The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1907-01-20
Mr.. HILLS DREAMS
USUALLY COME TRUE
Wall Street Interested in His
Latest UtteranceS
FINLEY ALONG SAME LINE
Critics Notice Selling of Railway Pre-
ferred stocks-Washina Linen
in Public Having Bad
Effect Abroad.
FINLEY ALONG SAME LINE
BY w. G. NICHOLAS.

New York, January 19.-(Special)-
When, a few weeks ago, that eminent
diagnostcian of railway ailments, Mr.
James J. Hill of st. Paul, told an amazed
country. in the course of a speech in Chi
cago, that freight traffic was growing so
enormously that we should need in the
course of the next few years 100000 miles
more of railway tracks, and that the
crying need of the railways at the moment
was hundreds of millions of capital to re-
lieye the congestion of traffic, coineldent
to Our unprecedented prosperity, 1t was
supposed that Mr.. Hill was only having
one of his dreams. The curious thing
| about these dreams of Mr.. Till is that
they usually )me true. and come tue
long before any of US expect Since
Mr. Hill made his railway expansion
speech in Chicago, the big news in Wall
street week after week has been cor
iinlous demand from railway corporations
foa new capital. Mr.. Hills own roads
have asked for $50 900, coo; the st. Paul
has asked for s1O0,000,000 for Its Pacific
coast ex.easion the Pennsylvania, I'M
mediately upon The death Of Mr.. Cassatt
has announced its intention of asking its
stockholders for authority TO Issue $780,
100000 OF new securities; the Chicago and
Northwest rn was asked for $25 900 and
other railroads are at work ON more or
less elaborate plans for new financing.
Suffering From Slow Paralysis.
Mr.. Hill estimates that $500, oOo.0 600 mist
be spent in the aext five years by Amer
lean railroads. rhe railroad financing of
a oermane 1t character which has already
been announced may be divided into three
classes tue first, securities already Of
fered TO the stockholders and in process
of sale: tie second, securities authorized
but net yet offered to stockholders or
otherwise disposed of; and, third, issues
for which boards ef directors have asked
authority. The securities offered to stock
holders and in process of sale mearly all
stocks) amount % $3OO,O0OOOo; those au-
thorized but n IT yet offered or sold figure
up 100000 900; and securities for which
authority has been asked by directors
amount to $200,0OO,00O. This makes a total
of S1,000,0 300 of railroad financing in
sight now. This does not include the well
known needs of various roads that have
plans for raising new capital now under
consideration The Southern railway is
| one of these. President Finley of the
| Southern mas seen lit to Issue a letter
| to the public generally, as wel1 as the
! eompany's stockholders, calling attention
! TO the very rapid commercial growth of
the south in the past twelve years, and
| to the manifest need of the company for
new capital with which to provide faclli-
/ ties to handle the business offered. MI
! Finley points out that the Southern in
| ha net Iva
tracted u spend nearly $t0O 900 to keep
the capacity CT the road up to the de-
mands of the territory it serves. Mr..
! Finley admits that the railroad service
of the country in general, and that of
the Southern in particular IS far from
satisfactory. MIR, Finley calls attention
| to the very large increase In the cost of
materials and labor in the past few years.
without any increase in railroad rates. He
says that this cannot go on.
Mr.. Hill asserted in his Chicago speech
! in November that the country, because of
/ the inadequate transportation facilities
was suffering from SLOW paralysis" This
was his diagnosis of the disease. He re-
/ peated this this week. The remarks of
| the president of the Southern railway are
along the same line. The Southern Is
suffering from Mr.. HIS disease of Slow
paralysis. The immediate effect OF Mr..
| FinleN's diagnosis was heavy selling of
| the shares of the Southern in Wall street
| This selling came not only from purely
speculative quarters here, but from what
appeared to be foreign investment quar-
ters The immediate effect on the market
of Mr.. Finley's diagnosis was more VIC
! lent in the preferred shares of the South
| ern. The selling of the Southern rail-
way shares for some years, especially the
| liquidation in the preferred shares, leads
to the belief that 1t is the intention to cut
the dividend on the preferred. Still, 1t Is
not well to leap at conclusions. There are
two ways of providing new capital for a
railway. After property has been bonded
/ and stocked until Its new securities are
4 unstable except at a great sacrifice, as
was the case in the Rock Island, the way
| to provide more capital is to economic
and cut dividends. 1t takes a great deal
of courage 90 do this, for the cutting
of dividends, while 1t speaks for economy
hurts a corhpanys credit not only with
Its stockholders but with banking inter-
ests. The more popular method of getting
new capital these days is that employed
| by the Pennsylvania and New York Cen
| trail roads. These two railroads, especi-
ally the Pennsylvania, are spending an
inal work In New York. Both of
these roads have recently raised their divi-
| dend rates, not because of increased
profits III their business, but because OF
| their desire to raise their credit and place
themselves in a better position to raise
more money. There is no question that
the increase in the Pennsylvania dividend
from per cent to per cent was for the
purpose of facilitating the sale of It's
| bonds to French investors.
Has Habit of Shuddering.
| Wall street has got into the habit of
| shuddering every time ii hears of a rail-
| road in need of money. The spectators
In stocks who seldom get outside of Man
haitian Island, and who only know by
| what they see in the newspapers of the