Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1907-01-21
Railroads Of the Country to
Spend Vast Sums in Better
ments of the Service
GREATEST ERA OF EXPANSION
To Meet the Future Prosperity of
America, Huge investments Are Re-
quired-Bis Stock Issues to Meet
the Necessities Of the Nations
Growth-Effect on the Stock Market.

Minneapolis, Jan. 21.-The railroads
of the United States will raise bill
lion dollars for extensions and better
ments. The money will be obtained by
issuing new securities. The greatest
era of railroad upbuilding in the his
tory of the country is at hand.
The total is stupendous, even for this
age of big things in American finance.
The raising of this immense fund will
involve financial operations on a large
scale, and il the figures could be set
over into their equivalents in time,
material and labor, industrial activity
that will exceed that of any period
past would appear. The fact that the
country has grown so great, that, even
after the expenditure of millions OF
dollars fer new tracks, new terminals
and new equipment, the roads are still
so far from being able to handle the
country's business as to require this
immense sum for work. the beginning
of which is planned for the present
year. is the greatest possible argu-
ment for the future prosperity Of the
country.
Strangely enough, the stock market
has been adversely affected by these
announcements of new capital require
ments. The statement of the president
of the Southern railway that his road
stood in need OF millions of dollars to
pay for work planned in the way OF
betterment and Improvement broke
that stock sharply. James j. Hills re-
cent statements as to probable re-
uuirements, had much the same
effect in the market generally. The
Northwestern road found that 1t need
ed money and that stock was affected.
and so on thru the entire list.
This apparent anomaly is explained
in great part by the fact that every
issue of stock governing railroad has
a speculative and an Investment value.
It's investment value depends upon the
dividend paid and the certainty of con-
tinuance. The speculative value may
depend upon many things quite re-
moved from fundamentals.
Many stocks have been too high,
speculatively, because their market
prices represented largely the conf
dence Of the people in the future of the
country. A stock paying per cent
annually for instance, and selling at
$50, is too high in sense, yet other
things may justify the price.
But period of great Improvement
work is at hand. The roads will raise
much money and will raise it by selling
their new issues .of stocks to investors,
some of them old stockholders. Issues
will find Judgment in London, Amster-
dam, Berlin Paris and Frankfort, the
European financial centers where many
round sum for American investment
in past years has been raised. The for
eign investor buys his stock largely
upon an investment basis. Hence, In
anticipation of such Judgment as will
probably consider a per cent annual
return the measurement for valua-
ton at par, the speculative values are
declining Investment values remain
unchanged The United States is pro-
ducing more tonnage every year, and
the railroads have opportunities unlim-
tied for the earning of substantial divi-
dends. But they must build up to re-
quirements, and period of such up
building Is opening.