File:American railway transportation (1908) (14572908408).jpg

Identifier: americanrailwayt1908john (find matches)
Title: American railway transportation
Year: 1908 (1900s)
Authors: Johnson, Emory R. (Emory Richard), 1864-1950
Subjects: Railroads Railroads and state
Publisher: New York, D. Appleton and company
Contributing Library: Mugar Memorial Library, Boston University
Digitizing Sponsor: Boston University

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mmission for a statementcomparing the par and market values of all classes ofrailroad securities during the year ending June 30, 1900.The report, made by the commission February 24, 1903,indicates that the $10,911,968,970 of securities (parvalue) whose market values could be ascertained, had atotal average market value in 1900 of $8,351,103,523;but the commission is careful to point out that the figuresare only approximately correct. There were securitieswdth a par value of $812,066,859 whose selling valuecould not be ascertained. Moreover, the commissioncalls attention to the fact that the prices paid for thesecurities bought and sold can not safely be accepted asthe measure of the value of the securities not on themarket; and also that the values of the securities listedon the stock-markets are not necessarily a just measurefor the valuation of the property. However, in spiteof the recognized limitations of the facts presented inthe commissions report, the data there presented indi-
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86 AMERICAN RAILWAY TRANSPORTATION cate that there was in 1900 a considerable differencebetween the market and par values of railroad securities.Market values, of course, depend mainly on the incomeobtained from the securities; but if stocks and bonds haduniformly been sold at or near par, the comparison ofpar and market values in 1900 would have shoAvn themarket values to have been greater than the par values. In addition to the motive for stock watering citedabove—the distribution of stock among bond purchasersgratis or at a low price—there are three other incentivesto the issue of large amounts of stock. In financingcorporations it has been found that greater profits can besecured from the sale of large amounts of stocks andbonds at a low figure than from the sale of small issuesat a high price. Investors prefer securities affordingopportunities for speculative gains. Ten million dollarsof 3-per-cent bonds will sell for more than $6,000,000 of5-per-cent bonds, although the inco

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