Evening star., 1932-09-04
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK. September 3.-No
stranger phase Of the public psychology
exhibited in the market place has been
presented than the abrupt change in
the attitude Of this public toward rail-
road securities.
Less than three months ago neither
the speculator nor the investor would
touch them. In their minds they were
worthless. Today the same people were
flooding brokers' Offices with orders to
purchase these shares "at the market" :"
although they have as q group ad-
vanced over 200 per cent from the low,
and in individual cases 400 and 500 per
cent.
Railroad Stock Survey.
As an argument favoring railroad
stocks for investment at the present
level, list of about 80 issues has been
published showing the current price
compared with the low of the 1920-21
panic. The present average works out
at about $50 share in contrast with
$44 then. Without analyzing the gen.
eral railroad situation and the position
of the individual stocks selected, one
might be led to believe there was too
great disparity between prices Of to-
day and those that represented the
bottom Of the market decade ago.
The first weak point in the argument
Is that about half Of the stocks in the
list not now paying dividends were In
1S20-2l making distributions ranging
from 5 per cent to 10 per cent year
Among the prominent roads on divi-
dend basis in 1920-21 and which have
since suspended payments. some for the
first time in their history are Atchison,
Atlantic Coast Line, Chicago g. North
western, Lackawanna, Great Northern,
Illinois Central Lehigh Valley, Louis
vile g. Nashville, New York Central.
Northern Pacific, Pennsylvania and
Southern Pacific Union Pacific was
! paying dividend Of 10 per cent then
compared with 6 per cent now.
Furthermore, ajority OF the 30
/ odd roads mentioned in the list have not
only been compelled to suspend divi-
/ dends, but for the first time on record
| they did not cover their fixed charges
| in the eight months to August 81
| This also throws the comparison be-
tween 1892 and 1921 out of balance.
1t was pointed out that in 1921 the
railroads were just being freed from
Federal control and were in q wretched
physical condition, with an inefficient
MANAGEMENT Here the contrast with
| 1882 Is highly favorable to the carriers
| for, although they have been compelled
| to cut maintenance costs to minimum
| that insures safety Of operation, they
are physically fit and efficiently oper.
ated When it comes to the outlook
| for trafic, however, one finds a situ-
alton that is not at all comparable to
that in 1921.
Losses in Traffic.
1t is since that time that the rail-
roads have experienced practically all
| of their loss in passenger business and
in freight traffic that has been absorbed
by motor trucks. In spite of the low
state of their plan In 1921 they were
then in control OF the great bulk of the
long and short haul business of the
country. In the past 10 years they
have lost q considerable part of their
short-haul passenger traffic and are
rapidly losing their long haul business
A study recently made by one of the
transcontlnental lines revealed the
amazing fact that its long-haul pas
senger traffic at present was only &c
per cent Of that in 1921, while a COM
petitor showed that this traff1c had
dropped to about 80 per cent Of that
soon after the war.
The far more serious development oi
the past decade is the loss to motor
trucks of an enormous amount each
year of high revenue freight. 1t Is q
more serious matter than competition
between the transcontinental lines ant
the Panama Canal 1t was not recog.
nized. or at least not admitted by the
railroad managers, until within the
past year. 1t has already been instru.
mental in causing several railroad re.
ce1vershlpS and Is prime factor today
In the omission Of practically all o.
the dividends previously paid to hold.
ers Of American railroad stocks. Il
is the greatest handicap the carrier.
have in re-establishing their credit. 81
If railroad stocks at their 1921 low,
averaged nearly so per cent higher thar