
| bound to be occasional exposures of
moral obtuseness In high places such as
was witnessed in the insurance investi-
CATION. believe that very little good is
| being done by the manner in which we
| are continuously washing our linen be-
| fore the world In this era of undertaking
| and investigation of everything and
! everybody we are beginning to make our
neighbors across the water believe that
| we are really bad to the core We know
| better ourselves So conservative a news
paper as the London Times, commenting
| on the remark of Its Washington cor
respondent that American railroads are
| terribly demoralized' presents an indict-
| all of us who are in our sane senses
| know Is absolutely unwarranted The
| Times asserts that the interests of the
| stockholders of American railroads are
| used by directors merely as blue chips
| In a great gambling game. The Times
] speaks of the plundering of American
railroads in recent years. This Is the
| verest tommy rot, as any one who is
| conyersant with the growth of American
railroads since 1896 well knows. The many
| thousands of Americans who have in
vested their surplus funds in this period
| of commercial growth in the shares of
| leading American roads have seen the
| profits of these enterprises, and their dis
| tributions to shareholders, increase year
| by year There are exceptions, of course,
! but 1t Is manifestly unfair to tell the
| story of American railroad finance by
! describing the few affairs of unsavory
| character AMI leaving out the big whole
| some story of marvellous progress The
inevitable effect OF this campaign of
! undertaking of everything American, II
| 1t is to be continued indefinitely, will
| be to force our foreign friends to be-
| lieve that self government In this coun
! try Is a failure and to invite them to
| withdraw their investments from this
| side of the water.
English Comments in 1893.
! In view of the comment by the Lon
| don Times on our methods of railroad
| management, 1t is of interest to read
| what an I'm o1ish dnanrier evnert said on