Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-03-04
HEARD ON CHANGE

in the common stock of the Washington
Railway and Electric Company. which
started OF in a rather sensational fashion
at the close OF the last week, seems to have
run its course, that stock still continues to
be the center OF interest to those dealing
in local securities. There is no explana-
ton of the recent movement except the
very general one that 1t was an effort on
the part OF large interests to gain control
of the property with a view of bringing;
about ultimately merging of local COR
porations engaged in the street railway
and lighting business.
There seems to be impression that to
carry out such a scheme Will evolve more
than merely getting from stockholders a
sufficient quantity of their holdings as the
belief is held by some that there are one
or more Independent interests that have
such plan in mind. In other words there
are those who look for a competition
among fnanciers to get control
AT the same time there are not lacking
those who look upon recent market devel
opments as merely the output of Inanipu-
lative or speculative efforts to bring about
an advance in the price of the stock and to
put an end TO what was believed to be
tendency toward the depression of the
stock. Altogether the uncertainty on this
subject serves to enhance the interest in
the stock.
recent squirt took place it is noticeable by
those who watch the market that while
the common under free buying was ad-
Vancing some three points both the pre-
ferred stock and the bonds were not af-
fected. In fact, the preferred stock, il any
thing, has been somewhat weaker than 1t
has been up to this time, and the bonds
have the same record.
There has been no intimations that the;
earning powers of the company have fallen
off in any way or that its revenues have
been decreased so that it will not be posi-
bic to continue the payment of the 5 per
cent dividend on the one or the per cent
interest on the other. In other words the
capacity of the company continues I'M
changed as far as known, and yet there is
shrlnkaSe In the market value of these
securities, while the only non-divdend-pay-
ing issue of the company bounds forward
and appreciates in value in the stock
market.
1t is expected that anomalies will be
found in the course of the stock market
and for that reason most people. and. in
fact, all the wise people, have given up
long ago the effort to furnish logical eX-
plantations. At the same time there are
two things which are evidently features of
the situation
One is that the common stock being one
half the price of the preferred on the
market. is cheaper to buy, and as it figures
to the extent of the issue on equal terms
with the more expensive stock in the con-
troll of the company it is natural to ex-
pect in any effort to buy q control that
the cheaper stock would be given the pref
erence.
1t is also true that in respect to both of
these stock issues that large blocks of them
We're taken on the local market during the
past summer, and the digestive process
has not yet been completed. In conse-
Quence of this state of affairs a good pro-
portion is loosely held, and forms what in
market parlance is spoken of floating
stock. The extent of this regulates in
some degree the strength or the weakness
of a stock on the market. 1t can be easily
raided when much of the holdings used
as collaterals for loans is liable to be
called on market recessons in prices. The
holders on margins are often under the
necessity of selling. 1t is thought the
process of shifting this stock from weaker
into stronger hands is going on at this
time, but is not yet complete, which ex-
plains some of the phases of the market
1t is expected that the so-called specu-
lative movement in the common stock
will continue for some time to come. and
that there will probably be up and down
movements.
The rather curious bidding up in the
tire list of the fire insurance stocks which
occurred during the week has attracted
considerable attention as is always the
case when anything affecting these COM
panies is done. AS far as known there
is no significance to be attached to this
sudden activity, except, perhaps, that it
was in the nature of an exploration to
find out how the land lies, ana whether
there was any loose stock about, and how
much.
Some blocks were located but whether
they have been acquired at the prices
named or not is not known. OF course
there can be only one explanation of such
acquisitions If such as have been made,
and that is some general consolidation of
the companies is contemplated Not that
the stocks are not valuable, for they yield
a good dividend on the market price, and
the surplus of the companies in most in
stances are greater than the capital stock,
so that the revenue from investments is a
guarantee that if the earnings from the
business are not sufficient then that will
not necessarily mean an entire suspension
of dividends.
Before. however. the stockholders can be
persuaded to part with their stock there
will have to be two rather difficult
questions settled, and while they not
particularly new ones, and have led in the
past to the wrecking of similar schemes of
consolidation, they seem to be just as i'm
portant as ever.
The opinion is also held that local COM
panies managed by local men are better
to do business with than those that have
not such connections. On the other hand
there is the comparison which is at once
presented of the immense resources of the
great companies, and so, as 1t may seem,
there is something to say on both sides
of this question which is likely to be I'M
settled for some time to come.