New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-07-27
Europe's War Scare Sends
Back Our Securities
and Lowers Prices.
RATE DECISION AND
RAILROAD CREDIT
Foreign Requirements Start Gold
Exports Again-Money Here
EaSy-Bank Surplus Up.

lean securities here by Europe last
week because of the threat Of serious
complications arising from the strained
relations between Austria and Servia
and uneasiness on this side over the
future Of the Rock Island and New
Haven systems depressed the stock
market 20 new low levels for the year.
Bonds generally held frmer than shares
but many issues not often seen in the
market appeared at prices considerably
under the last previous transactions.
Uncertainty over the rate decision con-
tinued and each day word was awaited
from Washington as to the possibility
of announcement of final action by the
commission. To a great extent il may
be considered that the effect Of such a
halfway relief as Is now expected has
been discounted in the market and in
business circles. II is TO crops rather
than to the federal board that men OF
affairs are looking for the needed i'm
petus that may lift business and securi-
ties out Of the rut into which they
have fallen.
The rate decision is sorely needed
if In any way il can offer encourage
ment TO the railroads that they may
expect reasonable return for the
money invested in the transportation
systems OF the country. Recent sta
tstics have shown how greatly the net
revenues of railroads have shrunk IN
1918, in spite of the investment of vast
amounts OF extra capital. Some hope
must be offered 20 the carriers if they
are to be able to fund their continual
requirements for new money.
Railroad Credit Suffers.
Railroad credit has been poor even
for period OF reorganization.
Government control has made invest
ors feel that expansion of earnings
cannot be expected though general
business conditions should improve.
The railroads, as has been pointed out
many times. are between the Inter
state Commerce Commissions control
Of rates and the increased expendl-
lures arising from the requirements
of state and federal boards. and higher
cost of supplies. Demands of employ
ees for better wages are, IN erect,
enforced by government action, for
state OF federal mediators 10 whom
public opinion forces the roads to sub
init such disputes usually act in such a
way as 10 increase labor costs.
For the most part, railroads must
continue to effect new loans TO meet
cid debts and to provide for necessary
improvements. First mortgage bonds
gre becoming fewer and junior OBJ.
legations, as appear from the yield
at which they are selling. are becom-
ing less and less desired, but loans
must be made if the railroads are to
keep out of receivership. In reorgan-
i1ing, either with or without court ac-
ton, distrust as to future earning
power make difficult raising needed
funds. Where twenty years ago stock
holders gladly paid assessments on
their holdings in expectation or great
appreciation in value of their securi-
ties. which we're generally realized, the
attitude now often assumed is that
there is danger of throwing good
money after bad since the government
is not giving generous enough treat
ment to the stronger roads to insure
success for those in difficulty. As
result. roads that have once been put
+ in receivership find it difficult to get
out again. In case of the Missouri
/ Pacific, strong protective committees
Of security holders have been formed
[ to bring about if possible necessary
r. organization without court order.
Sensational Inquiries.
Investigations and reports by the In
terstate Commerce Commission have
been made in such hostile manner
that, though it is possible good may
come from lessons learned through the
mistakes Of the past, the immediate
effect is further to break down the
credit Of the companies, whose stock
| holders, it would appear, should be as
/ sisted rather than injured. The New
Haven, suffering from such treatme mt,
has some months before II must meet
capital obligations other than ordinary
/ fixed charges, and the management
hopes 20 rehabilitate the roads posi-
ton from its present low estate III
/ spite Of the governments antitrust
! suit. The Rock Island, faced with gov
/ eminent inquiry that will apparently
| be conducted in the same spirit that
made the New Haven investigation
! fruitful Of sensational headlines in the
newspapers rather than OF any new
/ facts about the company's finances, has
had 10 abandon the plans worked out
. for reorganization. Here, 1T rs true,
other clements entered in. The stand
ardization of depreciation charges and
writing off discounts on securities sold
and losses in the Alton transaction
might have materially reduced chances
T Of payment on the new preferred stock.
on which 10000 900 was to be raised
to put the road on its feet.
Considerable objection was made 10
the proposition that holders OF stock OF
the Rock Island Company should, IN
return for new capital supplied, receive
in addition TO the new preferred part
of the present common stock of the
UNDERLYING railway, which forms the
collateral for the per cent bonds Of
the railroad II was argued that own
crs Of these collateral Is should take
control Of the underlying railway
through stock on which their issue
was based and provide any funds
needed themselves. The sharp break IN
the price Of the bonds on the EX-
change when IT was announced that
the plan had been abandoned showed
that some owners, At least, regrettca
loss o. the assistance OF the Rock ISL
and Company's stockholders.
Business Unsatisfactory.
Business conditions arc far from
satisfactory. A start was made toward
taising prices for finished steel prod
uctf, but the increase in wire. bars,
plates and shapes was Immediately fol
lowed by cuts in tinplatc and steel
hoops. Trade publications reported
little business at the new prices,