The Birmingham age-herald., 1907-04-28
GOSSIPING ABOUT ROOSEVELT SPEECH Wall Street Wonders What He
 Will Say May 30 HIGH RAILROAD EARNINGS shrewd Financiers Say Stocks Should Not be eauged for Time Being
 by Their Earning
 Power.
HIGH RAILROAD EARNINGS
BY w. G. NICHOLAS.

New York, April 27.-(special) )-From l Washington Wall street gets disturbing | rumors as to what Mr. Roosevelt is go- | ing to say Sin his Memorial day speech. The president has been talking this speech
 over with his advisors. and naturally there are leaks. Wall street is not so much disturbed as to what the president is going to say as the way he is going l to say it.
 l In the opinion of some far-sighted rail-
 road financiers the day has gone by when l the shareholders in the money making l roads can expect to receive large profits I in excess of regular dividends. It is said l that MT. Hill who has his ear to the | ground, has given us his idea of deelar- 1 ing an extra large cash dividend on Northern Pacific. MT. Hill has always I said that per cent dividends were about all the people of Minnesota and the north west would stand for, and his aim has l always been to distribute the extra profits | of his Great Northern in rights. Now 1 the Minnesota authorities are conducting campaign against this method of dis 1 tributing profits. Leading railroad finan- ciers say that MT. Roosevelt's agitation against large profits in the railroad busi- 1 ness has resulted in the building up of public sentiment against big dividends. Some of the shrewdest constructive hnanciers of the country say that the value of railroad stocks for the time be- ing must not be gauged by their earning power. The stock of road, they say, that pays per cent while earning Is per cent must be valued from the 6 per cent basis. If the road is earning two or three times the money needed to pay It's dividend, then it invites itself to the attack of the reformers who want to linn it the amount of profit that can be made in successfully managed road. Last winter some of the leading railroad stocks were selling, not on the basis of their dividends but on the basis of their earn ing power This, say some of the con servatives, could not go on In the face of a great public campaign to limit rail road profits. Most railroad stocks now are selling purely on their dividend mer- it's. Reading is an exception. Although a per cent stock, it is selling above par, To account for this the explanation is made that the Reading, by law. is going to be forced to make large distribution to its shareholders wen its transportation business and its coal business are di- vorced
 Easing the value of railroad stocks in this fashion, the wonder grows how Lack awanna can continue to sell in the neigh borhood of $475 a share. The stock is paying 10 per cent regular, and 10 per cent extra and impartial study of the roads figures of operation show that the stock is earning in the neighborhood of 60 per cent. The only way the Lacka- wanna can distribute the same profits to it's shareholders without making itself a target with 20 per cent dividends. Is to water it's stock. The company might give four or five shares for each share now issued But this would be in direct an
 
 declares stock watering a crime.
 One of the things that tends to market dulness is the refusal of the public to buy generously into the blind pools which have become such a conspicuous feature of stock exchange manipulation of late years. There is a spreading desire on the part of investors and spectators for more definite knowledge than Is now obtain able about the actual conditions of such blind pool stocks as Amalgamated Smell ters United Copper, Standard oil and many of the one-man railroads such as Missouri Pacific, St Paul. Great North ern, Northern Pacific and Wabash. There is noticed, also, an increasing desire to look behind the Standard Oil curtain. Stock in that corporation is much more widely distributed than most people think. a sem-offcial statement having been put out recently that there are nearly 5000 share owners in that corporation. It is popularly supposed that the overwhelm- Ing control of that company is lodged with small group of not to exceed dozen men. This appears to be d mis- take. The insiders seem to have found a way to distribute a great deal of their stock during the last two or three years at prices which look almost fabulously high, especially in view of the fact that not twenty people in the United States know what the real values and assets are.
 The Amalgamated Copper company has paid $50 000,000 in dividends since it was brought out in 99 The Amalgamated was product of the industrial promotion fever of the closing years of the century just gone. It was capitalized away up in the sky, just as the Steel corporation was two years later. It has been called the great swindle of modern American finance Any one out in the provinces who wants to get a popular audience while orating on the wickedness of Wall street tells about the awful Crime Of Amalgamated." The Boston novelist wrote about it for year or more.
 But it is well to reflect on the fact that the company has paid $5O000,0OO to it's shareholders since the awful "crime" was committed. The stock that was sold to the public in the beginning at par has for many months hung around this figure, sometimes selling quite bit above par, and again little below. Not all holders of the stock. however bought it at par. A good many shares were bought by the public at $75 and $50 and $40 and even lower. Many of the investors in the stock are receiving from i5 to % per cent on their money, some even more than this If it was a crime to float a $l55- 900 company that has distributed s50.- 090,000 in profits to its shareholders in less than eight years, how are We to char acterize the thousands of mining com panies brought out since the Amalgamat- ed was formed that have never distribut- ed a cent in profits, and that have been almost total losses to investors? If all the crimes of mining promotion were no worse than the Notation of the Amalga- mated, the promotion of mining proper ties would be most angelic trade.
 As to copper stocks and the copper metal a well known critic says: AS con cerns the general run of copper stocks which have been sold to the public re- gently as good things, it may 'oe con- servatively assumed that 50 per cent are trash mad that 20 per cent more are de- pendent wholly upon the present high price of the metal for their earning ca pacity or even for their bare existence. The rest of them may at some future date become excellent propositions.
 I've hear the statement made frequent ly that Amalgamated could pay it's divi- dends with Copper at 15 cents. Of course this is too ridiculous for comment. In eff feet. this is a statement that they are earning at present prices 10 cents pound net above the necessities of dividends and surnluS there were onY truth in such