The Return of the Toll Bridge 1927
THE RETURN OF THE TOLL BRIDGE
A FEW years ago the toll bridge was thought to be on the verge of obsolescense, but the automobile is rapidly bringing it back. New and expensive toll bridges are being erected all over the country to handle automobile traffic and to be paid for by that traffic. So it is not surprizing to find toll-bridge securities the subject of an interesting study by Peabody, Houghteling and Company. This company points out that concerns with small operating costs in proportion to receipts have” naturally been favorites with investors. This is one reason for the favor in which bonds of hydroelectric corporations have been held. But Peabody, Houghteling and Company tell us that toll-bridge companies operate on a much smaller expense ratio than do the hydroelectrics.
In 1925, as The Wall Street Journal reproduces the findings of the investment house, net revenues of the toll bridges were 80 per cent. of gross while the hydroelectrics’ net was only 50 per cent. of gross. The year before, toll-bridge earnings were 79 per cent. of gross, while for hydroelectrics the percentage was 58 per cent. But attention is called to the fact that “the relatively poor showing made by the hydroelectric companies in 1925 was due to large expansion programs calling for the outlay of huge sums.” A comparison of toll-bridge and hydroelectric companies is not so far-fetched as might seem at first sight, we read on, since “bridges are constructed to meet a public need and must be classed as a public utility.” Further observations made by the Peabody, Houghteling report are reproduced as follows in The Wall Street Journal:
The charging of tolls for the use of roads and bridges dates back to about 2000 B. C. During the supremacy of the Roman Empire, most of the important roads and bridges in that part of the world were under the control of military authorities, with costs being met by the State. One of the first toll bridges in this country crossed the Newbury River at Rowley, Massachusetts, built about 1654. Some forty years later a toll bridge had been built across Spuyten Duyvil Creek at the northern end of Manhattan Island. By 1808 about twenty companies had been incorporated to build and operate toll bridges in New York State, and many others were operating in Pennsylvania and Massachusetts. Only a few of these bridges earned adequate returns on the investment, however, and it was not until after 1910 that the increasing use of automobiles caused a big jump in the earning power of these bridge companies.
For instance, the Old Saybrook-Old Lyme bridge which spans the Connecticut River was opened for traffic in August, 1911, and cost $468,642. The bridge was operated on a toll basis up to December 31, 1924, during which time it showed net earnings of about $490,000 or more than enough to pay for itself. The Columbia River Interstate Bridge, connecting Portland, Oregon, with Vancouver, Washington, has shown average net income of 17 per cent. on capital cost for past nine-year period. Other toll bridges which are big earners include the Jacksonville-St. Johns River Bridge, the dark’s Ferry (Pa.) Bridge, the Gandy Bridge which connects Tampa and St. Petersburg, Florida, the Harrisburg (Pa.) Bridge, as well as the Bear Mountain Bridge and the Delaware River Bridge connecting Philadelphia and Camden.
The investor in bridge company securities runs some risk, however, the same as in any other business enterprise. Bridges are subject to destruction by fires and floods, as well as cyclones, etc. Most of the old wooden bridges have been replaced with modern stone structures, so that the fire menace is eliminated to a considerable degree. The permanency of many of the structures is attested by the fact that many bridges built more than a thousand years ago are still intact and in use.
Source: The Literary Digest for July 2, 1927