New-York tribune., 1908-07-19

obviously artificial
Railway rate discussions assume pre-sm.,.
interest vfce-President Brown OF the Nsvv~s
central-certihed spokesman FOR every Stand.
Oil railway elstionshp-maintains with w..
his position that the country is at critical tnn-
ure-shat higher freights, lower wages or bant
ruptcy must be recognized as close at hand
Mr. Brown does not sugar his phrases Pant
ruptcy is the word he uses
And I'm echo of Brown we have scnra 40
consequential railway managers declaring nu..
the same thing-few of them- though. uslr.
language quite as gothic as Brown IN ~
Southeastern territory rates are already act,,aTv
marked up an average 10 per cent Here \, :
starting point. For reasons Of diplomacy thsr.
may be hesitation in other sections. but event
,Ially-soon-the Southeastern programme MI,
be duplicated elsewhere. OF course. there sbov.
opposition. Shipping associations In rntltituas
will fight the new era schedule There viii
also be political autagonisrn- But with dom
mating leaders like Sfr. Hill and Mr. Hartman
and MIR. YoakUm- pronounced IN their declara
tons of what is essential. IL can be accountsd
As sure that advances Gin some guise) viii get
into operation
AS 70 the business outlook. almost eve-v
authority agrees that indications are enccur-
aging Judge Gary and President Corey Of IN,
United States Steel Corporation 90 on record
unequivocslly declaring that al disclosed facts
are inspiriting- And as for decades we hass
been educated to the view that the iron and
steel trades of the country are barometers
assurance from such sources exerts. naturally
enonpb esnecial influence The steel stoes,
become the strongest on the list They reach
records not recently known Despite the he
mendous total of steel capitalization the shares
move with ease II is not difficult TO under
stand such buoyancy- Here Is corporation
that has played fair with public sentiment
The public believes the statements II nahea
And those statements are cheerful
General trade Is Enthusiastically improving
Even ultra conservatives go this far. IN asri-
culture happy conditions rule This years
crop outlook is practically perfect Assured
yield is tremendous; prices are all that any
producer can desire.
IN the course OF recent discussions Wherein
many men foremost In experiences and Judgment
have participated, one exceptionally significant
observation IS made by an authority-by Mr.
Victor Morawetz, Chairman OF the Atchison
Directory and otherwise intimately identified
with crea. financial interests Mr. Morawstz
point. out that the railroads Of the country
have come into the critical position where they
are unable any further TO issue first mortgage
bonds that their resources on that account are
exhausted that from this time forward their
reliance TO meet capital requirements must %
upon issues OF subordinate character. ~ tlls
statement are suggestions which VIII re new
and surprising to others than those charged
with supervision OF the security SITUATION IN
the observation are varied signifeances WHAT
Mr. Morawetz attempts TO snow rs 'nae tne
RAILWAYS of the country are entitled 70 gen.
erous treatment. that by reason or the restr,e-
ton of their power to borrow upon mrs, mort
gage they should have freedom rom hanu.eaps s
upon secondary fssues-that earning eapacty'
now more than ever in the past. must oe 1ofe-
Tended. But there rs another vieN-anI lns
view from the investors STANDPOINT II Ns
are at an end of first mortgage railway pond
issues il new supply OF such securities is cut
off. there develops situation tneser Althea,o
known) wherein automatic Value rlSes 1o
bound to be registered
the American investment community WHICH
must have first mortgage ponds is eohItontoo
mon fame that important institutions which
must continually make large investment CON,
mtments have during recent months -ns9
aloof from the market They nave proceeceu
on the theory that they could-as IN former
upon lfnnitless high class bono
issues. They cannot But, TO their advantaeef
thanks to the long rushing wave OK peSsilnlsn.
the New York Stock Exchange lists are includ-
ing many bonds of exceptional character sell
ing below yield value. One notable example .
that Of the Kings County Elevated Ha1lroau l.s;.,
first mortgage 4 per cents. at only 81. Nicnn
two weeks hence-on August frst-thfs oona
pays a coupon of per cent-and this IL nas
been doing semi-annuaIly for years-1ne pfop-
erty's earnings not merely providing regular ln-
terest charges. but contributions to surplus at-
count approximating twelve per cent upon tne
company's entire capital stock suoordlnats 20 70
this bond interest In selecting such a pond 1oE
there is the warrant or varied rea-
sons. The entire bond issue now Is only S4voo-
600 II was virtually s12.500OoO only Illus
while ago. Then it's annual interest charge Wd5
SS75, 900. Now the total interest Is s-so,uue.
Now moreover. the property represents an
actual cash investment of s4.0oo.oee eNpenasu
upon the property for additions and improve
rnentS including electrical converslon-recoru
in any recent exhibit or corpoIa-
ton finance Thus the s7.00o,000 first nortsass
bonds to-day stand for the oT1glnai slz'oooeV"
plus 81 600 600 additional cash investment IN
terest charges are three times earned ana pdSe
eff all this individual intrinsic strength there p
the legally bound guarantee OF the Srookisn S
Union Elevated Railroad Company, the BrookI;h
Heights Railroad Company and the Bfoosln
Rapid Transit Company-guarantees all OF cOA
sequence enough independently-and not one ~
them needed-for the reason that the MIS-
County it's own account earns over anu o'e'
again all that is required -
Among the bond bargains Of the New ioIs s
Stock Exchange these Kings County Elevated
firsts loom conspicuously. -.
From the standpoint OF purchasers seems
profit opportunities. there Is this espeeldt .r,
traction: Bought at this time coupon OF tw9
per cent is collectible within a fortnight On.
six months hence there is another two per cs'-
per cent payable in nan yea. t...
four per cent upon par-vhich equals lhtSies-
at the rate of ten per cent for six months upon
the market price OF the security. Such ehahes
is rare-the chance TO earn ten per cent ufu,
capital invested while at the same time ndF's
for security a first mortgage bond WHICH -
any fairly Improving market should aoNan'
under all the ctrcurns'anes,,
Kings County Elevated frsts will still De cnsay
ten or fifteen points higher than they are -
selling.
IN the markets betterrnent Union Pacific gnu
St Paul among the railroads and Consohdal7'
Gas and United States Steel among the NOUS
trials have had leadership. What may oe es
regarded notable is that IN eses'
case advances have been predcated upon Vs'1..
Here Is test which is to be dominating =
market like this. The stock which earns ss
whose improving prospects are assured - -
only one which can hope TO Join IN netter,n, -
for the present There are such New w. sr-