The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1904-09-18
THE TOBACCO MERGER.
What the New York Evening
Post SAYS Of the Situation.
,ecif,l to MIC Times-DIspatch.)

Especial to The Times-Dlspatch.)
NEW YORK, Sept. 1.-THE plan for
rearranging the capital OF tho consoli-
dated Tobacco Company, announced last
Saturday. started out with the assertion
that the merger will DO remarkable in
that the stocks and bonds OF the new
company will represent Sl1O. 900 0Ds less
than tho stock and bonds OF the three
companies merged.
* This is one OF those statements which
though technicallytrue is In fact entirely
|. M sleading. Tho outstanding securities or
tho Burlington-Nor Pacific Great
Northern com bination technically include
both the $215, 0O0, 600 Burlington joint As"
and the O7,60o,000 Burl gton# took held
In trust as security for that mortgage.
direct lien on the Northern Pacific and
Great Northern properties, II they We're
to rellnuuish their claim on the $lO7. geo, 900
Burlington stock, and II TINT stock We're
then to ( be cancelled, ! t would not be
true that outstanding liabilities OF the
duced. The Burlington stock is not In
the public hands; neither rs the hundred
odd million stock Of tho American and
Continental Tobacco Companies. which Is
now pledged as security for the Slb7 600. O0O
four per cent bonds OF tho company
which controls them both, Cnnccllatlon OF
that underlying stock would, SO far as
regards the tobacco trusts liability 70
4 the outside public, leave matters exactly
where they were before. i&
Reason for the new, move-Why, then, Is
< tho Consolidated Tobacco found 1t neces-
snry to resort to such an eXpedlentY me
official circular replies that tho action
would work to the increased security
and sinpl ticntlon OF the whole Invest
ment and business as we'll as economy or
management" In measure this may
DO true. but the investment community
has directed its attention. not to the mere
fact that three concerns which are Wis
tually ono are to be officially described as
only one but to the fact that the 1900, OOO
collateral trust bonds Of tho holding COM
pany. wish no security but the stocks OF
tho underlying properties are to be en-
changed half for new four per cent.
bond, with q direct mortgage lien on the
a new six per cent, Cumulative preferred
stock. Insofar az this exchange means
substitution OF stocks for bonds. 1t Is
communicable. though resort to the cumu.
|at!ve dividend proylso, which has worked
trouble In SO many other companions
ID distinctly bad finance. It ~ however,
pretty we'll understood that tho pro ec-
tors of this bond conversion are the prin-
cipul owners Of tho bbnds whose CONVEX
sion is proposed. Why should they wish
to exchange for something else bonds
which are practically secured already by
title 10 lHcs pfopoiN9o " ~ 1900
trust? ,,,,,,
so-called INSIDERS" who hold these coll
lateral four per cents. and who have
held them since their creation In 1901;
arc anxious to got them Into lie general
mbllc;s hands. and have failed to do so,
livery Intelligent watcher Of Stock Ix-
change affairs knoAs that the enormous me, Y
dailv transactions III tobacco as are sham
tlnta,nnee, no put the mattor simply, M
Side" parties have one OF their brokers
brokers'. on tho chance that some inno-
cent 'Outsider" may be induced TO buy
a few Thousand In good faith; The net.
however. has been set too plainly In the
sight Of tho bird to be olAerwlse than
vain, and tobacco 4's'' still remain ''ull.
digested.'' This is not because " liberal
margin DOES not exist III the conpany's
annual earnings, beyond the ~, 800, 90
needed TOR interest on the bonds. On