The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1913-04-19
THE TROUBLE IN NEW ENGLAND

Copyright 1913 by c. NJ. Keys. New York;
The New England investor has for
some generations been a patient and
sa tisfied holder of railroad stocks. He
has believed in the great railroads of his
country and has put his faith In their
securities Whenever New England
citizen of ordinary fortune became an
investor he was apt to think first of all
of those old standard railroad stocks,
such as New Haven, Old Colony, Fitch
burg, Boston and Albany, Boston and
Maine. and Maine Central. They were
the big securities of the investment mar
ket into which he contemplated putting
his money and from which he figured
that he would. always draw a steady
and consistent income. For many years
the faith and confidence of New Eng
land in this group of stocks remained
unshaken. The people of that section of
the country are more than perhaps any
other similar group of people in the
country men and women of capital. A
very large part of the income enjoyed
by the people of New England comes
from investments rather than from
speculations, agriculture. or business, in
proportion to population, there are prob
ably more investors in New England
States than in any other section of this
continent.
VI late. the 1dlIn ana commence OF the
New England investor in his standard
railroad shares has been badly shaken.
1t has come to be a manifest fact that
the revenues of these railroads were fall
ing rather than rising and that the mar
gin available for the payment of divi-
dends was shrinking very rapidly. The
New England roads. perhaps more than
any other group, have suffered from the
rise in the cost of operation, because
- 1-&f IL ,oyrr
tonnage and smaller proportion of new
business growing up along the lines than
have the railroads of the West and Mid
die West where the country advanced
faster and tonnage grew more rapidly.
The cost of operation, therefore, has cut
into the margin Of profit on all OF these
roads to an extent that seems to make
1t impossible that thsg will continue
much longer to pay the same aggregate
dividends that they have been paying Cor
years past. Perhaps, also, there has been
weakness and folly in { e administrative
policies for these roads This, however,
is more or less of a question and the
dominant factor in the decline seems
rather to have been economic than ad-
ministrative.
Whatever the cause, the result has
been reflected in recent prices for the
standard New England railroad stocks.
From high price above go the best
known of these stocks has declined to
below 120: others have suffered declines
from over 200 to 20; from about 215 to
about 100 and declines of from 80 to 20
points are shown in others Of this group
of stocks.
In thousands of instances due to these
market declines, which have not yet to
any large extent been accompanied by
declines in income, but which clearly
foreshadow such declines. the modest for
tunes upon which families have existed
in the New England States have been
more than cut in two. 1t has been stat
ed on fairly good authority that if the
incomes shrink in proportion to the de-
cline in the market prices of the issues
the middle class of New England will
surely pass through a more or less pro-
tracted era of comparative. poverty, the
being with the period COW
ering the past fifteen years or so, In
which these issues have been good divi-
dend payers.
The melancholy part of this episode,
which seems to involve very large
number of people over so widespread an
area, is that there is no fundamental
error underlying the episode. The con-
fidence of the people in these railroad
stocks seems. according to the judgment
Of almost all the critics. to be justified
by the conditions. The element of pa
triotism and Of belief in the fortunes Of