New-York tribune., 1922-11-26
Railroads Earning Power
No. 3o-Reading Company

We present in the subjoiaed article
/ the thirty ninth Of series OF fortp
dastg discussions Of the present sarnine
po.ger Of the Leading american steam
Fdfvodds. AT the reqaest of The Tti5L
aae, these atiidies ieere undertaken by
me standard Statistics Componp, ms,
OF Nesc fork, which has prepared she
Popers and is securing copyright for
te mem 1882. The fortieth article ,ritt
| apPedT Tomorrow and iDitI deal NTH
M,1sesoars "a haHsas 4. Financial
| Editor
The Reading stocks, particularly the
common, have always been more or less
shrouded in mystery. 1t has long been
known that the company possessed
some very valuable assets outside Of
its railroad holdings, but just how val
liable they were has been the subject
OF much discussion.
1t has been anticipated that some dav
heading would make distribution Of
these assets, and now the povernment
has ordered that it shall be done A
plan Of segregation was submitted
more than year ago, but it did not
/ prove satisfactory to all the parties
concerned and so has been withdrawn
| 1or modihcatton. Announcement of the
new plan is expected shortly.
because of the anticipated distribu-
zion OF assets, Reading common has
ordinarily ranged higher in it's price
average than would be justified by the
rate of dividend paid A year ago the
public PUBL was willing to pay as high as
Wv Tor the right attached to each share
oa reading stock for the privilege Of
subscribing to stock in the new coal
company, making the net cost of each
coal share S44 to such subscribers
ihis VIII convey some idea of the pub
lies estimation of the value of Readings
coal co lands when measured by the 1,400.-
Voo new coal company shares it was
then proposed to issue What yalua-
tlon the public will place on the coal
property on the basis of the revised
| plan remains to be seen.
/ Presumably Reading will ultimately
become transportation company and
as such its railroad holdings. which
form the backbone of its present asset
value, should prove sufficiently profit
| ahle to enable it under normal condi-
tions to maintain dividends on its COM
/ mon stock at Approximately the rate
now paid, which would place both pre-
ferred stock issues among the high
grade investment preferred stocks and
give the sommon a very substantial
rating. The bond Issues of the various
railroads composing the Reading sys-
tenn may be ranked among the best.
The situation is discussed at greater
length below.
Growth of capitalization
x.. FUNDED lst pff I'd prf. Com. Total
Year, debt stock. stock. stock. cap
isas isas S1sS1 lss1 sssS stsS s7So ss7S2
me. SO ~
The figures in the above table rep
resent the capitalization of the Read
| ing Company alone, and do not include
those OF any of the companies which it
controls through stock ownership.
Historical Factors
/ The Reading Company was incorpo-
rated in 1871, in Pennsylvania. and was
! granted a broad charter Its original
name was the Excelsior Enterprise
| Company Control was acquired in
1895 by committee representing the
reorganization managers of the Phila-
| deiphia g. Reading Railroad, which
committee acquired, along with the
railroad, the coal lands and property of
the Philadelphia & Reading Coal e.
Iron Company, both sold under fore
closure. Subsequently large portion
OF the property so acquired was con-
veyed to the Reading Company, as it
| was afterward named, its capital stock
being increased from 100000 to $780,
600, 1000, at which figure IL now stands.
The Reoding Company is a holding
and not an operating company. 1t owns
the entire capital stock of number of
companies, of which the following are
the most Important:
Philadelphia & Reading Railway
Company.
Philadelphia & Reading Coal e. Iron
Company.
Reading Iron Company
The Reading Company also owns
q majority interest in the stocks of
number of other companies, the most
important of which is the Central
Railroad Of New Jersey. The Read
ing owns about So per cent of Jersey
Central stock, which has been placed in
the hands Of trustees by order of the
court under the decree of dissolution
-~as explained below-until favor
able opportunity is offered for its
sale. ,-.,4
The Antitrust Suit
Ia September, 1913. the government
instituted proceedings against the
ReadingJersey Central combination,
including their subsidiary coal COM
panies, claiming it to be In restraint
of trade and therefore existing in
violation OF the law, The case was
fought up to the United States SUI
preme Court, which handed down its
decree on April 26, 1920, ordering the
combination to be dissolved
On February IA, 1924, in pursuance
OF the decree, the Reading Company
filed its segregation plan. Certain pro-