Evening star. [volume] (Washington, D.C.) 1854-1972, 1910-12-25
Railroad Shareholders May
Have to Accept a Cut.
RATE INCREASE SOLE HOPE
If It Isn't Granted. There Will Have
to Be Big Retrenchmeut.
GLOOMY WALL STREET DAY
Brokerage Houses Not Sufficiently
Prosperous to Give Usual
Christmas Presents.
By w. G. Nicholas.
Special Correspondence Of The Star.

By w. G. Nicholas.
Special Correspondence Of The Star.
NEW YORK. December "a. 1910.
There has been a fairly active Christ
mas week in the stock market. Prices
have not changed materially. but the sit
uation has been encouraging rather than
otherwise. Investors with real money
to invest in real stocks and real bonds
have been in evidence and they have
taken out Of the floating supply a good
many securities of one kind and another
to fatten their strong boxes.
| A compilation by one Of the best Wall
street statistical authorities shows that
on or about the list OF January there will
be paid out In dividends and interest
$226. OOC, 900, an increase Of about $4,000
600 over the amount disbursed at the cor
responding period year ago. This in
crease is accounted for in part by the ad-
dition Of a number Of companies to the
list used last year, but aside from that
there has been a very considerable en-
largement in the dividends on the basis
of the old list. The interstate commerce
commission makes a contribution along
the same line. and the annual report Of
that body for the fiscal year ended June
last shows an operating income Of $S37.-
WHICH is $JI,OUp,yVO more tndn
for the year ending 1909. The commits
sion is at pains, however, to supplement
this annual report with figures for the
first quarter OF the current fiscal year
showing q net loss Of $12.0Oo.OOO in oper-
ating income. as compared with the cor
responding quarter Of the preceding year.
Comfort for the Railroads.
! Representatives of the railroad interests
find considerable comfort in this state
ment and profess to think that it has
some bearing on the decision which is
to be rendered by the commission about
the LIST Of next February on the ques-
ton Of whether or not to allow an adj
vance of $50,OO0,OOO to $75.OO0OOO in
freight rates. The commissions figures
for the first quarter of the year show a
the transportation companies and its will
lingness to have that fact advertised
might possibly be construed as indicative
of purpose to help the railroads out by
giving them a chance to soak the pub
lie for the amount Of the big deficiency.
Commenting on the railroad situation
| as 1t Is now found, the president Of one
of the big middle-class systems is quoted
| as saying: Should the commission turn
down the railroads. and l am inclined
to think it will in part at least. the car
riers will be obliged to start in upon a
policy of drastic economy. There will
penses and every part of the great rail-
road establishment of the country will
have to bear its share. There will have
to be a reduction either in the wage scale
or in the number of men employed. The
latter Would result in an impairment Of
the quality Of service given and would be
likely to be followed by nation wide
have to be stili further curtaiiment Of
plans for new equipment and for the re-
placement Of old rails and other ma
| terials that go to make up the plant.
Should any such situation Continue over
any considerable period Of time, there Will
arise a demand from the public which
cannot be ignored that stockholders must
bear Their part of the burden. There will
be ground for such demand, as there
would be really an injustice in starving
| the railroads in order to continue the
payment of larger dividends than are
| justified. Many Of the railroads will be
| able to keep on paying dividends at the
situated
Cut in Dividends Coming.
| Supplemental to the foregoing frank
statement of the situation by one who
| is broad gagged and fair-minded enough
| to look the facts souareiy in the face it
may be said that a sentiment is growing
among the men who are responsible for
| the financial management of the great
| railroad systems Of the country that
| there will have to be a scaling down in
dividends during the next year If times
| do not improve and II the government
does not come to the rescue Of the rail-
roads. Indeed. it is an open question
| with them whether the stock market sit
uation would not be improved If such
policy were adopted. The idea gains
ground that it would be the safe and
sane thing to do and that such a course
| would meet with the approval Of the
efock holdorc them SAlvea
This great body Of men and women
realizes that it is the opposite Of conserv-
| atism to drain their properties by the
payment of unearned dividends at the
day paying out money to stockholders
they should put back into the property
and the quotations in the stock market
| represent the real condition.
When the stocks Of great railroads are
selling on an income basis Of 2 Or points
under what they should sell II present
dividends were justified the meaning Is
obvious. The prices Of today reflect the
| to be cut, and the sooner this is done the
better it will be for everybody.
! Taking existing stock exchange prices
as guide Baltimore and Ohio, St. Paul,
| cifc and several other roads are in line
for the pruning knife. Union Pacific has
! not as yet shown sufficient recession in
prices to be catalogued with the others.
| come from dividends in other roads which
| it holds in its treasury, that company
also cannot be expected to escape a gen.
eral SlaShing.
Industrials Use the Knife.
The industrials show less hesitancy
about cutting their garments according to
the cloth. AS rule they do not strug-
gle and strain as much as the railroads
| do to keep on paying dividends after the
| income account runs down below the
safety line. With them the rule is to
scale down dividends unless earnings keep
| up. The big steel trust Is an exception
| to this rule, and although it is now no
torious that it is barely earning dividends
| on the common stock, 1t Is in a position
to defend continued payment because of
| its stupendous reserves. 1t could pay
out Of that fund for a year or more with
out impairing its standing or Gripping it.
| self In the Il ast degree.
In the light Of current conditions those
canned interviews handed out by Judge
Gary and others about the brilliant pros
poets for the iron and steel trade appear
| ridiculous. The great captains of indus
| try seemed to feel that they were obliged
to misrepresent the facts until conceal
|