The sun. [volume] (New York [N.Y.]) 1833-1916, 1901-10-14
THE FINANCIAL SITUATION.


tnal adjustment Of those strained rels-
tons Of great railway interests which
will PASS into history under tho name Of
,ha Northern Pacific corner. In spite
az all the assurances OF peaco and amity
,ha, were made last May between the
c~ontending Great Northern and Union
Pacific parties. Il was clear that 80 long
a. the Northern Pacific stocks were kept
tied up In the manner that they were.
This reacc and concord vas a mis-
homer. The contestants had not re-
,ir.d from the battlefield. but were lying
on their arms and regarding each other
,tentively. Hence. q rumor that forms
Of a lasting settlement Of the contro-
yersy had been agreed upon could
only have one effect upon a market In
which Operators for tho decline had had
full way for a considerable period. The~e
,alrr Of stock which thcy did - W
retired in fright from their position. Their
retreat was accelerated by a remarkable
inward movement Of St. Paul common,
the basis 81 which was the report that tho
Union Pacific people had transferred TO
their Great Northern rivals the coveted
Northern Pacific preferred shares and had
revived in cturn q large block Of st. Paul
stock which gave 20 tho Union Pacific
the control Of that railway.
80 far. however. mons OF these rumors
has ma;eralized into fact; and the net ~
cult Of them seems to 10 only an emphasis
cf the extreme complication In which all
this Northern Pacific matter stands and the
yerv doubtful character Of lite issue. II Is
conceded that Mr.. Hi IL organizing q pro-
%rrie'arv compan which shall offer TO take
over the Grcet Northern shares Ia such a way
that Mr. Hill can manage tho system with
out locking up 40 much OF his capital rs 10
nov required. He has talked for years Of
forming such a company for purely
personal and private reasons and such
al organization might we'll serve as
the starting point Of a plan for absorb
Ing the Northern Pacific sharcs But
herr is the rub. The Union Pacific people
letter known perhaps a. tho Kuhn-I0sb
PARTY declare that the positive. transferred
and registered control OF the Northern
Pacific Railway IL vested In them, and that
they IN W nv no means agreed TO turni II over
o. Mr. Hill What they were after In pur-
chasing Northern Pacific stock was the con-
troll % Burlington. the latter road bring a line
competing with their own and about 10 pass
into hostile or scmi-ho-tile Northern Pacific
hands. and they aver that Il Is not vet clear
20 them how their control of Burlington
or the future operation ofthe property
in a manner friendly 20 them can still Ia
assured. n Mr.. Huls new company sbsorbs
their Northern Pacific purchases. II has
be.n said that IA. kuhn-lOeb control
o. tho Northern Notwithstanding that
Il j. "a control lies In the ownership Of a
majority Of the preferred stock and that
this stock can H., and l. likely 20 L.. retired
NJ tar on jar. | re,t. But the kuhn-Iocb
party maintain that only the Northern
Pacific COMPANY not any Board of Dire
tor. can take this action. and that as matters
stand, thcy-thc kuhn-LOeb peoph-run tho
company
The intrinsic weakness Of the Union
Pacific position il, however. the legal dim
Guilty that will confront them in al attempt
e. permanently finance ana secure their
Northern Pacific holdings. A. individuals.
they can carry the stock for al indef-
hit. period Ia bank loans. but as a
railroad company. they meet the pro-
visions Of the statutes Of the Northwestern
States forbidding one competing railroad
60 own or manage another, The plan
which the Union Pacific interests undoubt-
edly had In mind was the issue Of Union
Pacific convertible bonds against the
Northern Pacific preferred shares but the
discovory was made that such shares could
rot be deposited a. collateral security for
the proposal bond issue Here. therefore.
Is a situation which may be one Of harmony.
but which looks more like one 81 confusion,
with neither party 10 IL AZ ali sure Of the
outcome.
Two general considerations ought 10
be bone In mind. moreover. regarding
tho scheme OF q proprietary company TO
own the stocks Of railways In the North
west and operate the roads In a common
interest II Ia manifestly an attempt 20
evade the laws In nearly all OF the Stats
IN the region named. not 20 speak q
the Federal States, against the Joint man
sgement % competing railway properties.
A. Just referred TO. Clever lawyers have
evolved the plan. and Il In probably a legal
one, but 1; can hardly he expected that IL
will not be attacked and ave To fight its
way through the courts. Secondly, the IN
vesting public will certainly he much more
hesi,an, about extending support to such
a scheme than they would have becn last
spring details In support 81 this CON
clusion ought to be unnecessary Nor can
II Ia said that thu story tina the
Union Pacific interests have sold their
Northern Pacific shares and taken 81. Paul
common in exchange IL q probable one.
u would mean the entire abandonment %
the purpose which the Union Pacific inter
e.'s had originally In mind. namely. the
control Of Burlington. The Chicago. Nil
waukeo a -. Paul Railway Is In no scnse a
railway competing with the Union Pacific.
and could not he valuable TO It
a. = mar" adjunct. for the lines Of the two
systems touch each other nj but q few points.
Everybody who should he informed CON
"rning the supposed deal" declared last
week that the story wa totally without
foundation A more likely matter Is
That IA" upward movement In prices NJ the
weeks end was plain. old-fashioned
manipulation largely directed against
a heavily ovcr-sold market. hut with tho
main PURPOSE in view 81 establishing a
higher level on which stocks could he more
rrnfiahly disposed ~
Despite the Wall Street whirl. there were
lev r~al'v important developments IN the
hhan'ih world during the last seven DAYS.
'"nefAi business and lndusi rial conditions