STUDIES IN SECURITIES 
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A large part of Louisville surplus earnings has been regularly put 
back into the property, over 49% in the past decade, notwithstand- 
ing payment of at least 5% and an average over 6% dividends since 
1900. Assets, mostly road and equipment, have been increased 
approximately $300,000,000 during the period of Atlantic Coast 
Line control, and $121,900,000 dividends paid, while increase in 
capitalization was but $158,000,000 aside from $45,000,000 stock 
dividend distributed in 1923 to capitalize in part $82,000,000 ac- 
cumulated surplus. Beginning 1927 surplus had grown up to $74,- 
336,000 comparative with $117,000,000 capital stock and $235,- 
542,000 funded debt. Almost unique among railroads Louisville 
& Nashville charges depreciation on physical property other than 
equipment and last December 31 had $14,644,000 reserved which 
other companies would consider surplus. 
The 5034 miles operated by Louisville & Nashville together with 
2705 of “‘dependencies’’ form a gathering net of lines in Kentucky, 
Tennessee, and Alabama, running to terminal outlets at Chicago, 
Cincinnati, St. Louis, Memphis, Mobile, and New Orleans, and con- 
necting with Atlantic Coast Line at four eastern points. A prin- 
cipal subsidiary is the 71.8%-owned Nashville, Chattanooga & St. 
Louis Ry., operating 1259 miles, dividends from which at 7 % for 
the past decade are equal to 69 cents on Louisville shares with 85 
and 86 cents equivalent left untaken in the last two years. 
On the present 1,170,000 shares in Louisville & Nashville R.R. the 
earnings have been as follows : 
1926. .. wee . $16.60 1028 ie 311.55 
1925. -.. 16.00 1922. cvueeen.. 9.05 
1924 ves 12.10 LODE. ew 00 
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Best record before 1925 was $14.05 equivalent on the present basis 
in 1917, and average was short of $8 during ten years 1908 to 
1917, so a new level of earnings seems established. Assurance of 
this is found in operating expense ratios above 76% in 1925 and 
1926, and accordingly high for a road with heavy coal traffic; 
under present gross revenues 49% lower ratio means $5 more share 
earnings, and in 1916 expenses took less than 65% of gross. 
Uninterrupted dividend payments by Louisville & Nashville since 
1899 rose to 7% rate in 1910 and remained there except for 59 
and 6% dividends in 1915 and 1916 until the 6215 % stock distribu- 
tion in 1923. On the increased capital dividends were begun at 5% 
and increased to 6% a year later. In August, 1926, 145% extra was 
Paid and 7% rate was made regular with the February, 1927, semi- 
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