New-York tribune., 1911-02-27
FINANCIAL MARKET
Stocks Break on Decision Against
Railroads in Rate Case, but
Recover Part of the Loss.

by the Interstate Commerce Commission
against the railroads in the application
Of the latter for higher freight rate
schedules will not be a factor in market
movements for any length of time. nor
| will il interfere to any great extent with
| the plans of the railroads in connection
with improvements and new construction
work. despite the pessmistic predictions
bv certain railroad presidents 1t is IN
teresting 10 recall that when announce
ment recently was made that the Harrl-
man lines would spend large amount
| of money on the properties In the next
| five wears. the president of the Union
Pacific said that our plan for the ex-
penditure Of S75.OO0,OO0 for double
tracking OF the Omaha-S San Francisco
Portland main line will in nowise be af-
| fected bv an adverse decision of the
commission in the matter of rate ad-
yances." Naturally, the railroad men
are disappointed over the action or the
commission. especially as they feel that
their demands for higher rates were
fully justified by existing conditions III
the railroad world. but it is not con-
ceivable that they cannot meet new con-
ditions by practising the so-called Bran
deis greater efficiency system. Scientific
management. Mr.. Brandeis asserts, Will
increase net income and decrease oper-
atirg costs. notwithstanding higher
wages.
II should he borne in mind that if the
railroads can prove by future experience
that they cannot make money on the
basis Of present rates they have the
consent Of the interstate commission
again To present demands for Increased
freight charges. Apparently, the rail
roads intend to accept the decision Of the
commission without a fight, although 1t
! has been hinted that they might appeal
| to the new Court of Commerce The
points made by the Interstate Commerce
| Commission are so strong. however, that
n hardly appears probable the decision
will he unset. In the last wear gross
! receipts Of all the railroads in the Cnlted
| States showed an increase Of SZZooNo'-
OOO. as compared with the year before,
while in the same time operating ex-
nenses increased S216 100000. leaving
gain in net earnings of S4OOoH IL
/ should be borne in mind that IN the ias'
SIX months Of the year general business
| in the country was poor. and that gross
revenue was adversely affected, with no
apparent efforts on the part OF the COM
| ...-3o, g. o,,+ lourf1 expenees
From current indications the present
wear will bring forth prosperous results
for the railroads. and if, as expected
gross returns are heavy and railroad
managers Introduce economic reforms IN
the operation of their properties, dlVi-
( derds will not he in danger of being re-
/ duced or passed The Southern Railway
| restored it's preferred stock TO the diVi-
dend column two weeks ago. Wouln
/ the directors of the company have taken
such action If they believed decision IN
! the rate case in favor of the Shippers
u,o,,1d disorcanize the railroad business
in this country II is worth noting that
in spite Of higher operating COSTS the
railroads reporting earnings for last De
| oar,ber show p gain in net of more than
! 60 600 ana against gain in gross or
about S150O0O00. and that in January
ali roads not affected by abnormal
weather conditions showed large in
creases in operating revenue "hlcn
were especially significant az comparl-
sons were made with a period IN the pre-
ceding wear when particularly favorable
results were reported. Net earnings Tor
January have not yet been received. but
tbe,, doubtless will show a continuation
&C rho ir1nrovement begun in the last
month Of 1910
In the larger part Of the last week the
/ stock market was dull at unlmportan'
nrice changes. the only activity deVeiop-
ING with the handing down OF the Inter
state Commerce Commissions decision
In the bond department, however there
WAS a steady demand for high grade IN
vestments, both on the exchange ana
over the counter. and an especially ac-
tive speculative inquiry for the missouri
Pacific convertible IS and the Wabash
refunding and extension As. the issues
hoinq taken bv interests who felt con-
WINGED that both the speculative and IN
vestment outlook for the securities is
extremely promising as consequence OF
tho radical changes for the better In the
management Of the Gould lines. These
securities have great potential value
The Missouri Pacific convertible 3's are
convertible after September 1917, up TO
September, 1882 into Missouri Paclhc
stock at par and as of an authorized
issue Of S175.OOo.O00 only S29,S06,oOO is
outstanding the company doubtless viii
do it's future financing by means OF this
security. il is quite likely that within
! reasonable period the new interests IN
the property will place the stock into
which the bonds are convertible on
dividend basis in order to make Sood
market for new offerings of the o's.
Commission houses had few buying or
ders for public account in the stock mar
ket although i'm Fridays decline sub
stautial interests who always have
money ON the "slumps' gathered in at
tractive shares that we're thrown over by
frightened holders. There was, however,
little liouidation 10y real owners Of stocks,
the chief selling representing margin ac-
counts and bear pressure. Money rates
continue at low figures, but higher
ouotations are looked for in March. The