The Washington herald., 1906-12-22
WALL STREET NOTES
Money for Carrying Stocks
is Difficult to Get.
BLAME PLACED ON BROKERS
Especial Facilities such az Bor-
rowerS from Union Pacific. Have
Only way to Avoid High Rates-St.
Paul Insiders Boosted Their stock
at OppOrtune Moment.

at OppOrtune Moment.
New York. Dec. 2I-In spite Of the
/ easier tendency Of call money in the past
day or two the interest rate charged by
brokers on customers accounts for the
current month viii be about the highest
on record. The average customer who
/ finds that he is charged Is per cent may
/ be inclined to grumble but those who
/ fully understand the circumstances will
think themselves lucky that it is not
more. q
/ Undoubtedly some houses will be Obliged
TO charge a higher rate than this, for even
/ firms with the best facilities, barring
those of special nature. cannot get
much below it. Taking b per cent as
! fair average, the carrying charge for the
month. on account Of Il stock selling for 80
/ viii be sos a share so THAI. including
/ the commission. the buyer who carries
through the month stock costing that
I price viii be confronted with loss Of ~
/ points. even if At the end OF the month
/ the price is exactly what it was at the be
ginning
/ The brokers are not 70 blame. and moth
/ ing that may occur in the money market
/ in the next week can change the situation
/ TO such an extent that the average rate
/ for the whole month viii not be far above
/ the normal There will surely be cases
where the rate viii be near 20 per cent.
unless the unexpected happens in the
next week
! Speaking Of brokers who have special
/ facilities" for borrowing, that item. de
mand loans S34O000c0. in the Union Pa
/ cifc annual report. nearly comes 70 mind
/ Ii is said that this money or a great
/ part of it. has been placed at the disposal
/ OF certain brokers at per cent. regard
/ less of the rates for call funds on the
/ floor of the stock exchange and at the
I banks. II the rumor is correct, then. OF
/ course, the favored brokers will be able
/ to make "a rate on customers accounts 50
/ low rs TO make the charges Of others look
| like extOrti0n II is certainly in the
power of some one connected with Union
/ Pacific 10 give favored brokers unfair ad-
vantage of others.
The circular issued by the St Paul
management regarding the new issue Of
stock contains this provision: THE direc-
tors, in their discretion, may provide for
assuming certificates of stocks to sub
scri5eTs. their legal representatives OF
assigns. for such amounts as shall have
been paid upon their respective subscrip-
tions. or for such portions thereof as the
/ directors may determine There is "a good
zeal OF interest in the question Of where
the buyer of the rights would stand if.
after paying the first installment of %
. per cent on his allotment. the directors.
in their discretion" decided to give him
stock 70 the par value Of his subscription
and thus completed the transaction.
1t is evident that the cost OF the rights
would in that case be out Of all proper
ton TO the amount of stock obtained b.
exercising them. and that although. in
/ smaller degree. the same would hold true
after subsequent payments 20 next year
The fact that the directors have re-
+ Ceived this power is one Of the reasons
why the rights are not popular. It may
be that the provision In question conten-
plates the giving Of new warrants, en-
utling the holder OF the rights to con-
tinue his subscriptions and to receive
ultimately the balance Of stock repaid in
his allotment. but on this important mat
ter the circular is nugatory
! St Paul insiders. "at their discretion"
boosted the stock 20 record prices just
before the announcement OF the rights.
and there is a supp0sition that they also
thought il discreet TO drive in an existing
short interest and replace il By one Of
their own. The peculiar provision in the
official circular referred to above might
be discTeetly awaited of at any time in
the next couple of years to supply new
stocks TO relieve any awkward situation
produced by a short interest. if less dis
tasteful To the directors than the one
which was driven in a week ago This
looks like too much discretion.
Z. II. Hartman is said TO have devised
the scheme adopted by the directors of
St Paul for the sale of the new stocks.
and brokers are wondering what the OBJ
ject was in making It so unlike anything
else that the street has known. Mr. Har-
riman is not in the ST Paul board. but il
4 is understood that he has been operating
in the stock within the last year. Has
iloop-hole been purposely left to permit
the retreat at any time Of a favored short
interest?
On a former occasion St. Paul issued
stock to the amounts Of installment. paid
on a new issue, giving new warrants for
further subscription. The same may be
done this time. According TO the prece-
Ident then established all subscribers would
be treated alike. although as far as the
circular is concerned. the directors are
left with fun discretion to do as they
please in the matter.
The customers Of brokerage houses were
reminded of old times when. by an error.
a quotation Of 1875 for Brooklyn Rapid
Transit was printed on the stock ex-
change ticker The stock sold around that
price on the day Of Gov Flowers death,
but on the day when the news became
known it broke 20 points. The high point
Of the Flower boom was 49,, or about 50
points higher than the present level.
Then, as now, there was talk of divl-
dend and the frequent recurrence of these
stories during the past seven or eight
years goes to show that hope springs
eternal" in Wall street speculative circles.
The decision on the Coney Island fare
question will probably be handed down in
January. ana win have an important bear
! ing on the dividend prospects.
As Amalgamated Copper officials do
not expect to show any increase in the
! production Of the metal, it would be in
/ to~oe+frer lr~rv,- xr-f,o