The Washington herald., 1906-11-28
FIGURES IMPOSING ENOUGH
Harriman's Hand Is Seen in Data
Which Makes Interesting Reading.
New York Central in Rise, Due to
the Substitution of Electricity ia
the Metropolitan District.

that the showing was favorable, and
thereafter expressions to the contrary be-
came subdued IN tone, and in many cases
brokers who had at first expressed dissat-
isfaction said later in the day that on
looking more deeply into the report they
found some very important points which
they had previously overlooked, and that
in the light Of deeper study they were
forced TO express unqualified satisfaction.
Perhaps as good way as any 10 figure
the equities in Union Pacific is by taking
at about market value the principal stocks
owned and deducing the total from the
capitalization Of the company. Figuring,
for instance. the Sl5, ,436, 900 Great Northern
at valuation OF 3O0-the market price is
about 3I7-this item is worth s46, ,2C9, ,2CO. At
80 for Northern Pacific. the market price
being about 221, the Sl3. .S52, 500 Of this stock
owned is worth S26, $500 Taking the
$s0.0JJ.00j Southern Pacific comman at 30,
ana the $ls00OOJ0 preferred at us, these
two are worth S02, ,2i0, 900. while Sl0.343. GO
Alton preferred at SO, and 1880 Northern
Securities at 20, are worth. respectively.
$S,21i, $50, and Sl,44g,S 500. The grand total
value Of these securities-the valuation in
every case being substantially below the
market price-is. therefore, SlS497g.O 900.
Taking the valuation of the principal Sc
cur!ues at S1S4 ,97g. 900, as shown above, and
adding thereto the 81. .25S, $50 cash. and the
So. 10000 demand loans there IS total
Of $240,947.SS2. free assets, the only part
pledged being the Southern Pacific, which
is used as collateral for the Oregon Short
] 5rfH 1 Of fab ggn
are in the hands Of the public Deducting
the par value Of these bonds from the
total value Of securities owned. there is
a balance Of free assets worth at least
Sls5.9iLSS2, or approximately the equiya-
lent Of I00 per cent on Union Pacific stock
II, as IS believed viii be done. a 100 per
cent stock dividend should be distributed
To represent these assets, the new stock
would be worth par. and the earning ca
pacity Of the Union Pacific from its trans
pOTtatl0n business alone. which for the
year equaled l-2 per cent in common
stock, would make the latter look reason
ably cheap around s. when IL sold ''ex"
one Of the most notable features of the
Union Pacific report is the large reduc-
ton In the holdings Of the stocks Of the
Hill roads The company shows smaller
holdings Of Great Northern and a much
interest In Northern Pacific than
at the end Of the preceding year, while
the Sl20G0.0t0 Northern Securities has dis
appeared altogether. partly on account of
direct sale, but principally through con
version into Northern Pacific and Great
Northern, and subsequent sale Of these.
Now the question is asked: IT these
stocks are so good, why did Union Pacific
sell them?" The only answer that can be
elected from the report is that appar-
entity the company thought cash was a
better kind Of asset.
Demand loans, S3f,710GC0.
This Is in the Union Pacific report. and
nothing more upon the subject. Not q
word 10 say TO whom the money has been
loaned, OF by whose authority although
the power over so much call money is a
tremendous lever in the stock market. IL
has always been believed since the Union
Pacific increased its dividends from 6 to
ID per cent and Southern Pacific was
placed on Il per cent basis last summer.
that the Hartman interests were carry
Ing the maximum lines Of both stocks.
and the Inquiry is now pertinent whether
those stocks We're largely carried on
money borrowed from the Union Pacific
treasury. with assurance that repayment
would not be demanded for convenient
periods. And even If the money has been
loaned out 10 brokers without any favor
itism whatever toward Hartman inter
ests. it viii be seen that the power 10 call
loans 10 such an amount would place in
the hands Of the party entrusted with dis
cretion in the matter a tremendous power
over the market during periods OF strin-
gency such as have REQUIRED frequently
In the past few years.
Stripped Of the other incomes. Union
Pacific earned from transportation the
equivalent Of about per cent on its com
mon stock. II the other assets are taken
as contributing 800 a share in the present
market price the balance, 81 or there
abouts, represents an earning power from
the railroad lines lower than that of
southern Pacific Judged by this stand
ard, therefore Union Pacific seems to he
selling for nearly all It is worth. although
thls does not necessarily mean that il may
not be put considerably higher.
Analysis Of the Union Pacific report
which, in figuring the value of assets
places stocks Of little intrinsic worth at
par. are not only useless-they are mis-
chievous
When a railroad company, in making
It's annual report, puts in the dividend on
the stock OF a subsidiary that was not
declared until more than a month after
the end Of its fiscal year. OF paid until
after the lapse Of three months. il is
hardly worth the trouble to search for
concealed earning power. The purpose
to make the showing as good as possible
is too clearly evident
There was no news, though there were
lots of tips in connection with the rise In
New York Central But neither news nor
tips were really needed, for there does
not seem to have been any substantial
grounds for the decline IN the price of
the stock. and sooner or later part. at
least, Of the loss was sure TO be recov-
cred. If there ever was any doubt as to
the wisdom of installing electric power
on the main line leading into the Grand
Central Depot, this should be removed
by the numerous projects for the substi-
tuition OF electricity for steam on sections
Of other important railroad systems As
has before been pointed out, the greater
facility with which trains can be ham
died by electric traction will be equiva-
lent to the addition Of new parallel tracks
which could not be supplied except by an
enormous outlay.
Among specialtles, Virginia-Carolina
Chemical was notable for its strength.
and the only reason given therefore was
that the business was good. A better
reason. however, could hardy be desired
II only there was enough of it