Evening star., 1924-04-06
RAILWAY STOCKS
ON UPWARD TREND
Marked Revival in Past Week
of Interest in the In
veStmentS.
SOUND BASIS Is INDICATED
February Earnings Improve Over
January Showing-Sharp Rise
in Other Issues.
SOUND BASIS is INDICATED
BY GEORGE T. HUGHES

NEW YORK, April 5.-The week
has been marked by revival of in
terest in railroad stocks so pro-
nounced as to indicate the possi-
bility of investment buying as dis
tinguished from the purely specula-
tive. That there is a sound basis for
such revival the February earn
ings statements abundantly demon
Strate.
AS compared with January, the i'm
provement was striking. 1t was not
only the increase in gross earnings
but the larger proportion that was
saved for net which was the impress
Sivc feature of the returns. 1t led TO
should fall off, as apparently it did
in March, economies in operation
would suffice to make good showing
Tor the stocks.
The leader in this movement was
The Southern Pacific. For months
shares of this road have dragged
along without material change. All
the time il was earning and paying
It's per cent dividend nearly twice
over and apparently was out or line
with AtchiSon, even granting that the
latter has the greater earning power
Wall street View of Situation
Alyays on the outlook for some
special explanation, Wall Street was
ouick TO suggest that the raising of
the Southern Pacific dividend was un-
der consideration. There was no
good reason to believe the directors ,
nave any such plan in view ana, IN
any case, such an explanation is uh-
necessary. 1t is sufficient 10 say lhdt
provided there is no untaNoraole iaii
way legislation at Washington nlsn
Grade dividend paying rallroao stoCho
have been selling below their rrterils
,.Irrent charge for money ana the
tecord car loadings. 3o;so
The strength of Southern racine
was shared by stocks OF tne oSns Xnsi
.trong carriers, such as New YORK
central aud Atchison. With regaru
Ia the latter, many holders or the
stock still hope for an eventual ~
crease in the quarterly disbursement =:
This, notwithstanding the dc'tu' a. a.
the directors the other day IN ue
claring only the usual e per cen |.
II is pointed out that for the past zen zen
wears, earnings on AtchiSon common, !
have approximated twice the dlVloeho
reouirementS and that vast equities
bavn heen built up for the common
stock. All this time the DIVIDENDS
have been continued at the same rate
per cent
Speculation in Bonds Cited.
Along with the activity in the in
vestment railroad stocks has been
specuIation in railroad bonds, chiefly
Il the hiEhsr h yigldng ,s isspSs N sash Han e as
the Seaboard and the Erie. This dem-
vustration was undoubtedly almost
entirely speculative. but was SlsnlN-
"ant, nevertheless. 1t must not De
forgotten that there are three great
railroad refunding operations Whlcn
must be completed within the next
year. These are the financing by the
Baltimore and Ohio, the New haven
and the ST. Paul of their extensive
nearby maturities. There have been
ali sorts of reports as to the progress
being made along these lines. The
best Information is that work on the
Baltimore and Ohio plan has been
under way for some time. AS to the
New Haven, the statement is made
in the annual report published TINS
week that plans are under consider
alton for taking care of the European
loan which falls due April i, l925.
With regard to the st: Paul II may
be said that the bankers have not
yet undertaken the task and will not
undertake il for some time to come.
MeanW hile, it is hoped that improve
ment in earnings Will make possible
refunding on some reasonable basis.
Nor has the buying of st. Paul bonds
been done by the interests which have
this financing to take care Of. 1t has
come from outsiders and is believed
to have been somewhat embarrassing
spectators do not await accomplished
results.
Investment Activity.
In another field the week has been
noteworthy for an investment and
speculative activity quite as signiti-
cant as lin railroad securities, but an
activity of which the general public
has taken little notice. There has
been a sharp rise in The securities Of
electric light and power companies.
not on the exchange, but in the So
called outside market.
Bonds and even pr eferred stocks of
these companies have not shared this
Improvement nearly as much rs have
the common stocks. Nor has il been
the securities af operating companies,
but of holding companies. which have
received The greatest attea.in. For
a long time there was a prejudice
among couserva'i'c in csto-s against
holding companies. This prejudice
seems to be breaking down.
More stress is being put upon the
diversification of risk which the hold
ing company enjoys over the operat-
ing company, a condition particularly
true in the public utility field. Mean
while, the electric light and power
producers have been reporting
steadily increasing demand Fnr Tho