The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1895-12-10
is IT A BIG GAMBLE?
WYsT RE0TtS DROP In AKERI-
CAN TOBACCO COMPA-
NY'S STOCK.
SOMEBODY CLEARED BIG MONEY

Common Stock yesterday Scored Ar
other Decline ef l-s Per Cent,
Making the ~ Drop Since Friday
Clo,ipg 1G Per Cenl-.g he Preferred
Stock Went Of as Much as 10 7 &
Per Cent Since Friday--The COmpa
ny's Stat men3 as TO Div+Cends.
NEW YORK, Dec. 9--The general
opinion in Wall street to-day was that
it is exceedingly fortunate for the
holders of the American Tobacco
other industrial stocks that the sensa-
tional movement in the first named
came of half holiday and not of full
business day. AS it was the drop in
the common of 11H per cent on Sat
urday as compared with the final
price of the previous day caused the
throwing over of large amounts of
investment stock in addition to inn
mense lines of speculative held
stock
To-day the common scored an addi-
tional decline of as per cent, making
the net drop since Fridays closing 16
per cent. The preferred stock
slumped Sa4 points to-day, making the
net loss since Friday 10Hs per cent.
The management claims that it's
action in advertising the passage of
the dividend on the common stock was
based upon conservatism, and that the
payment of dividend out of borrowed
money would have rightly brought
censure upon the directors.
What the street says is that the i'm
portant decision Of the board was com
municated 10 the security holders in a
manner unprecedented in the memory
of the financial community 1t does
not impute speculative motives on the
part of the management, but insists
that brilliant speculative opportun-
ity was afforded on account of the eX-
tremely sudden news at ii moment
when there was no chance to attempt
to relieve the inevitable heavy loss.
The two Stock Exchange houses
which issued call to the stockholders
to take action to displace the manage
ment, or, at any rate, to acquire
voice in the Board, are Rolston q
Bass. and j. S. Bache & Co. In cir
cular which they issued they say:
80 the Stockholders of the American
Tobacco Company
The recent remarkable develop
ments i'm the affairs of our company,
coupled with the persistent decline in
the price of your securities, leads us to
regard the present as an opportune
moment for the assertion of the rights
of the security holders. We believe
that a majority of the stock is to-day
in the hands of the general public,
and not represented on the Board of
Directors as at present constituted.
We therefore ask the cooperation
of our fellow stocklw lders. with view
to secure greater publicity and detail
in the company's reports. and TO en-
force adequate representation on the
Board, Stockholders are requested 10
communicate with either Of a un-
dersigned. stating the amount of their
holdings and their addresses
The circular giving reasons for pass
ing the dividend on the common
stock says:
"On account of the increasing volume
of the comrany's business and the ac-
QUESTION during the year of new
plants and businesses, the company
requires more cash working capital
than heretofore
uEItiOft. III t4lt lbtSi iHclb Ol us
management, it is to the interest OF
the stockholders and proper for the
prudent prosecution of its growing
business that the sum necessary to
pay further dividends on its common
stock for this year be retained and APP
piled to working capital"
Since its incorporation in 1890 the
American Tobacco Company had main
tanned until the present time, ~ per
cent annual dividends on $17,900,000 of
common and per cent annual diVi-
dends on $11,935,000 of preferred
stock. The company has earned very
large profits almost uninterruptedly
and its latest balance sheet showed
surplus. 1t has not been claimed. how
ever, that this surplus was in cash. The
management has unquestionably
taken a step. that however pitiable to
the security holders will help immeas-
urably in the fight with the outside to-
bacco manufacturers.
The selling of the preferred stock
since Saturday morning has been due
partly to apprehension that the man
agement might, if necessary, for it's
successful maintenance of the contest
with the outside plug tobacco people,
reduce or even suspend dividends on
that stock also. The interest that has
started a combination movement of
the security holders against the pres
ent management are still reticent be-
yond asserting that strong protective
committee will be formed.
The highest price touched by the
preferred stock this year was 116, on
August 10th. and the common sold at
III on May 27th. The low points
reached to-day, 90 for preferred and 63
for the common, are the lowest of the
year.
The payments on the trusts common
stock the past five years has been:
Year ending
Dec. 81, 1890, 10 per cent. 81 100000
Dec. 81, 1891, 12 per cent. 2,f48,o00
Dec. 81, 1892, 12 per cent. 2,l68,000
Dec. 81, 1898, l2 per cent. 2,152, 500
Dee. 81, 1894 12 per cent. 2,148,000
Dec. 81, 1895, IL per cent. 800. 2,14S. 900
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