JAS. H. OLIPHANT & CO.
_——
(without the extra Burlington dividend equal to 5.4%) and 4.4%,
with result in 1922 the reduction from 7% to 5% in dividend rate,
though earnings in 1923 and 1924 were 7.2% and in 1925 had re-
covered to 8.6%.
Moderate additions have brought funded debt to $333,395,000 (in-
cluding $115,000,000 non-callable 7s due 1936 representing 499%
Burlington ownership) while stock is $248,985,000 (preferred in
name only since right to issue common was surrendered in 1898)
or 43% of capitalization. With that proportion of stock a few
dollars per share over the dividend means a generous addition to
surplus and in fact 11.7% (1912-13) was largest net in twenty
years. When a dollar was a dollar in the years 1898 to 1915
$188,480,000 Greati Northern stock was subscribed at 100 by
stockholders. The Government valuation indicates $185 share
asset valuation, plus $80 if adjusted to present-day dollar pur-
chasing power, the $60,000,000 excess market over book value of
Burlington holdings offsetting entirely the unproductive $45,800,-
000 Spokane, Portland & Seattle Ry. half interest.
The 8,200-mile Great Northern system lies 25% in Minnesota, 23%
in North Dakota, 22% in Montana, and 14% in Washington. A
dependence on wheat and ore promises to be gradually overcome
by farming diversification and industrial development in these
States. Products of mines (mostly ore) and of agriculture (mostly
grain) represented in 1926 609% and 15% respectively of ton-
nage but 22% and 27% of revenues (in 1925, 58% and 17% versus
22% and 28%; in 1924, 56% and 219% versus 21% and 33%)
so the importance of ore to earnings should not be over-rated.
Bulky freight allows low operating ratio, and reduction from 79%
in 1921 successively to 77%, 72%, 68%, 66%, and 64% in 1926
aims toward the ‘‘test period’’ 57%, which would add 38% to
earnings on the stock.
Providing the unification with Northern Pacific Ry. as proposed
on equal terms is consummated, Great Northern will share its
somewhat better current earnings in exchange for an equity in the
valuable lands owned by its twin railroad, while both will divide
an estimated $10,000,000 annual savings, equal to 2% on the stock,
from simplified operation of a 27.000-mile svstem.
In the fall from eminence, Great Northern Ry. stock last sold
at 100 in 1919, but the approach to parity again is with the trend
clearly reversed, and the price range of 10714, to 18934 in ten
years to 1916 comes to mind naturally. An attractive return even
from the present dividend is available with good investment back-
oround.
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