The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1913-04-24
Wall Street Needs Some Very
Favorable Happening to
Brace Its Courage.
UTILITIES STILL LEADING
Local Securities Trade Slow-Union
Savings Banks Hons-Gossip
Of the Street.
BY 1. A. FLEMING.

Exchange except that the leaders gen.
orally held their own. The fluctuations
were too narrow to permit OF much
familiarity, even on the part OF the
scalping fraternity, and no one else
seemed to have an inclinauon 10 oo
anything.
Commission houses were not favored
with orders, the slowness or the pono
market was distressing, while the nerve
of Montenegro, though applauded' Is
recognized as likely to bring about IN
ternational complications on the Eu-
ropean side.
First there was a little rally. then
there was a reaction, and nnally the
leading rails and industrials showed SUCH
narrow net changes for the day that
they did not deserve position In the days
fiuctuations-too small fractionally-
Yet there were stocks that showed i'm
portant changes. Liggett Myers To-
bacco shares were off 4 points: Loril-
lard 3. and American Tobacco 31-I
In the rails Canadian Pacific was 1 IL
lower: Frisco seconds ., and Colorado
Southern / point.
Corn Products preferred gained Is
the best advance of the session. Betn-
lehem Steel preferred also rose a point,
but otherwise it was case of fractions.
Needs Incentive.
The market needs an incentive. 1t
NAV get il today from a further reduc-
tion i'm the Bank of England rate OF
discount, il may come from positive re-
coyery in the bond trade-but ii must
have something. Investment buying Is
not Undertone is better because shorts
have been whipped twice and are rather
timid and slow to push their advantage.
UtIlitIe. Hold Best Record.
The firm of Henry l.. Doherty & Co.,
New York bankers. has just issued an
other group of its charts illustrating
the relations of public utility, railroad
and industrial securities.
They point out that the intrinsic mer-
its CT tne class of securities as compared
with another are dependent first on the
relative safety of the principal invested
and second on the relative earnings per
500 invested.
The chart having three sections shows
in section No. l the way the capital Is
sued by these three groups OF companies
has Increased during a period OF ten
Years No. chart shows the way the
net earnings on this capital have In
creased and decreased during the same
period.
From the data OF the hrst and second
sections the net earnings per 500 of Sc
,urites outstanding were calculated aIo
are illustrated IN section No. 8. AS these
figures include all of the railroads or
the Crited States, all of the large indus
trials listed on the New YORK STOCK Tx
change during this period and most or
the large gas and electric companies,
they warrant some detailed consideration.
1t is surprising to learn that during
M loSf 10 railroad canlta1 OUT
-tanding has increa sed by over one-haf
the total amount outstanding prior to
1902: but it is still more surprising to
realize that during the same PERIOD gas
and electric companies nave had to
double their capitalization. In other
words, while the growth of the railroads
IN the United States has been very rap
Id. the growth or the gas ana electric
companies has proportlonately been
twice as rapid.
The second section OF this chart shows
that while industrials and steam railroads
are SUBJECT to quite marked fluctuations
In the amounts of their net earnings,
the net earnings of gas and electric
companies nave increased steadily, even
through such periods of depression as
followed the panic or lyU!
t:as md EIectrics Gain.
lie TACT ITdl IIle llne SHO"ulS the net
earnings of the steam railroads per $40
of securities outstanding remains essen
TALLY between 81 and s4.75 during pc
riod during which the railroads issued
additional capital equal to half the total
capital they had outstanding at the be-
ginning of this period, shows that in
spite OF this considerable expansion it
has been accompanied with essentially
commensurate net earnings.
Section No. 3 shows that the net earn
ings of industrials per 500 of industrial
securities outstanding have fiuctuated be-
tween per cent and 10 per cent, but
or the other hand, they have averaged
1913 as against only $4.25 for the rail-
roads.
In view of these net earnings per 800
il is extremely interesting to note that
all the stocks of all railroads listed on
the New York Stock Exchange are SELL
ing at an average of something over SIPS
per share, while those of public utilities
are selling at an average of but slightly
over $50. The immediate inference might
be that public utility stocks are much
less secure than are those of the rail-
roads, whereas as a matter of fact the
reverse is the case. Public utility secur-
titles sell at lower prices in spite of their
high safety and high earnings. merely
because they have not been as popular
as railroad securities.
Doherty & Co. in February OF this
year issued charts showing in detail the
relative security of these different
classes of securities. These deductions
were drawn from a review of the equiva-
lent of over $545, $40, 81, 443 of capital dur
ing the thirty years from 1882 to 1912.
OF this vast sum they found over $685.
1878, or "a per cent, had been ;n-re-
cefvers hands.
Small Loss.
The chart (30SO, showing receivership
risks and net earnings per 500 of securi-
ties outstanding, illustrates the relative
risk to capital in the different groups
dealt with. Therein it appears that for
every 500 of railroad securities out
standing $1.& averaged to be in receiv-
ers hands. For the larger industrials
this figure appears as $207, whereas for
gas and electric securities outstanding
it is but 81 cents, and this in spite Of the
high net earnings OF these latter,
amounting, rs above stated, to an aver
age of $50 per 500.
When we consider that this chart is
the conclusion Of statistical studies of
conditions IN this country for thirty
years II ID interesting. to note that II
shows conclusively that high earning
rates are not necessarily Indicative of
insecurity of capital. for, curiously
enough. the gss and electric group, which