Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-08-20
EARNINGS
!" GAIN IS FORECAST.
TO
July Business of Carriers
= Established Record-Econ-
= omy in Operation.
an.cia1 nisnateh To The star.

Special Dispatch to The Star.
~ NEW YORK, August 20.-This week
will bring forth the July earnings state
ments Of most of the large railroads of
the country. AS the volume Of mer-
chandise and agricultural products
moved last month was record, 1t is
expected that a set of remarkable OPP
Grating figures will be presented on
(which further upward movements III
railroad stocks will be based.
49, These will supplement the six months
showing of the carriers, which was one
of the best in their history. An analy-
sis of the returns for the first half of
1929 indicates that in that period they
had net operating income Of 1858, 347.-
1875. This compared with $462, 227 ,52o
in the corresponding months of 1928.
The effect OF the gain Of 100000
900 was to raise the rate of return on
the property investment OF the class
roads to 5.54 per cent, as against 4.62
per cent in the first six months OF last
year.
Operating Efficiency.
This was due not only to a substan-
tial gain in gross earnings, amounting
to 1852 900 900, but to high operating
efficiency. The operating ratio dropped
from 1878 per cent to 1882 per cent,
with properties all maintained at al:
excellent standard, but with economies
effected through larger train loads, a
greater daily mileage of cars, a saving
IN fuel and in Shopwork.
= One of the groups in the class rail-
roads and representing the Eastern car
riers was able to earn return on prop
Ierty investment Of sos per cent. This
aS highly satisfactory to the roads in
the Eastern district, which include a
number Of those that may at some
future date be compelled to pay over a
part Of their earnings into the Govern
.mept fund.
I Other sections of the country did not
show up SO we'll. For instance, in the
Southern district the annual rate OF re-
turn was only 439 per cent, although
an the same period of 1928 it was down
TO 4.05 per cent. In the Western dis
trict 533 per cent was earned on the
property investment, compared with
the annual rate of return of 444 per
cent for the first six months of 1928.
This includes some of the lines in the
Northwest that in recent years have
earned less than per cent per annum.
A comparison today between the
prices at which public utility and rail-
road stocks are selling emphasized the
great discrepancy between the two
classes when based on the ratio of mar
'ket values to earnings per share. A
case in point is that Of American Tele-
phone & Telegraph, which sold around
$500 a share, pays a dividend Of per
cent, and earns about Is per cent. The
nearest to it in respect to price among
the rails is Union Pacific, which was
today from 10 to IL points lower than
American Telephone & Telegraph, al
though it pays dividends Of 10 per cent
and earned this year between $l8 and
$40 a share. Atchison common was
even lower by 10 points than Union Pa
cifc. It pays dividend of 10 per
cent, and this calendar year Is expected
to earn nearly twice as much per share
as American Telephone stock.
Another Contrast.
The same line Of argument Is also
applied as between General Electric,
which Is quoted around $400 share,
with a comparatively low dividend re-
turn and relatively low earnings per
share In contrast with the railroad
stocks. One Of the popular public util-
tiles, namely. American 81 Foreign
Power. is selling between SO and go
times its earnings.