The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1854-08-16
The Paatlmes OF Wall Street.
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The remarks Of come Of the leading New York
journals upon financial and commercial topics, can
not always be relied upon for their soundness and
accuracy. Too often they receive their information
from interested quarters and make their statements
and draw their conclusions wth too much regard
for private interests and too little for those Of the
public. The remarkable decline in the value Of
New York and Erie Railroad stock has OcoakSoned
great deal Of comment, and has been discussed In
Q very contradictory manner by different writer's,
some Of whom have been influenced by Partially,
and others by hostility towards the road; some OF
them being in the interest Of those who wish the
stock to rise and Others In the interest Of those
who wish it to fall. The statements Of neither
party are entirely true or wholly false, and tie
truth lies somewhere between the two.
One Of the Wall street papers said the company
was on the verge Of bankruptsy; that the payment
&C iDlU -r i. A.e-s& end Sepfember honda was
for long time in doubt, and was secured only with
the greatest difficulty, and ut the last moment So
much alarm was felt on this poiut, that its seven
per cent convertible bonds dae in 1871, have been
fo'd as low as seventy per cent, and one day tie
highest :, offer was sixty PEI cent The Tr'tas
and paid for BY the bankrupt house which had en-
gagged "a take them. But this turns out not 10 be
true, the financial writer Of the Eusning Post bsv
ing ascertained that one million of them would not
be paid for.
In this emergency, the rich banking house Of
Brown, Brothers 4 Co. stepped forward to help the
road, and to help themselves at the Same time.
They have lent the com any about $500 600 On the
personal security OF the eleven INDIVIDUAL directors,
thereby making the corporate responsibility of the
company o. not good for much. This act was
amusiDgly trumpeted by the Tribune as very noble
and generous exploit on the pxrt Of the directors
and the Browns, who had lent the money In these
times ct the legal rate Of interest Toe story about
legal interest was . self evident absurdi.y II Was
plain enough that the Browns, who are wide awake
to the main chance, would never volunteer to lift
lame duck on its legs without pay Of some kind.
friends had large amount Of the bonds on their
hands, which were likely to fall through unless they
FASTENED to the rescue. Besides that, Il 10 under
stood that they received q commission" which is
ested directors also held large, both Of the stock and
bonds, and In stepping forward a. they did, helped
themselves quite - much. II not more, than they
did tie COMPANY. These Wall street eulogios on
and " eminent bankers' would Be smusinG II they
were not mHchie vous. IT ese men deserved 10
great credit for doing simry what II was their In
terest and duty to do. When more money ia to be
made ss y sSSng n &c " y
can be got on on the weaker brethren, thar BY Jet
ting II 60 down, then, and not until then, WaV
street steps noby" and cisinterestedly to thu
res ne. When, on the other band, Is of:en happens
the most money Is to be made by passing DIVIDEND
and depressing the stock and bonds for The purpose
Of buying 1t up, then the noble directors and
disntereed bankers Of these companies let them 8,
down by the rum without the slightest compun-toI
stock the chief football Of the gamblers, bad gone
90 low that there was imminent danger Of ts vanish
ing alto gether. The depicting practice had been
carried 100 far, and ~ strengthening plaster wAs
not put on the patient there was danger that the
sick man" might die too so0D-that Is, before the
wire pLllers could get out with whole skin. Their
cob house Was coming down before ttey could get
out Of the way. This accounts for the milk 10 the
cocoanut--tbat II, for the noble" loan Of the
bankers and the noble" endorsement Of the di
rectors.
The Erie Railroad Company is cor SANITY publishing
accounts Of "a great increase Of receipts over last
year." and ut the time 1t is announced that its
customary dividend Is to be passed. This is what we
should call the "rule Of three indirect"-s mys.e
rious and newly discovered mat1emstical principle
peculiar TO the Erie and Central Railroads--whi h
acts ON the rule Of the larger the receipts the
smaller the dividends. The 400 900 lent by the
Browns win b but drop In the bucket. hvery
doubtful whether the Eris road ID earning enough
TO pay the seven per cent interest It, ENORMOUS
bonded indebtedness Of s24,00o,000. I1 income
bonds, due next February, will be met with great
difHcuity, Il at all. The trouble with this road -
with the New York Central q, that IT. nominal
cost capital and debt arc q least double what they
ahould have BEEN that the rates which hey receive
for their business Leave very small margin fcy pro
It, and that their expenses Of various knde absorb
nearly the whole d their recepts and require con
stanty new additions to their debt while thek orc
dit ID diminishipg.