New-York tribune., 1909-01-03
The Financial World.

! and depression. the present rOseate in ths sun
/ shine Of hope and confidence
Two fundamental forces are revealed
revolutionizing railroad business. One Is th4
| constant absorption by the great systems %
| smaller systems the other is the marked growth
OF economy in operation expenses 1t is saf4
/ assumption that the smaller systems absorbed
are assured producers or contributors Of profit
able traffic and that afiIiation with more I'm
| portant lines viii be mutually beneficial This
movement Is not new in character. for the COM
prehensive Pennsylvania. New York Central and
New Haven systems-dOminant each IN us sec
! tion-were built UP largely by absorption. but
It is new policy becoming Of general adop-
tion the latest illustration being the taking over
OF Colorado Southern by Burlington Numerous
other important negotiations are afoot One
has to do with Minneapolis and St Louis. whose
current market strength NAV perhaps be re-
garded as significant OF the progress already
made by the negotiatOrs- Minneapolis and 81
Louis. like Alton and Colorado Southern, 1t Is
/ TO be remembered. is Hawley stock
Such natural and legal unification or railroads.
is distinctly a public benefit. tending to lower
traffic rates. while through concentration ot
management. financial benefits 70 the roads
themselves naturally accrue
As to decrease Of operating expenses-so con-
spicuousy Illustrated in the Hartman roads
nothing could be more welcome TO the investor.
proving the wisdom Of the american policy.
maintained for many years OF devOting a large
Had different policy been pursued larger diyi-
dends might have been temporarily paid but at
the expense Of permanent strength This 1eat-
lIre usually escapes the analyses OF sO-called
net earnings" which have in fact ranged nuch
higher than sUperfriaIiy disclosed
Both Tendencies ucted-absOTption ~ lesser
penses-are lie iJgcti outgrowth OF improved
and irnprov : conGtttons. and both will con-
tinue tor they = es' ard enduring
60 r-ateriar ,.e p, a.F.-antages assured IN
some consolidate. cases that # Is the contention
OF controlling frunCiers that net results q ex-
traordinary character must be shown forthwith
Take for example the opportunity involved N
the absorption OF Minneapolis and St Louis
with Iowa Central coinCidentaIIy. II may he)
by the great northwestern system whose agents
have the negotiations in charge. Minneapolis
earnings. both gross and net. are larger now
than when a few years back its common stock
sold GeOI. 1902 and 1909 from ten TO fifteen
points above par. paying 5 per cent. dividends.
and still reserving surpIuses. Then tindeed. for
years-and virtually TIL this last year, the nor
NAL ratio OF operating expenses Of the property
was low IN the 6G's-averaging under So z per
cent In 1908 that rate is arbitrarily Fitted 10
points. 10 IS per cent, charged out Of earn
nES for ordinary eXDenSeS-a large UphuIIdlUE
thus actually appropriated from total net
earnings substantially bigger than when five PER
cent formerly paid upon the common stock
1t is true, OF course. that the railroad is stronger
and made better able 10 earn in the future, hy
very reason Of this arbitrary appropriation. ana
undoubtedly the bearing of this policy is taken
amply into consideration. too. by the new bid
ders for contraI-iust as the same policy the
same manner Of financial and hysiCai develop
ment exerted influence when James J. Hill made
his Burlington bid for Colorado Southeru-for
in MnneapO and St Louis. as I'm Colorado
Southern. and IN Alton, there has been the fore
sighted. accomplishing management Of the
same dominating personality IL Is Edwin HaW-
ley who has upbutlt them al. Last January
Alton As recently as November they we're at
the same price. Alton is dozen points higher
now Alton benefits by official disclosures To
discover similar good for Minneapolis and St
Louis is simply matter OF when. At pres
ent earnings are increasing $1,000 a day-
As over and over again New York Centra"s
extraordinary investment situation has been
reverted TO IN this reviev-the stock rising
something ike ten points within the last ten
days-so in other parts Of the market, the bar
gain opportunity fairly thrusts itself forward
Il cannot be long before Pennsylvania fo,-
lows New York Central. r1arketvise- New York
CentraTs rise is not by any means over
Moreover what NAV be fairly kept continually
in mind IS that New York Central and Pennsy.-
vania have groups Of subordinate auxiliary.
companies identified with them. and in every
OF those properties market betterment IS
before long bound 70 be shown.
At the risk Of objection 10 relt-ration this re-
view has been. TOO. persistent in urging the
intrinsic value Of Minneapolis. St Paul and
SauIt Ste. Marie t"Soo'J shares They rose
yesterday five six points It looks as II they
were going much higher. Legitimacy II the riss
IS probably due TO the prospect Of an increased
dividend. Earnings are warranting per cent
and mOre-a fact. when the stock very
much lower. pointed out by one OF the devoted
champions OF the property. jefferson " Lev
Developments OF importance tmpeHd in Denver
and Rio Grande affairs. Denver's largest stock
holder now is John D. Rockefeller. The Rocks-
feller- Gould relationship has become consequen-
tiaI again: and a Rock Island bid Of $50 share
for "a controlling amount of Denver common
stock has just been refused
Exceptional activity showed at the end ot tbs
week IN the New York traction stocks. Brooklyn
jumped up rapidly. largely. and the rest oS the
list reflected the Improvement Some curious
Brooklyn Rapid Transit stories circulate. one
is that Pennsylvania is TO guarantee dividends
Another represents that the control Of the Third
Avenue system has been obtained Yet another
tells of a independent interest related 10 o1e
Of the great electrical companies Whatever the
facts Brooklyn Rapid Transit stock seems TO
be scarce-and the brave manipulative devices
Of James r. Keene are continually in evidences
During the week. coincidentaIIy. much has
been published regarding Third Avenues s!tua-
tiOu. Most OF these stories have been intended
10 help depression. They have been Inventions.
What investors OF sane inclination are now 20
regard is that Third Avenue is separated-stays
separate-from all the rest OF the New York
fractions. II is the one property that can ndks
moneys making money The stun and non
sense OF excessive stock assessments current not
long ago were foolish COnCOctiOns- During tFe
week intimatiOns have suggested that the Ne"
York New Haven and Hartford Railroad NAV
seek Third Avenue control And. despite evaSlve
official disavowals. 1t is not improoaple tha'