RAILWAY BORROWINGS AND EARNINGS.
That English Railway stocks should be affected for the time being by the unsettled Labour outlook is quite natural, but in so far as depression may have been accen- tuated by apprehensions that the recent large capital issues prejudice the situation adversely from the share- holders' point of view, I think that such apprehensions are in part, at all events, based on a misunderstanding of the actual facts. For some little time past the com- panies have been using large portions of their various internal funds for capital outlays, and now under a recent decision of the Court of Appeal it has become clear that these funds have to be replenished by fresh borrowing. The matter, however, is largely one of book-keeping, and when the new funds have been replenished by fresh loans the proceeds of the loans will presumably be reinvested and the railways will be able to include the income from such investments in their revenues.
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