STUDIES IN SECURITIES

from the Coal Co. and occasionally but not since 1919 about
$1,000,000 annually from the Iron Co., so earnings gained on
balance.

Disclosure of earnings, upon the change of Reading to a simple
railroad operating company, indeterminate before then, showed
net per share of common stock $14 in 1923, $8.80 in 1924, $10.20
in the anthracite strike year 1925, and $11.20 in 1926. Noticeably,
the proportion of revenues taken by expenses still is high, 72.5%
in 1923, 76.3% in 1924, 75% in 1925 and 74% in 1926, comparative
 with less than 709% in the last decade, and 2% reduction would
bring $1.50 more share earnings to the common stock. Included in
expenses were depreciation and retirement reserves for equipment
 of $6,444,000 in 1926 and $5,913,000 in 1925; effect of
these was to increase the balance in reserves $8,400,000 in two
years or by $6 per common share; perhaps a consequently improved
 equipment will not continue to call for reserves at this
rate. Maintenance also in the past two years has included laying
300 miles with 130-pound rail.

The property is represented by $121,900,000 bonds, $140,000,000
stock, and $99,030,000 surplus. Of the bonds $41,242,000 bear 4%
and $61,362,000 414% interest, while of the stock $70,000,000
is 49, preferred, allowing a moderate return earned on property
value to bulk large on the common stock. Book value is $121 for
the 1,400,000 $50-par common shares and roughly $150 giving
effect to property value admitted by the Government and market
 value of Jersey Central stockholdings. Common dividends
began with $1.75 in 1905, increased to $2 in 1906, $3 rate in 1910,
and to $4 in 1913. Declaration of $1 extra last December likely
was the forerunner of a well-justified increase in the regular dividend.
 Reading common is an equity whose full measure the market
 is beginning to take.

Reynolds Tobacco Co.

For some years the R. J. Reynolds Tobacco Co. has led competitors
in earnings reported ; its ‘‘Camel’’ brand has been the largest selling
 cigarette and is reputed to take nearly half the entire demand
(total cigarette consumption has increased 85% since 1920) ; in addition
 the company has the popular ‘‘Prince Albert’’ pipe tobacco
and other brands including chewing tobaccos.

Expansion in earnings available for dividends after maximum
allowed reserves for taxes and depreciation has been as follows:
[651