New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1920-08-12
Rubber Preferred Not in Danger

Question--Is cumulative preferred stock
much safer than non"cumulative? For
Car and Foundry. whose common sells about
iSo and pays IL per cent, would seem to
be safe enough investment. yet noto
that IT Is non-cumulative. How does this
materially detract from the safety OF the
Investment not only. in this particular
case. but in general? Then. taking tho
American Car and Foundry has no bond
issue. Is this an advantage7 Does it make
company's assets? Would you explain to
me, who must try to learn something about
i Investments the relative value OF these
apart from the foregoing queries, can YOU
ten t me something about the outlook for
United states Rubber? I notice the com
mon stock has dropped amazingly. but
should have attributed this simply to the
nucllations of the present depressed mar
longer mention United States Rubber first
preferred In your list OF suggestions for
conservative C, Investments. AS it an issue
time, am rather alarmed and should like
10 know why you cease to consider it a
perfectly conservative investment. Is the
diVdend In any remote danger? It is
A. r. G. ' "@''' pi'io'ieo'---' Mrs)
Internationally speaking, the fact
that a stock is cumulative is of value
TO the investor, for the reason that
should corporation find it necessary
to reduce or pass the dividend on such
stock there is always a chance Of it's
oelng made up during prosperous
period. While the preferred stock of
American Car and Foundry is non
cumulative, consideration should be
gwen TO the TACT that the company has
no funded debt. Therefore, the pre-
ferred stock is, in reality, a first lien
on the property. Nor may the pre-
1erred stock be retired. Consideration
should be given, of course, to the par
tlcular stock IN question. We have not
Intentionally omitted the mention of
United States Rubber preferred stock.
we still believe it to be q very fair
Investment. We have never given if
the same rating as United States Steel
preferred, American Car and Foundry
preferred or National Biscuit preferred.
we see no reason for holder of United
states Rubber preferred to be alarmed
oyer the decrease in the earnings of
~ ne company. 1t must be remembered
that nearly every manufacturing com
pany in the country enjoved unnrec rec.
edented prosperity during the war
period. This prosperity was so un-
usual that most companies paid out
large dividends to common stock hold
efs. Some paid out too much. per
maps. The conservatively MANAGED
c concerns kept an eye on surplus &C.
counts, knowing full we'll that such
prosperity could not last. Recent de-
crease crease IN earnings of many companies
re reflects these. facts of deAation in
the prices of materials. This was
pound to come. Every one talked about
II, every one with sense knew it would
come. When we recommend invest
ments we base our opinions upon the
facts as they present themselves at tho
tlnie. We have witnessed in this coun-
Try some startling changes in the status
o.; investment securities. ANYTHING is
likely to happen. What may be good
investment to-day is a speculation to-
morrow. For that reason we advise
investors to keep in touch with affairs
ana not to buy securities, put them
away and d, forget them, as is SO often
a a;l we have been through stirring
times in this country before. Periods
OF business depression have come about
ana yet the well-managed corporations
nave weathered the storm. We con-.
sloer the United States Rubber Com
pany to be in this class.