Evening star. [volume] (Washington, D.C.) 1854-1972, 1916-10-29
NEW STOCK ISSUE
BY N. Y. CENTRAL
To Take Place of Short-Term
Notes for Raising Needed
Capital.
WAR STOCKS AGAIN BOOM


NEW YORK. October 2S.--An INTEREST,"
ing development in the railroad situation
was the announcement last week that
the New York Central had voted new
issue of 250.000 shares of treasury stock,
approximately s25.000.000. to be offered
to present shareholders. Railroad financ-
ing in recent years has to a large extent
been limited to short-term notes ami
bond issues. current net earnings being
such that new stock issues have not
made a very favorable appeal to in
vestors 1t is understood that the pur-
poses for which the proceeds of the
stock distributing will be devoted are
in connection with important improve
ment work.
1t is believed that the action taken by
creasing the company's dividend on its
present outstanding stock. although
earnings are sufficient to pay a higher
dividend than the present disbursement.
Good Plan to Follow.
1t would be we'll for the railroads if
this practice could become general. for
the tendency in recent years has been to
add to fixed charges whenever new
money was needed. There is balance
between that proportion of capital
which should be interest bearing and
that which should be raised by stock
sales. which has been disturbed by the
long period during which transportation
earnings were not sufficiently elastic to
permit the roads to pay dividends which
made new stock issues feasible, but
business is now running at such a rate
as to enable the companies to extri-
cate themselves from some of their diff
ficulties. Last year saw the smallest
amount of new railway construction this
country has enjoyed since the civil war.
Only 100000 of new capital was add
ed last year to an investment of sl6.-
600 600, 900, which is perhaps accounted
for by the fact that there are $4,000
miles of existing roads which have not
been able to pay interest charges on the
bonds they carry.
Stocks and Bonds.
New high records for Bethlehem
Steel, General Motors and general
advance in rails and industrials were
the features of the opening sessions of
this weeks stock market. After it's
sensational rise from 80 to 500 last year,
the interest in Bethlehem Jagged to
such an extent that the quotations re-
ceded almost 200 points The recent
active trading in this stock. stimulated
by the reports of enormous net earn
ings. has had the effect of carrying
forward the price to a point somewhat
in excess of last years record, and this
verified the predictions of many OF its
ardent admirers, who have continually
prophesied selling price ten times It's
par value.
The recent announcement of the
British chancellor of the exchequer to
the effect that his government must
continue to spend Sl0,00O,0OO day Tor
American products has been fruitful
source of speculation for statisticianS,
who have been trying to figure out
Just where and in what proportion this
vast sum Of money is to find final de-
post Add to this statement the fact
that the terms of new collateral loan
of S3OO,0OO,0O0 to the British govern
ment are about to be announced. and
an excellent confirmation of the prob
abilities of continued war orders is
surely provided.
Market Technically Strong.
Despite the general advance in the
stock market in recent weeks. Wall
street leaders are convinced that the
technical position of the market is
strong, and has been much improved
as a result Of the sudden shake-up-
which occurred coincident with the u
boat activities on the Atlantic sea-
board The elimination of weak ac-
counts and the coincident resettlement
at lower levels made for healthier con-
ditions, and subsequent operations have
shown that the undertone Is much
firmer in consequence. The proximity
of election does not appear to have any
marked influence in any quarter. nor
has 1t served to depress trading &C
tivfty-
Wall street is looking beyond cleo
ton to the next step in international
financing, interest having been re-
kindIed this week by the resumption Of
gold imports in no small proportion.
The view is held generally that Great
Britain intends to hold sterling steady
and domestic interest rates. insofar as
and domestic interest rates. in so far as
possible, in order to be in position to
market another collateral loan of good
ly proportions at fairly low rate early
in November. Sterling exchange has,
for some time past, been dull, with but
fractional changes. continuance of
this state of affairs for the time being
will prove highly satisfactory to Euro
pean interests, who at the moment
wish no disturbing factor injected into
the situation. w. S. COUSINS.