The Washington herald., 1906-12-14
STOCKS IN A DECLINE
Two Possible Reasons for the
Fall in Prices.
THE $6O,OOO,OOO ISSUE IS ONE
Cold Reception to the Great North
ern Announcement - Advance in
Money Rates Also n Factor in the
Days TradinE-Bank of England
Makes "A Strong Showing.

New York, Dec. 13-There was. per
haps, fair room for question yesterday
whether the decline in the price of stocks
was due more to the advance in money
rates or TO the cold reception given by
the stock market TO the announcement OF
the Great Northern Railway Company
S6O000.00G stock issue. There could be nc
such divergence of opinion regarding the
cause for the fall in values to-day. Al
though money rates were even higher
than they We're yesterday. the cost of pro-
curing funds for use on call or on time
was only to a minor extent a topic OF
market discussion.
The matter that figured almost exclu-
sively in the view Of spectators was the
heavy selling Of the Northern Pacific and
Great Northern preferred shares, which
went on without cessation from the open
ing Of business. and whose sympathetic
effect was visible in a weakness Of the gen
eTal market that appeared nearly to the
point of decentralization.
The pressure of liquidation in the North
ern Pacific and Great Northern preferred
stocks seemed in uninterrupted force at
the end of the stock exchange session,
closing prices for these stocks being only
higher by small fractions than the lowest
of the day. and the stocks sustained net
losses of 1l5s and 141z points. respectively.
Supposedly all this selling had to do with
the plans of the two companies for an is
sue Of stock. The Northern Pacific plans
have not yet been made public property,
but 1t is believed that it will be soon
forthcoming, perhaps within the next
twenty-fOur hours. and that it will pro-
vide for the creation Of a large amount
of new stock for which payments are to
be spread over a relatively long period of
time. as in the case of the Great North
ern's scheme. It is understood however,
that the Northern Pacific viii allow in
terest on its payments at the rate OF Z per
cent whereas the Great Northern only al
lows Der cent.
Speculation Is Discouraged.
There were, Of course, all sorts Of stories
current purporting to account for the pre-
else origin Of the selling that went on
One theory was that the announcement Of
so many large stock issues recently, com
ing at time when the investment market
is confessedly torpid, had served 10 dis
courage general speculative enthusiasm on
the side OF rising prices. and that in the
two stocks specifically concerned the sell
ing was Of the sort that often takes place
in Wall street when expected good news
concerning any security is promulgated.
Another theory was that the share
holders of Great Northern and Northern
Pacific companies were disappointed, be-
cause payment for the new stock were
10 be spread over a period of years, so
that rights TO subscribe TO the new issues
were, as was argued, less valuable; and
it also developed that some sort OF an
objection had been made TO the Great
Northern stock issue by the authorities
Of the State OF Minnesota.
Il IS not improbable. however. that the
real reason for the break in the Great
Northern and Northern Pacific shares to-
day was that liquidation of the Union
Pacific Railroad Company's holdings OF
these securities was in progress. The
terms of payment for the new stock are
obviously such that the Union Pacific
Company, "a large holder still of the
Great Northern and Northern Pacific pre-
ferTed shares. would be lending US money
as subscriber TO the new issue at a
comparatively low rate Of interest to its
rivals for the purpose of building I'D their
enterprises.
Assuming that this reason is indeed the
true one for to-day's fall IN the price of
the stocks, interest as to the future
nearly centers in the question as 70 the
amount of Great Northern and Northern
Pacihc shares yet remaining in the Union
Paciiic's hands.
st. Paul In an Advance.
In only one respect was there any
feature to the market to-day aside from
that of a broad declining movement
brought about in the manner stated.
This was in transactions of nearly 20O,90O
shares of Chicago, Milwaukee and St
Paul common stock and an advance in
the price of the stock in the face Of a
falling market elsewhere Of 27s points.
The sUppOsiuOn was, Of course. that an
this represented favorable developments
OF some kind from the point of view of
the st. Paul shareholders. and there is, in
fact, reason TO believe that before long
the announcement viii be made OF an
issue of $75,000,0O0 of St. Paul preferred
stock at par to stockholders equivalent to
the rights to the amount of about SS4 on
each share Of the existing St Paul COM
mon stock.
The highest rate paid for money to-day
was l6 per cent and most Of the days
loans were at Is per cent, as against a
prevailing rate yesterday of 10 per cent
Indications for the end of the week bank
statement were no more fiattering than
they recently have been. save as the bank
loan account may be favorably affected
by t0-day's liquidation.
Sterling exchange was weaker In
natural consequence for the rise in money
rates, although there appears to be little
Idea that imports OF gold from Europe
Will be undertaken by our bankers for
several weeks to come. The Bank Of
England's weekly return to-day made a
strong showing, exhibiting a proportion
Of 47-02 per cent OF reserve to liabilities
against 44& per cent last week.