New-York tribune., 1903-01-18
financial.
The Financial World.

httle activity on Monday. apparently from the
momentum Of the previous rather lively week.
the trading fell away day by day: and even the
appearance Of bank statement yesterday.
showing great changes In the position Of tire
banks. failed to give much stimulus tn husfnass
Altogether it was a wearisome week
IL has been suggested that the Erie problem
has something to do with this 1t is evident
that Erie has become centre Of attention with
the big interests. If not exactly a bone of con
tention; and for the moment it may be that the
leaders have drawn off. and are watching deveI-
opments. About two weeks ago, it became plain
that competitive buying had started in the Erie
issues: then it appeared to suddenly stop A
sort os serni-offcial announcement was made
that the Morgan interests had already secured
enough of the stock to make control Of the
property secure
The voting issues Of the company include
bonds well stock; and altogether there
is quite large voting constituency. There are
112 millions common. nearly 4S millions
first preferred 16 millions second preferred: and
voting powers lodged with certain Of the
tond issues. A majority Of the stock would be
in excess of $4,000 shares A voting trust
holds possession present, Mr.. Morgan being
the head of it; but If adverse interest held
majority of the stock it would be altogether too
powerful body for voting trust agreement
to stand against
The other problem in Erie is how to raise
more money. More money "a needed for i'm
rrovements. and the bonds still available FOR
that purpose are 80 restricted in issue that they
can be used only In driblets annually while a
large sum is needed in bulk to start extensive
improvements throughout the system There
are indications that Mr Perkins is figuring out
financial scheme TO meet the difficulty.
The first and second preferred stocks were
1x-aoLr hafu 6v ART
of the investor; while the specuIator might
watch the game and take his chances what
ever that game might turn up favorable to the
common stock There has been very good buy
ing Of the first and second preferred the past
week: the latter having had rise OF three
four points.
While it IS conceded in high quarters that
there really was competitive buying Of Erie, it
seems to be much of a mystery who the people
were who started the buying, and were
promptly opposed by the Morgan buying Con
lecture takes in many names; but it mainly
concentrates on the Gould people, though they
deny it. The wide reaching schemes OF railroad
extension which have their nucleus IN the
Missouri Pacific, seem to have convinced people
of Importance that the ultimate aim is TO bring
that system by. hook or crook. TO tidewater,
and at some other point than Baltimore
OF course the great eastern interests do not
want the existing situation disturbed. The tes-
tirony given before the Kentucky Commission
by Mr.. Morgan and others, shows how seriously
is viewed the disturbance of an existing rail-
road situation by the advent Of new con1ers-
When Mr. Gates and his associates (nnost OF
them his fellow directors in the old Steel Wire
Company bought control OF the Louisville and
Nashville the interests controlling all other
Southern lines were alarmed as TO Wnat Ine
outcome might be. Mr. Gates Is known 70 oe
daring, and also a little reckless 1t was better
to buy the road from him than TO run the
chance of having the railroad situation IN the
South thrown into confusion
The Gates pool were paid good round price
for their stock: and incidentally, the testimony
revealed the fact that the important railroad
system known as the Atlantic Coast Line, was
owned wholly by three fanilies-only one OF
which is known TO the public. 1t was also shown
that these three families were able to raise
millions in cash on short notice-a Significant IN
dication of the wealth which lies unknown. so TO
speak in this country.
One effect of the inquiry was to surnuiale
buving of Louisville and Nashville and Southern
Railroad stock; on the argument that the sac
rifces made to secure stability in the southern
railroad situation, were all excellent guarantee
for the future of the roads What the Kentucky
Commission started out to prove was that the
nAvv combination Of Southern interests was made
to create monopoly and put up rates; wnat u
has proved is that the people who have the
heaviest investments in these properties, ana are
charged with their management. desire above all
things stability security from violent disturb
arce.
Why the Gates pool were able to buy control OF
Louisville and Nashville was because the sltua-
ton there was abnormal The people controlling
the road were without ownership in IT, They
had no stock-the whole Board Of Directors
could not scare up 10000 shares among them
selves to protect Mr.. Belnont's short sales This
situation, which was known to the Gates people,
gave them their opportunity.
In connection with the buying OF properties.
the weeks bank statement is interesting, be-
cause of it's great increase in loans and de-
posits. which are known to be an effect OF the
purchase of Reading by the Pennsylvania and
Vanderbilt interests. The Vanderbilt side was
represented by the Lake Shore. which Company
has given its twelve months note for the shares
turned over to it The financing of this trans
action largely explains the swelling of the loan
account by over IA millions. and the deposit ae-
count by nearly twice as much. An tntimatlon
that the Pennsylvania Company would soon oe
in the market with new stock issue TO con-
siderable amount possibly has connection WIN
the same matter. The Pennsylvania dld no'
buy Reading as it was debarred from so dong
by legal technicanties; but the B. & u uu'
and the Pennsylvania, controlling the b q O''
can supply it with the money necessary for the
purchase In other words the Pennsylvania
finances the transaction through the B. & ..
II there is 10 be- as intiInated. new issue OF
Pennsylvania stock. il will of course oe oueFeU
to stockholders at some attractive price tne
rights to which will be valuable as measured