Evening star., 1923-07-29
RAILROAD SHARES
/ MARKET FEATURE
Decline in Stocks of Lines in
Northwest Brings Deep
Concern to Investors.
RECEIvERSHIP is SHOCK
Financial World Awaits Real
Peace in Europe-Bright
Spots Amid Clouds.
.RECEIvERsHIP is SHOCK
BY GEORGE T. HUGHES.

Special Dispatch to The Star.
VIEW YORK, July 2S.-The out
standing feature in the securities
continued decline in the stocks of
the northwestern railroads. The in
cident is important not simply as
affecting shareholders in these par
ticular railroads; in it's larger as
poets il concerns investors in securi-
ties.
For the past six months those
whose business it has been to give
speculative advice to Wall street
have been urging the purchase OF
railroad stocks as pelng far safer for
investment purposes than shares IN
Industrial companies or even in utili-
ties. 1t was pointed out that the
railroads were doing a record busi-
ness, that their service to the coun-
try was absolutely essential and that
there had been no corresponding ad-
vance in the price of railroad stocks
Such an advance must come. II was
argued, to put the railroad shares 1T
line with the rest of the market.
object of Bear Attacks.
For the most part this advice fell
upon unheeding ears. Week after
week carloadingS made new records
Month after month earnings state
mentS were more favorable, Still
investors held off. The explanation
commonly given was that they fear
ed the effect of adverse legislation
Even dividend increases. such as thai
of the New York Central, and initial
dividends, such as that of Pere Mar
quette. failed to stimulate interest
Now, under the influence of the siumr
of wheat and signs of the times as
expressed in the Minnesota election
railroad issues. led by these north
western roads, have been the obJec1
of concentrated bear attacks anc
some considerable liquidation on the
part Cf actual holders. instead o1
advancing.
Receivership Causes shock.
TO add to the difficulty. on Thurs
day came the announcement OF re.
ceivership for the Minneapolis ano
St. Louis All this has made deeE
and unfortunate impression upon the
very people who must be relied upon
for the new capital which the ran
roads so greatly need. The danger is
that these incidents Will be maSnl-
tied out of all proportion to their I'M
portance The troubles OF the Mime
apcIis and st. Louis were no sur
prise to the we'll Informed. and the
Hill roads have had their own dim =
back to the cutting of the dividenu
To the present , per cent OASIS.
Moreover their territory is eSpeCiaiis
affected by the unfortunate pilGn! o,
the wheat growers. competitor
from the Panama canal has also been
an adverse factor, as in the case OF
the other trLnscontinental roauS-
Would Improve Credit.
The problem then that confronts
sxrcutives and railroad bankers IL
how to restore railroad crea'ts ~
that new financing can De acroin dad
plished, not by increasing pohueu
Indebtedness which in the case OF
most of the roads is far too high IN
proportion to total capitalization. put
by marketing of new stock prefer
red if necessary. common II pos
stble 1t is quite evident that the
present favorable earnings are not
sufficient for this purpose.
There must be some assurance that
the roads will be given an oppor
tunity to work out their own sal
legislation. 1t may be that the evil
dencc which this weeks market has
afforded will be considered when
Congress meets to take uH both the
Agricultural and the railroad situa-
ton 1t is admitted that the farmer
needs lower freight rates on his
products. but ii will do no good to
relieve the farmer by strangling the
railroads. Inc OrODlenl Is one the
solution of which requires states
marship of a high order.
Europe Must Have Peace.
The other vitally important ques-
ticn. which must be answered before
our security markets can be put on
II stable basis, is how to restore ac-
tual and not simply technical peace
in Europe. AS to this. it is very
dangerous to be dogmatic. The most
that can be said is that the market
price of the securities most closely
affected-foreign bonds-does not
seem to reflect the same amount OF
pessimism as the news >dispa tches
1t may be that the markets take the
view that no matter how dark the
outlook way out will be found
simply because it must be found
Undoubtedly the most dangerous as
pect of the whole situation is that
the currency collapse in Germany
Will bring about a real crisis before
this way out is discovered.
Against all this gloom may be set
the continued ease in the money
market. As far as the future can
be read from the action of the high
grade bonds the outlook is for
come. Trade conditions remain ia
Norab BILE. Such action as has oc-
Cured is normal to the season
There continues to be overproduc-
tion in oil. but. sooner or later, that
will correct itself. While wheat is
low. corn is high. And business is