The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1901-06-03
The PANIC
IN OCEANIC
Was Due toVarious
Bills That We're
Withheld.

SAN FRANCISCO, May 22-John d.
Steamship Company, has at last made
3 statement in reference to that cor
poration and the panic which sent its
stock down in few days from $102 TO
S35 share, and caused even a shrink
age in the market price of its bonds.
The immediate cause of Mr.. sSpreck-
els statement was the report, just filed,
of an expert in the service of the Stock
and Bond Exchange on the standing of
the company The moving spirit in this
investigation was Edward Pollitz, the
chairman of the committee appointed
to discover why the company's annual
statement issued January q, 1901, con-
tanned no mention of its heavy indebt-
edness, why dividend of fifty cents a
share was declared on February 1st,
and an assessment of SO share levied
nineteen days later.
Mr. POLITE said: This investigation
1 consider was due the stockholders.
They insisted that the eompany's books
the stockholders, and in general way
I can give its substance.
The investigation found that the
spreckels Brothers Company had con-
tracted for three new steamers, the So
noma, Sierra and Ventura, and the i'm
provement of the old steamers Mari
posa and Alameda, at a total cost OF
SO, 050, 000 This was all to be provided
for out of a bond issued of 81, 405, 900.
This is really the puzzling part in re-
gard to the entire business. The orig
inal contracts for the new steamers
amounted to ESQ. 600, and for the re-
pairs to the old ones S235. 600. To this
was added 100000 for bringing the
new vessels round the Horn. and $780,
900 interest on bonds which had to be
paid before the vessels arrived
Thus the outlay was about s375,0O0
more than the sum provided for by the
issue of bonds Then, in addition, the
vessels cost about $225,000 more than it
was thought they would. because the
furnishings had to be provided.
The public was kept in ignorance of
these facts. The annual statement
showed that the company was not in
debt; in fact that it's only liabilities
were for the bond issue. The debts
were recorded in the books; but not
in the statement. This shook public
confidence very much, and the canse
of the panic was the $40 assessment
after the 50-cent dividend, which in
turn was declared after the annual
meeting.
Now the explanation is by no means
easy Apparently, there was no mo-
tive for misrepresentation or conceal
ment.f for the Spreckels brothers did
not trade in the stock. They did not
sell share. and. seeming, had not the
slightest expectation of the new order,
for A. B. Spreckels added to his hold
ings Just before the drop, and has not
sold a share since.
Had all the facts which have since
become public been made known in the
annual statement, there would have
been a decline, but not panic.
The only encouraging feature now
is the fact that the company is earning
well. Last month the earnings amount
ed to about $4,000 net, interest on
bonds paid I understand, too, that
the company will manage to steer clear
of the threatened second SO assess
ment The stock is just about as low
as ever-that is TO say. it carried the
$40 assessment, and is today s45.50 bid
John d. Spreckels was seen at his
office in the steamship company S
building. and was asked number of
questions in regard to Mr.. Pollitz'
statement In answer he said:
THE public does not realize that the
. amount of bonded Indebtedness cannot
: exceed the amount of the capital, and
hence that, having reached the limit of
bonded indebtedness-s2, 500 000-it was
l necessary to secure the remaining
: funds in some other way. Money was
needed for extra machine parts, for
furnishing, linen, tableware. crockery,
, etc When We prepared the annual
statement there was no bills from
. Cramp for these extras. / now have
bills amounting to 1927 900. which 1 am
! holding out because there must be an
, adjustment of affairs before / pay
them A representative of the Cramps
is here now for that purpose We are
D entitled to recover from the Cramps
1.-THE interest on our bonds for the time
e the vessels were delayed in delivery be-
: yond the contract dates.
i ..As a matter of fact, we did not pay
e dividends in excess of our earnings;
but some of our earnings had not been
paid The United States Government
Ipay quarterly, and the money from
THAT source had been earned but not
lpaid. The New Zealand Government
= also owed us money which it declined
e to pay to our agents. When I went tc
e New Zealand I executed a power of at
: ,torney, and the money was paid.
= Neither my brother nor 1 sold {
( share of stock, and we hold about hall
h the stock of the company in the origin
al certificates. A. B. Spreckels bough
stock when the price was still high
and has not sold nor bought since tbs
drop. The fact is that the brokers ant
dealers put the stock up to the price o.
8 S102. which was above its worth. /
?, cost the shareholders s72 before the 81
: assessment was levied, and has cost So
to date. Large dividends have beef