In selecting the twenty stocks to be used in forming a composite security, care was taken to eliminate the shares of such corporations as have undergone radical changes during the period considered, 1896 to 1905, inclusive. The Rock Island Company, for example, is in itself an important system, but owing to the conversion of $75,000,000 Common stock into $200,000,000 of mixed securities in 1902, the tracing of its subsequent movements would involve unnecessary computations and explanations. It may be added that experimental tests show that the hypothetical stock, call it “Composite Common” for the sake of convenient reference, was faithfully representative of almost all movements from 1896 to 1906, and that the selection of other stocks would have made only insignificant variations in the general result. The original intention was to extend the investigation for a longer period than ten years, but so many readjustments, assessments, and other changes occurred in listed securities prior to 1896 as to make a clear showing difficult. Common stocks of railroads only were considered. Few Industrials have reached their tenth birthday, and aside from this, their introduction would make a false showing by increasing the dividend rate with no corresponding increase in the selling price of the stock. The twenty stocks chosen for amalgamation were as follows: Atchison, Topeka & Santa Fe, Baltimore and Ohio, Canadian Pacific, Canada Southern, Chesapeake & Ohio, Chicago & Great Western, Chicago, Milwaukee & St. Paul, Chicago & Northwestern, Chicago, St. Paul, Minneapolis & Omaha, Erie, Illinois Central, Louisville & Nashville, Missouri Pacific, New York Central & Hudson River RR., Pennsylvania, Reading, Southern Pacific, Southern Railway, Union Pacific, and Wabash RR. PRICES OF COMPOSITE BY YEARS FROM 1896 TO 1906, INCLUSIVE. Year High Average Low Fluctuation 1896 44 37½ 31 13 1897 53¼ 43⅞ 34½ 18¾ 1898 62½ 53¼ 44 18½ 1899 72½ 64¼ 56 16½ 1900 80½ 70½ 60⅜ 20⅛ 1901 106½ 89⅞ 73¼ 33¼ 1902 119¼ 105½ 91⅝ 27⅝ 1903 106½ 89⅞ 73¼ 33¼ 1904 105½ 91 76½ 29 1905 122¾ 109⅝ 96½ 26¼ 1906 125¾ 111⅞ 98⅛ 27⅝ Fractions were necessarily omitted from the totals employed in charting the movements. They are, however, unimportant. Dividends on Composite Common were as follows: 1896 1⅖ % 1897 1½ % 1898 1⅝ % 1899 1⁹/₁₀ % 1900 2½ % 1901 3 % 1902 3½ % 1903 3⅜ % 1904 3⁷/₁₀ % 1905 3⅞ % 1906 4¾ % [Illustration: FLUCTUATIONS OF STOCKS FOR TEN YEARS. (The rims of the circles touch the average high and low points of 20 railroad stocks, each year for 10 years.) Reproduced, by permission, from MOODY’S MAGAZINE of August, 1906.]