South Bend news-times. (South Bend, Ind.) 1913-1938, 1919-06-01
The Financial Outlook
When Will the Turn Socksp Bargains in Preferred
Stocks and Bonds-Rairoad Situation Will Be
Satisfactorily Settled

some measure 10 the htdNg lqu4Ad-
ton by foreign interests.
However. the more fundamental
cause for this decline and in fact
the broad downward swing since
1909 was the beginning at about
that time Of the many difficulties
from which the roads have been
suffering since Commodity prices
had been moving upward during
these years, and the costs of rail-
road operation had advanced. In
1910 the roads made their first COM
bined appeal for increased rates
which had been turned down. The
many laws regulating or moro prop
erly put. stirling the roads. started
to flow thick and fast around this
time. The roads about then were
initiated into difficulties under
which they have been operating
since. and which have been the
basic cause in the ruthless pressing
of the market values of railway is
sues
Trend Since December, 1914.
From December. 1914 to about
August, 1915, the trend was irreg-
ular but on the whole upward. In
the latter period the average rose to
H.. The advance was not due, how
ever. to any marked improvement in
the railroads. The interstate COM
merce commission had granted a
slight increase in rates and the
roads had been temporarily ben
Gifted by the extensive prosperity
enjoyed by the country due TO con-
ditions created by the war. Again
there was a strong bull market dur
ing the most OF this period and the
rails undoubtedly moved in SYM
pathy with the lndustrials.
Beginning with August, 1915,
railroad stocks went on the most
severe sdump in their history By
February, 1917, the average loss was
about II points, then moved up six
points. but by December, 1917. had
rapidly declined TO 1915. the lowest
point on record. An advance start
ed in December. 1917. which con-
tinued until October, 1918. The
roads had been taken over by the
government under apparently favor
able conditions for most of them.
Few roads. however. earned the
standard return guaranteed them
and the conditions of most of them
had hardly been very materially
benefited under federal operation.
In November the armistice had
been signed and counting upon the
possible early return of the roads to
their owners the prices OF railroad
stocks began TO discount all adverse
possibilities in the return of the
roads 10 private ownership and
operation. At the beginning of the
current year an irregular but slow
upward tendency started, rejecting
undoubtedly that railroad stocks
had already discounted the worst
and something would have TO be
done to improve the condition of
the railroads
Railroads to Get square Deal"
Prest Wilson has announced that
the railroads will be handed back
to their owners at the end of the
calendar year" though the actual
date of the return depends largely
upon the time when the legislation
will finally be enacted. All parties
are agreed that the roads cannot
be allowed to return under the old
conditions, but that radical changes
taking into consideration the wide
future OF railroading and it's devel-
opment in this country must be
made.
Considering the vital Importance
of the solution of the railroad prob
lem TO our economic and industrial
life and the vast interests affected,
its solution has received consider
able attention by personages in all
walks OF life. Excepting the plan
of the railroad b rotherhoods, all
others argue for private ownership
and operation. Me<ges of the
present companies into a few large
systems is sought for by all parties.
These are urged in the public in
terest and would simplify the task
Of regulating the railroads. Every
body of course desires that the roads
should be assured a fair return on
the capital invested in them and
wants rates to be so adjusted that
this will be possible. Matters OF
control and regulation also take
prominent part in the suggested
plan. Discussions as to the joint use
cf terminals and the Cancellation OF
wages have also been plentiful.
Prospects for Better Grade Rails.
As yet the suggested solution of
the railroad problem is not specific
enough to formulate definitely how
holders of railroad securities will be
affected by the legislation finally en-
acted II is becoming increasingly
clear. however that the railroads
are To be given square deal and
that the nnal outcome viii mate
rally improve the position OF sub
stantial railroad securities. We be-
lieve that the better grade rails
have good prospects for improved
market and investment position.