RAIL PREFERENCE PROSPECTS Highest Current Price this Yield Price. Year
0 £ s. d.
L.M.S. 4 per cent. First Pref. .. 721 .. 82 .. 5 r t o 'L.M.S. 4 per cent. 1923 Pref. 544 .. 70 .. 7 7 0 L.N.E.R. 4 per cent. First Pref. 544 • • 68 • • 7 7 0 Prices such as these, even making full allowance for the unfavourable traffic trend, seem to me to reflect undue pessi- mism. Recent traffics have been affected, it is well to remem- ber, by a sharp decline in the carriage of livestock, induced by drought, and by the poor domestic demand for coal in consequence of abnormally mild weather. Thus, the con- traction one would expect from trade recession has been exaggerated by special factors. Faced by higher expenditure, the railways will find it difficult to maintain their net revenues this year at the 1937 level, but there should be a fairly com- fortable margin of cover for preference dividends. Holders of railway preferences should not be frightened out at today's prices. I wish I could see more evidence of recovery on the home industrial front. These provincial clearings and railway traffics are disconcerting. On the railways passenger receipts are holding up reasonably well, but the goods and coal sec- tions have fallen away badly in the past few weeks. Having taken a sombre view of home railway ordinary stocks, I regard the setback in quotations as a belated adjustment to a reason- able basis of yield, but the decline in the preference stocks is disappointing. Here is the story of the recent fall, together with the current yields :
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