The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1906-12-19
Call Money Scars to % Per
Cent-Time Loans Up.
ST. PAUL BELOW HILL AVERAGE
Traders Are Unable to Determine
whether Present Quotation Is Too
Low. or other stocks Controlled by
Magnate Are Too High-QuestiOn Of
Rights Seriously Figured Upon.

ey market which was reported TO have re-
suited in the lower level OF prices which
has already resulted from the present
liquidation should bring the public into
the market it is hard to see. Money on
call rose as high as % per cent to-day,
and even greater stringency prevailed in
the market for time funds than on Mon
day. but the liquidation IN high-priced Sc
curities was met by an increase in the
loanable money at the disposal of the
borrowers. This win probably In time
give rise to a renewal of bullEsh opera
tions, but the really doubtful factor is
whether public interest. without which
no bull movement can be entirely success
full, can be stimulated to any great ex-
tent.
One Of the traders described the trouble
with the market as a severe attack Of
"MeIonitis."
Deducting the value Of the rights from
the present price of St Paul. the net price
of the stock as fiat per cent dividend
issue is materially lower than that Of
either OF the HiH issues. The traders
are wondering whether this means thai
ST. Paul is too low. or that the Hill
stocks. Notwithstanding the heavy de-
cline IN their price within the last week
or so, are stlll too high. Judged by
standards 10 which the street had until a
few months ago been long accustomed,
81. Paul Is too low If the mystery in the
price Of Baltimore and Ohio. which so
long puzzled the street. was really TO b.
explained as adjustment 10 a new stand
ard.
This may be the reason why Union and
Southern Pacific sell on a basis to yield
substantially over 3 per cent on their
price. The same reason may have begun
10 assert itself in St Paul and possibly
it would also make itself more evident in
the Hill stocks If there were not some
thing Of a special nature still undis-
closed in regard to these which induces
insiders 10 maintain them at a price that
average trader thinks is out Of line with
other prominent stocks.
There has been a good deal of con-
fusion over the value of the St Paul
right on account of unusual feature OF
the offerings Of both preferred and COM
mon for subscription. whRh upset the
handy methods Of calculation usually fol-
lowed by most people in the street The
mistake most commonly made was in
estimating on the basis Of present market
prices the value Of rights Of an allotment
Of 20 per cent in preferred stock than esti-
mating the value-also on the basis Of
present prices for the stocks-of rights
on an allotment Of . per cent in common
stock at par and adding the two together.
The trouble with this method is that in
making the second calculation the value
Of the stock is taking on rights instead Of
ex-rights, so that the result is far from
correct.
The easiest way Of arriving at the value
of the St Paul rights is as follows: The
holder OF 10 shares of preferred stocks.
worth at the market approximately go
900 cash. subscrlbes for 30 additional
shares Of preferred stock $500 and .
common shares (S20o). making hts entire
investment 175 shares at a cost OF SZs.o00
Should his stock afterward bring him
500 for the preferred and 500 for the
common. ne would realize $50 600 for his
80 shares of the former and $40 for
his . shares Of the latter. with total
Of S34. 80 for his Us shares. There would
thus be profit Of $50 on the 10 shares
or an average Of 81 Il share, which would
be the value Of the rights on the new
stock if delivered in the near future
But for the fact that the new certifl-
Gates will not lie issued until March, 1893
there are involved in all the uncertainties,
political and otherwise, Of a period of over
two years. and Wall street is, therefore,
not inclined to buy what it calls de
ferred rights" at face value
shorts in St Paul were left little time
. F,r,~o ~. closing IF booLrs
The street was nearly at a loss for an
explanation of the apparent haste on the
part of the management. but while few
traders suppositiOn is that it is move
against the shorts or a freeZe-Out Of
some stockholders, there was also the
orv that it was intended TO fOrestall pos
sible legal action by the State of Wiscon-
sin from which the company obtained a
charter.
A conservative banker. in no way con-
nected with the controlling interests in
ST. Paul. SAYS: The public should sus-
pend Judgment on the action OF the ST.
Paul mana cement in calling for the first
installment on the new stock at the end
Of this year and the consequent early
closing of the transfer books. The man
agement crowd has heretofore been above
criticism IN all such matters, and think
that when the full facts are made known
IL will be recognized that there Is no
ground for fault-fnding now. l know
something Of the reason which deter
mined the boards action, and | think l
would do the same in similar circum-
stances"
The guess was hazarded by prominent
broker that ST Paul wanted the first In
stallment on the new stock to exercise
an option on some property al the begin
ming Of the new year and the further
surmise was offered that 1t might posi-
bly have some influence on Missouri.
Kansas and Texas, OF which $4,000 shares,
or about one-haIf of the voting capital
izatioo. might have been bought for s10,-
OOO. OO0. at an average Of $40 a share.
No fault could be found with st. Paul
for following the example Of the Hin