“The initial facts that we wish to know of a railway then are, What sort of a road has it, what is its traffic, does it get good rates? When we know what business it does, what its earnings are, then we shall ask, how is it capitalized, what are the fixed charges these earnings have to bear, what is there left, and what is the amount of stock which has to share the surplus? We shall ask if its earnings are stable, if the maintenance is adequate, if the policy of the road is conservative, if its management is good or bad. When we have done all this, then we shall go into the market, ask the prevalent rate of money, and by a simple rule of thumb, we shall know, in a broad way, whether the stock is cheap or dear.”--From “American Railways as Investments,” by Carl Snyder. _The Effects of Business Depression on Rails and Industrials._ “There is apparently a popular belief that the general market always moves together in a considerable swing, and that any advance in one set of stocks would be accompanied by a corresponding advance in others. So far as the general tone of a day’s market is concerned this is true; but, nevertheless, individual stocks or groups of stocks can easily and gradually change their selling basis in a brief period of time. In 1901, for example, the industrial stocks reached their high levels, and suffered a considerable decline in 1902. Meanwhile the rails were advancing. To illustrate and confirm this statement the highest prices of both Rails and Industrials in July, 1901, and July, 1902, are set forth in the following tables. There can be no unfairness in choosing this particular period. What is to be demonstrated is that it is possible for the groups to cross each other in price in a given time. The ten most active stocks have been chosen in each group as fairly representative of the entire market: RAILROAD STOCKS. High in High in Stock July, 1901 July, 1902 Atchison 89⅜ 95¾ B. & O. 108¾ 112⅛ Can. Pac. 108¼ 139¾ St. Paul 177¼ 189⅜ Erie 43⅝ 39½ L. & N. 111 145⅞ Mo. Pac. 121⅞ 119½ Penna 151¾ 161¾ Reading 47 69⅞ Union Pacific 110⅞ 110⅝ ------- ------- Average price 102.97 118.41 INDUSTRIAL STOCKS.