ELEVENTH ANNUAL YEAR BOOK — PART IV. 169 



all street railway companies in the state of New York having an operat- 

 ing revenue amounting to over $1,000,000 annually, as reported in Poor's 

 1910 Railroad Manual, and the other list including the bonds of such com- 

 panies whose securities sold during the first week of November, according 

 to the New York Commercial and Financial Chronicle; and I find that 

 none of these gas, electric light, street railway or other public service 

 corporations have marketed any 4 per cent bonds since the year 1907. 

 Even the United States Steel Corporation and its subsidiary companies, 

 with their vast resources, have no outstanding 4 per cent bonds. Of all 

 their fifty-eight bonds, reported by Moody, only one issue is on a basis 

 lower than 5 per cent, and that is a 4.4 per cent bond. 



It is no evidence of bad credit that you can't borrow money to- 

 day at four per cent; in fact, that is a general financial situation. 

 I told the commission that they could raise these rates to their 

 hearts' content and they wouldn't make it possible for these com- 

 panies to market four per cent bonds at par ; that they would have 

 to readjust the entire financial situation in the country, and, in 

 fact, the world, to sell them. My statement may sound rather pre- 

 sumptuous, coming from this corn-fed product of the state of 

 Iowa, but immediately the "Wall Street Journal came out and in- 

 dorsed my proposition and said I was on absolutely sound ground, 

 and that the railroad officials were wrong when they said their in- 

 ability to market four per cent bonds was an indication of bad 

 credit ; it was simply an indication of the general financial situa- 

 tion in the country. 



But reasoning and thinking about that thing brought up an- 

 other proposition to me : If it is true that the railroads have to 

 pay more for their money, isn't that an argument in favor of ad- 

 vanced freight rates, so that they can have more money to borrow 

 with? I found out that the market prices of bonds have been de- 

 clining somewhat steadily during recent years. It occurred to 

 me first to find out whether the market prices of other bonds had 

 declined, and I took four representative industrial companies and 

 four representative railway companies that appeared at "Washing- 

 ton, and I found that the market value of the industrial bonds 

 decreased practically the same as the railway bonds. Then it oc- 

 curred to me to wonder what about the market prices of stocks: 

 perhaps they have been going up ; and if that is true, why shouldn't 

 the railroad companies put their money into stock investments in 

 place of borrowing on them ? Why should they have that margain 

 between the bond rate and the stock rate? I found that no such 

 margin exists in England. I have here an exhibit showing the aver- 



