The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1901-06-04
OCEANIC STOCK
PANIC EXPLAINED

SAN FRANCISCO, May 92.-John d.
Spreckels, president of the Oceanic
Steamship Company, has at last made
a statement in reference to that cor
poration and the panic which sent its
stock down in few days from $l02 to
$35 a share, and caused even a shrink
age in the market price of it's bonds.
The immediate cause of Mr. Spreck
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 POLITE, the
chairman of the committee appointed
to discover why the company's annual
statement, issued January 2l 1901, con
tanned no mention of it's heavy indebt-
ledness, why dividend of fifty cents a
share was declared on February list,
and an assessment of $40 share levied
nineteen days later.
Mr. POLITE said: This investigation
l consider was due the stockholders.
They insisted that the company's books
be examined. The report is open to
the stock holders, and in q general way
| | 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 inn
provement of the old steamers Mari
posa and Alameda, at total cost of
SO. O5O,OOO. This was all to be provided
for out of a bond issued of 2,4O5, 900.
This is really the puzzlng part in re-
gard to the entire business. The orig
Iinal contracts for the new steamers
lamounted to S2,25O,000, and for the re-
pairs to the old ones $235OOO. 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 $4,000
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 its 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 cause
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. 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. Il. 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 decline. but not a panic. .,t
THE only encouraging feature now
Is the fact that the company is earning
WELL Last month the earnings amount
ed to about s2S.OOO net interest on
bonds paid. l understand, too, that
the company will manage to steer clear
of the threatened second $40 assess
ment The stock is just about as low
as ever-that is to say, it carried the
$40 assessment. and Is today $3.50 bid"
John ID. SpreCkels was seen at his
Office In the steamship Company's
building, and was asked a number of
questions In regard to Mr.. POLITE
statement. In answer he said:
THE public does not realize that the
amount of bonded indebtedness cannot
exceed the amount of the capitals and
hence that, having reached the limit of
bonded indebtedness-$2, 500, 000-it was
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. l now have
bills amounting TO 1927 900. which l am
holding out because there must be an
adjustment of affairs before l pay
them. A representative of the Cramps
Is here now for that purpose. We are
entitled to recover from the Cramps
the interest on our bonds for the time
the vessels We're delayed in delivery be-
yond the contract dates.
"As a matter OF fact, we did not pay !
dividends In excess OF our earnings |
but some OF our earnings had not been |
paid, The United States Government
pay quarterly. and the money from
that source had been earned but not |
paid. The New Zealand Government |
hlsb bN'u us HnoHfs NHlAH ~ utNlih'h |
to pay to our agents. When I went 10 !
New Zealand l executed a power OF at"
torney. and the money was paid,
Neither my brother nor | sold a
share Of stock. and we hold about half |
the stock Of the company In tho origin
al certificates. A. II, spreekels bought
stock when the price was still high.
ard has not sold nor bought since the
drop The fact IL that the brokers and !