Evening star., 1927-03-02
RAILROADS TO TURN
TO STOCK ISSUES
Carriers Money Troubles
CIearing-5O-50 Bond and
Share Status Sought.


New York. March 2.-The barom-
eters of Wall Street show reassur-
ing signs of the clearing up of the
money troubles that have beset the
railroads Of the country in the last
decade. This statement was made
yesterday by Robert S. Binkerd, vice
chairman Of the committee Of public
relations OF the Eastern railroads, -and
affirmed by a prominent railroad
banker. The latter said that 1927 will
mark the turn in sthe financial lane
that leads to the issuance of stock in
stead OF bonds to met the carriers
necessities.
1t is learned that eight of the big
transportation systems arc considering
broadening their stock issues. The
railroads are: Pennsylvania, Louisville
and Nashville: Baltimore and Ohio.
Atchison, Topeka and Santa Fe, Union
Pacific, Delaware and Hudson, Della.
ware, Lackawanna and Western and
Nashville, Chattanooga and st. Louis.
C.. & o. Is q Leader.
Already the Chesapeake and Ohio
with an issue of $50 ,000. 900 and the st.
Louis and San Francisco with ST.
100000 of common stock have led the
way in the new movement of owner.
i
trail has authorized $100, 900. 900 stock
issue, with $20,000.0OO reserved for
employees.
With some $1,000 ,000, 900 to be pour.
ed out into investment channels this
year, bankers feel that the time has
come for railroad stocks to be offered
to the investing public. Increased
earnings and an ability to improve
their situation through their own eff.
forts has created a feeling of conf
dence, bankers say. in partnership Sc
curities of railroads. For more than
10 years the carriers, with hat in
hand. have had to beg for money,
which could only be obtained by bond
issues that created a heavy indebted.
ness and top-heavy capital struc.
ture.
Hope for $3.50 Proportion.
Railroad officials and bankers hope
to establish over a period Of years
capital structure for the carriers
that will show stocks and bonds in
$500 proportion. There have been
no stock issues Of Importance in the
last lO years except two preferred
issues OF the Illinois Central and the
chesapeake & Ohio. OF nearly So, 900
100000 of railroad securities issued
In the six wears ending 1925, 80 per
cent consisted or bonds and other
forms of Indebtedness.
Mr.. Binkerd said the ultimate ain,
OF the railroads is to correct their
capital structures so that bonds and
stock Will be Of even amounts.
we nave been trying to avoid in.
creasing the funded debt" said aArr.
blnkerd, and have been scraping the
parrei or all our resources. This year
looks to be the first year in which a
substantial step will be taken In that
olrection. Increased confidence in
raiiroad stocks has come because the
Iauroads have demonstrated their abil.
uy 10 improve their own situation
through their own efforts.
Taken From Earnings.
since 1920 the railroads have ex.
pended $4,000, 900 900 on equipment and
improvements and this money has
peen taken from earnings and depre.
ciation and retirement allowances.
we nave oeen slowing away the stock
noloers money all these years and
return to the stockholder the fruits of
his denial Of dividends.
mr.. Binkerd said the proportion of
STOCK TO bonds of the carriers was. at
tne end or last year, 432 for. stock
ana oo.8 Tor bonds. The tendency
toward the unbalance was first noted
In 1910 when confidence in the rail.
roads began to be undermined by
abuses with resultant political attacks.
at the end of 1926 the capital structure
or the country's railroads stood S12.-
10000 in bonds and $9,41s, ,O0O, 900
In stocks. NO''''
Mr.. Binkerd said that the HIGHER
yleld on railroad stocks would aid in
bringing larger numbers into the fam.
lily of railroad owners.