The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1906-12-23
"MELON|T|S" WAS
MARKET COMPLAINT
Others Seemed TO Think it Was
"LemonitiS"
THE KINDS OF MELONS CUT
Violent Break in ST. Paul Brought on
Liquidation in Other Hleh-Priced
Stocks, and Bad Slump
Was Result.
THE KINDS OF MELONS CUT
BY w. G, NICHOLAS,

NEW l ofk, December 2l.-lSpeeial 1-Nan
street this week was afflicted with a
new disease. Some financial physicians
diagnosed it as ''melonitis," others called
1t 'lemonitis." The symptoms of the Us
ease appeared some days ago when James
j. Hill began making Christmas presents
to his Great Northern stockholders. The
financial physicians misjudged the symp-
toms that then appeared and described
the disease as a mild form of "melonitis"
But this week, upon the announcement
of the issue of $1OO.00O,OOo of new st.
Paul stock, the disease broke out in vio-
lent form, and the physicians then dag
nosed it as "lemonitis.
The lay reader, perhaps, needs some
explanation of these scientific terms. A
"melon" in the nomenclature of Wall
street, is large gift made by COM
pany to its stockholders. Melons take
various forms. When a company takes
a large block of stock out of its treas
ury and makes a gift of 1t to It's stock
holders the company Is said to cut up a
melon" Or, again, company issues a
large block of new stock; allowing the
stockholders right to Duy it under the
thereby accrue to the stockholders con-
sttute another form of melon" Rail
road or industrial companies sometimes
accumulate a large amount of cash in
the treasury and distribute this cash
among the stockholders in the form of an
extra dividend. This is the sort of incl
on that the Iackawanna railroad has
cut up for the past two years near
Christmas time in the form of a 10 per
cent extra dividend. Everybody knows.
of course, what lemon" is. A lemon
is q gift which, on presentation. seems
to have value, put that afterwards turns
out to be of most unsatisfactory char
acter
When James J. Hill turned the Great
Northern ore lands over to his stock
holders the other day by dividing up
among them 15O0pJ.OO0 shares of ore land
certificates. the gift was referred to as
a "melon." But when these certificates
declined in the market from around 800
to below SO the cry went up that Mr..
Hill had handed out a lemon" But in
this case the stockholders were looking
a gift horse in the mouth. Whatever
may be the value of the ore land GER
tihcates they are all 'velvet" for Great
Northern stockholders. Mr.. Hill of his
own free will turned over to his stock
holders probably 7O0,00o,0oo tons of iron
ore that he was under no moral obligation
to transfer to them. The lemon" cry
was not raised by the rea. stockholders
in the Great Northern, but by specula-
tors who had recently paid high prices
for Great Northern stock In anticipation
of the cutting up of a melon" Mr..
Hill followed the ore land "melon" with
stock "meon giving his stockholders the
right to subscribe to $6O.O00,000 of new
stock at less than half the market price
The value of these rights have also de-
clined, causing further cries of lemon"
Mr.. Hill then proceeded to cut up an
other 'melon" for the Northern Pacific
stockholders, giving them the right to
subscribe to s930O0,000 of new stock at
par or about one-half the market price.
AS soon as all the good news was out
on the Hill stocks spectators fastened
to take their profits In the time honored
fashion. The result was a slump in the
Hill stocks.
But the markets violent attack of lem
onitis' was due this week to the cutting
up of the st. Paul lemon" st. Paul
stock in the course of n few days was
advanced from about $3.50 n share to close
on to $500 The buying of the stock
was in anticipation of valuable rights. The
directors gave stockholders the rights to
subscribe to s1OooOo,oOO of new stock at