New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1902-04-13

The Financial World.


ments attending the transfer OF control of the
Louisville & Nashville Company. That control
has actually passed is conceded The open ques-
ton is to whom it has gone One statement
made very positively yesterday was that II had
gone to Rock Island interests. On the other
hand. there was a rumor that the Illinois Cen
trail people would turn up in control. Geograph-
ically the L. & n. has only the remotest rela-
ton to the Rock Island. The latter is an east
and west road from Chicago to Colorado with
extensions southwest 10 the Mexican border
The Louisville is distinctly north and south
road. it's main line being from Cincinnati to
New Orleans. IT, therefore, the Rock Island
people have bought control, agreed to buy il
is difficult TO what relation the purchase
would have to that road it would in fact ap-
pear to be an independent speculation.
On the other hand. the Illinois Central is a
north and south road. it's main line running
from Chica go to New Orleans; and it's geograph-
ical relations TO the L. g. N. are necessarily
close. If control of L. & " should be turned
over to Illinois Central interests there would
be railroad logic in it. One other interest re-
mains-the Southern Railroad otherwise Mr.
Morgan. Here again there would be railroad
logic in the requirement of control There is
reason for stating that control of L. & NJ has
already actually been offered to the Morgan
interests If control has since been transferred
elsewhere. it must have been because the offer
was declined.
1t has long been seen that the Louisville q
Nashville system had been left by the course Of
railroad development in comparatively iso-
lated position. Its Board of Directors consisted
in the main of nobodies. Its President Mr. Mel
Vile Smith is known to be good railroad man:
but the financial backing of the company was
shadowy. The Rothschilds were popularity sup
7
name went far: but it had no terrors for the
bold spirits who have done much lately 10
stir up the dry bones of Wall Street. They. ap-
parently knew exactly how much and how little
the Rothschids held of L. & N. stock; they knew
how insignificant the strength Of the house
which stood sponsor for the road here; and on
/ this knowledge they made their plans
he inciden; of catching officers of the COM
| pany technically. but withaI very practically
short of their own stock was more less acct
dental Plans to secure control had been well
under way before the Chairman Of the Board
sold-as alleged-the $4,000 shares Of treasury
stock and then found himself in the awkward
position of being unable to make good delivery,
OF the same. In fact it was not till after 1t be-
| came necessary to borrow this stock for deliv-
| cry that the disturbing discovery made by
! the borrowers that all the floating Louisville
| pie who had done the absorbing the same
people who had also bought all the treasury
| stock; and that consequently. the borrowing
| must be done from them. they being the only
| people who had stock in large amounts to lend.
This was a situation which promised another
| Northern Pacific corner: and when the thing got
| rumored around the Street Thursday and
| Friday ii caused a very uneasy feeling, which
| seriously affected the market II was in meas
ure aIIayed by serni-officiaI assurances that no
| corner would be forced 1t seems to be under
| stccd that it could be forced. If Mr.. Gates and
his associates so inclined: and it cannot be said
| that the Street feels wholly assured yet
The statement is made that the borrowers CT
some 35 900 shares of stock must deliver to-
I rorrow-Monday. This arrangement, it is as-
serted was made Thursday night; otherwise
| the stock would have had to be delivered on
Friday The authorities of the Stock Exchange
had been irnportuned to suspend the rule re.
curing 80 days notice to be given of the Issue
| Of new stock before it can be a good delivery.
| OF course such request was refused. II 1t had
| been suspended it would nave been a grave
scandal That rule was made TO prevent Just
| such snap sales of new stock which appears
to have been made in this case. II. with that
| rule before them. officers of a company choose
| to secretly unload on the market lot of unde-
4
| is no business of the Stock Exchange to relieve
| them. They must arrange with the buyers.
| The question has been asked-who is going to
nay ttie losses in this transaction? Is it the
| railroad company or the individual directors
| or director who made the sales? 1t is assert
| ed that the stock was sold between par and lOo-
] The market price is now about 40. Those VINO
| are borrowing the stock have been called upon
| to return it. They have none When they sold
| short depending upon getting the stock to de-
| liver in so days. they had to borrow stock 70
| make immediate delivery 10 the buyers NOW
| they are called upon 10 return the borrowed
| stock at once. To DO this they must buy There
| is likely to be a pretty wide margin between
| the price at which the stock which cannot De
| delivered was sold. and the price at which the
stock which can be delivered will have to De
| bought Who stands the loss? Very likely
private settlement will be made, OF may aIreaay
have been made: but all the same there Is DIG
| loss for somebody to pay.
One fact this affair has brought into prorni-
rence-that the Louisville & Nashville ROAD
was controlled by non-stockholding board OF
| directors. under the prestige of a name Odr
| rorgh-and- tumble from the west are not
awed by names. and would just soon call the
Rothschilds TO show their hands as the nex1
| man. Meantime the Street is having great fun
| over the smart fnancier who got caught in MS
\ own trap
Outside the Louisville episode. the Street mas
| discussed various things. and the movement Oh
| the market has indicated uncertainty of OPINION
| though generally tending toward improvement
! The Government crop report was unfavoraoie III
respect TO the condition OF the winter wheal'
| and favorable in the increased acreage. Whieh
| promises a large gross yield The reports OF ran
road earnings continue to show increases. nor y
| there any diminution of the business IN sisH~
| Some buIish influence was exerted by the pea''
| conference news from South Africa. yet the Lon-