New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-07-22
Saturday, JulV 2I. 1917


roads are their friends. Through
misguided efforts to better the posi-
ton of the country's transportation
system by winning public sympathy
for them, they have done more
than any other section of the COM
munity to destroy confidence in rail-
road securities. No matter how
favorable conditions may be, they
can see nothing but trouble in the
future. Everything is interpreted
pessimistically. Earnings are large,
say the railroads spokesman, but
think Of the uncertainties which lie
ahead; who knows what the situa-
ton will be year from now? True,
the Eastern roads have received an
increase in rates, but will it be suf-
fcient to meet ever rising costs?
Operating economies have been eff
fected, but, after all, what will the
saving amount TO? The questions
are put with a hopeless air, as if
the answers necessarily must be adj
verse. And with this sort of stuff
as a base, many financial writers
waste tons of good white paper on
gloomy articles, without ever paus-
ing to analyze the situation for
themselves. During the course of
n week, one who reads financial
news will come across many columns
of respondent comment, all leading
to the same conclusion, which is
that unless the Interstate Com
merce Commission changes its recent
decision, and allows the full Is per
cent advance, railroad credit is
going to the dogs. Here is a typical
bit of sadness:
Railroad credit is the paramount
question to-day. With the small re-
lief granted, railroads will face the
same disasters of nine or ten years
ago when the Interstate Commerce
Commission was endowed with power
to fix rates. When this occurred
railroad credit collapsed; the roads
could not issue bonds but we're
forced to resort to short term notes
TO finance their needs. The fact
that 10000 miles of railroads were
thrown into the hands of receivers
was solely due to the accumulation
Of these notes rather than to the
non-payment Of interest on their
bonded debt. The recurrence of
short term financing should serve as
warning to shippers, legislators
and railroads alike.
If it were we'll founded, it might
be excusable, but it isn't. The state
ment. "the fact that 10000 miles
of railroads were thrown into the
hands of receivers was solely due to
the accumulation of these notes
rather than to the non-payment OF
interest on their bonded debt" is
lust as absurd as the inference that
railroads had to resort to short
term financing because they were
not granted all they asked of the
Commerce Commission. 1t is an I'M
fortunate fact that conditions in the
investment market are unfavorable
for the fotation of long term
bonds at this time, but the rate
decision is in no way responsible.
That some of the short term issues
were privately placed on an extraor-
dinarily high yield basis is un-
fortunate, too, but it does not prove
that railroad credit has been de-
stroyed. Industrial concerns with
the highest credit standing have had
to pay Just as big a price for
money.
1t is not surprising, in view Of
the fact that investors have been
pounded with gloomy predictions Tor
years, that railroad securities are
not so highly regarded as they used
TO be. The surprising thing is that
investors will touch them at all.
In days gone by, it was the habit
Of counsel for the defendant to weep
copiously as he tried to win the
iury's sympathy for his client. But
the thing was overdone, and went
ont of style long ago. Those who
sneak for the railroads, with the
nublic sitting as the jury, still shed
hitter tears on every occasion. 1t is
about time for them to realize that
that. too, has been overdone, and
that the way to make the strongest
appeal to public opinion is to tell
the straight story.
Il is a curious fact that those
who like to talk Of railroad poverty
,,iJoro bother TO revise their data.