Perth Amboy evening news., 1920-08-24
az W. s. MANN
tcePxrizht. te2A bS Tho washAns-

N 80 80.
WARRINGTON Aug. A. real
test Of the new Cummins railroad
law will be made within the ext
few months and upon the results
ef this test will depend In large
measure whether there must be fur
theF legislation hx congress in the
aid OF railroads II the railroads do
not pass the test favorably. i may
result too. IN further talk Of gov
ernment owRership, The test will
lie in The manner and measure IN
which the investing public sub
scEieeS 70 the new issues Of railroad
The railroads must have money.
They need millions for equipment
and extensions TO meet the increased
uafhc demands and to replace old
stock. They must get 10 largely
through the issue of securities. The
roads have been waiting until the
Interstate Commerce Commission
should tx the new freight and pas
senger rates as provided in the
Cummins law. The commission has
now acted. It Is reported that the
issues Of new securities by the roads
Of she country In the next three or
four months will reach a total of
$500, 100000 This IS only part of
the amount which the roads need.
But 1t is a round sum. The securities
viii be sold to the public and the
public must purchase these securi-
ties IL the roads are to get the money
they need. II the public does not
come forward. necessarily the roads
will be in a hole.
1t has been suggested that 10 the
public does not invest readily in
the railroad securities when they
are offered. the government may
have to get behind the roads with its
credit. Although this would not neo-
essarily lead to government owner
ship, there seems little doubt that
the advocates Of government owner
ship would take the opportunity 20
that the government so the en-
tire route and acquire and operate
the roads.
Under the law. the roads r en-
titled to make q return of not more
than six per cent on the aggregate
strong roads will benefit under the
policy, but the weaker may have diff
with their securities. 1t is
necessary to the commerce of the
country that these weaker roads OBJ
tain the assistance they require.
some of them do q very important
part of the business of the country,
though they may not be financially
1t Is expected that the railroads
will go to the bankers for assistance
In Heating their leans to q great ex-
The bankers buy for resale
and for quick sale The business IS
done on a small margin, out Of
must come the selling com-
missions 10 the dealers throughout
the country and other expenses, and
the bankers profit therefore is COM
paratively small. The banker, too
use good Judgment in puFchas-
whether be railroad or industrial
corporations else he stands to lose.
The financing Of corporate securities
IS very different from the financing
Of government securities. In the
of government securities, there
s a definite security. which can be
under the provisions of the
aw authorizing the issue, to the pub
te fer purchase.
With the securities put forward
by the corporation it is practically
to sell them, according
financial experts through COM
bidding by the public, espe-
tally in times like the present. 1t
$ necessary therefore. 10 make ar
'angements for handling the securi-
les through the banking houses in
arge part. or at least 1t has been SO
the past. The banks must make
heir arrangements, it Is said. prac-
ieally simultaneously with the an-
louncement Of he issue of securities
md must know in advance If they
buy them and in what quantities.
In this way they are able to make
III arrangements for offering them
. the public. In this way the rail-
roads are able ia get their securi-
les off their hands in big blocks. and
he banks distribute the risks at
.endant upon the transaction
their syndicates.