New-York tribune., 1906-12-14
CALLS STOCK ILLEGAL.
! HILL SHARES DECLINE.
NiRResOta attorney General to OPP
pose Great Northern Issue.

81 Paul. Dec. 13.-Attorney General Young or
Minnesota to-day made ruling that under the
state law. the proposed increase of S60.H0.00
in the capital stock of the Great Northern Rail
way. recently announced from New York. was
invalid, and that as soon as the issue was sctu-
ally begun the state would take action in the
matter.
In the statement promugatng his ruling the
Attorney General says:
This proposed issue would Increase the stock
OF the Great Northern Railway Company to
S-loNstttE. The bonds OF the system are now
about S213.000 COO which would make the cap
ItalIzatlon of the six thousand miles Of road
N4-2'V0Vn This exceeds $4,000 mile for
hoth main line and branches, where much of
the road especially the branch lines, cost not to
exceed 5000 mile
The dividends on this excess capitalization are
an uhWarranted tax on the patrons of the road.
and. instead of increasing its stock. which is
now ABOUT $4,000 a mile, the company ought
italizaton.
Railroad regulation and rate regulation would
ne nut farce If our law should be SO construed
as 10 permit a domestic railway company to
increase its capital stock at will to an unIim-
tied amount. especially as in this case. for the
dlIeged purpose of buying stock of other sub
stdldfy companies. composed of the same stock
holders where the stock to be purchased was
issued under other jurisdictions and sold at
arbitrary prices 10 he fixed by the buyer who
Is also the seller. If there is any vitality in
our law on the subject the proposed stock will
not be issued unless the necessity therefor is
consent
ofnoers of this state is secured as provided by
law.
The Attorney General holds that before a
railroad can increase its capital stock it must
serve notice of such intention on the State Rail-
way and Warehouse Commission for a review
and public hearing to determine the necessity
for the increase. This has not been done The
Attorney General holds, Furthermore. that the
increase OF S23,WOOoO. made last spring must
also be explained before either that issue or
the present proposed issue can become legal
The Great Northern operates under a Mime
sofa charter
Great Northern and Northern Pacific were the
leaders in severe break in the stock market yes
,sroay afternoon, in which practically the whole
4So except - Paul suffered Weakness had pre-
vailed during the whole session. its cause being
7uiAclehtIy explained by the continued stringency
OF money and the imperative necessity of the banks
reducing loans. in of the large deficit in re-
serve SHOWN last Saturday and the prospect OF
anouler Dad showing at the end of the current
week Great Northern. however was especially
under pressure. as it had been on Wednesday fol-
lowing the announcement of its proposed new stock
issue OF S60vv0,000 and Northern Pacific on the
news mat 1t too contemplated issue of stock,
De much larger than that OF the Great Northern.
The dispatches from St Paul that the Attorney
General of Minnesota had questioned the validity
of the Great Nortkern's financing gave added
impetus to the decline in the stock, and various
runors adverse TO the company circulated
among them that President James J. Hill was
dead
AT the Office or the company no direct advices
from st. Paul had been received up TO a late hour,
but full confidence was expressed that 1t would be
found that exact compliance with the laws OF
Minnesota had been had.
One OF the causes for the extreme weakness of
Great Northern and Northern Pacific it was re
ported among brokerage houses was that the
Union Pacific selling its holdings of the stocks
OF the two roads Great Northern sold down 70
10S24 closing at 2O9 net loss for the day of 142
points and an extreme decline from the high of
Wednesday, before the announcement of It's com
ing stock issue of 22i4 points Northern Pacific
closed at 2p7a only = point above the lowest of
the day and l1's points lower than on the pre-
cedng day. Its decline from the high Of Wednes-
day to the low of yesterday was IT'S points Great
Northern certificates also declined sharply,
losing ~ points on the day
ST. Paul. on the contrary. was strong throughout
the session rising 1924. and closing with a net
gain of % points, 1873 There that
competitive buying of St. Paul was in progress be-
tween the Hartman and HilI-Morgan interests, but
these reports were not received seriously. The St
Paul executive committee held meeting, at which.
It had been rumOred, announcement concerning
the issuance OF new stock might be authorized. but
il said after the meeting that only routine
business had been transacted
The announcement in The Tribune Of the size Of
the proposed stock issue OF the Northern Pacific
and OF the fact that the plan for the sale Of the
company's equity in the Burlington to the Great
Northern had been postponed, was confirmed yes
terday from an independent source. The circular,
II is learned is in the hands of the printer.
and will be issued Interest is 10 be paid at
per cent instead OF per cent. as in the case OF
the Great Northern the subscriptions 10 the
Se3 O0O new Northern Pacific stock the payments
for which are to be distributed a considerably
longer period than that given the Great Northern
stockholders for making payments.
Rates for time loans yesterday tie highest
for more than a year For ninety day loans
good mixed Stock Exchange collateral per cent
was bid without any transactions The nominal
rate on sixty day funds was per cent bid. Sig
asked. for four months per cent bid, and for five
10 six months. 6le per cent Call money brought
as high as IS per cent with Is the ruling rate
The local Sub-Treasury up TO the close or busi-
ness Yesterday had paid TO the depositary banks
sum in excess of s. 1000 under the order OF the
Secretary Of the Treasury, directing tne release OF
100000 in all of government money. The amount
allotted 10 the New York banks was stated by the
Secretary in mis- announcement a few days ago OF
his plans for relieving the money strtngency as
81 600 600 but some of the banks in the interior
have declined % avail themselves Of the privilege
of receiving part OF the special deposit and IT is
understood that these allOtments have been turned
over 10 the local institutions.