The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-12-10

conditions in the money market warranted,
an upward movement In security prices
would take place. Careful observers OF the
market. therefore, believing that some, even
il no exceeding, relaxation In money rates
should be looked for in the early part OF next
year, are still strongly inclined 20 the opinion
that the path OF prices is yet generally
upward. There is, il may be said q current
impression, to which some attention must be
paid in consideration Of these matters, that
an additional reason, aside from the hig
carrying charges for stocks, which has con-
tributed to the public apathy concerning
the stock market in the last six months
and, indeed, throughout the year as a whole
has been the growth of a popul ar feeling
that the operations OF our great railway
and industrial corporations were becoming
In many instances so vast and complicated
as not TO be followed intelligently by or1i-
nary individuals. SO that II stocks are bought
they must be purchased because OF the
private counsel of a financial power OF
the first rank rather than upon the ex-
ercise Of individual judgment by the
investor. Many OF these corporations
have become not only concerns engaged
in a specific business but great banking
and holding companies, so that their rev
enues derived from outside interests Of a
financial nature are even greater than those
proceeding from the carrying on OF the in
dustry for which they were ostensibly char
tered. The difficulty lie not that the company
transactions Of the kind last described
are at all improper or disadvantage to
the corporations interested, but that they
are such that few people can be informed
about them and knowledge of the real value
OF the equities possessed by the company
becomes limited TO a very few. Thus the
most important financial publication OF
recent weeks has been the annual report
Of the great Union Pacific Railroad Com
pany. The report was, admittedly. a most
excellent one of it's kind, a%bounding in detail
and otherwise conforming 10 high account
ing standards: but il was OF such intricate
character and 10 be understood required
to be read with eyes 40 trained that il was
practically not understandable by nine out
OF ten OF the persons who perused il. A
matter may be here referred TO because
il is in itself interesting and pertinent and
because publicity as regards certain of its
details at least is herewith for the first
time fully given to il: and the reference
NAV be the more freely made inasmuCh az
the position taken in this column regarding
the high value OF Union Pacific stock and
it's comparative c~heapness as a 10 per cent.
dividend payer has been time and again
emphasized. When the present Union
Pacific company was organized out of the
ruins Of the old Union Pacific corporation
the new Union Pacific common and preferred
shares were issued in exchange for. among
other things, the common and preferred
stocks of the Oregon, Short Line and the
Oregon Railway and Navigation COM
panies. The stocks of the two Ore
gon companies were, in the exchange,
stamped as retired by an issue Of the Union
Pacific common and preferred stock. Time
passed and in 1901 the Union Pacific com
pany, wishing to borrow money, made an
issue Of 500, OOO, 900 convertible I per cent.
bonds and offered in the indenture as col
lateral security to the extent Of about 40
per cent. Of the mortgage s27,3 34, 300 Of the
Oregon Short Line stock and 81 1898 500 OF
the common stock and 80, S75, 200 Of the pre-
ferred stock Of the Oregon Railway and
Navigation Company. When this propo-
sition was forthcoming objection was nat
urally taken to il by the stock listing COM
mittee Of the New York Stock Exchange
upon the ground that the stocks Of the two
Oregon lines had already been retired by an
issue Of Union Pacific common and pre-
ferred stock that was still outstanding.
The matter came before the full governing
committee Of the Stock Exchange for adj
Indication. and 80 close was the division
of opinion concerning il that among the
thirty-ive members Of the board Of gov
ernors present seventeen votes we're cast in
favor Of the proposition and seventeen
against il and the deciding ballot allowing
the new convertible bonds a listing was cast
by the president Of the Stock Exchange after
the tie vote previously recorded. Years
vent on and the Union Pacific convertible
bonds we're themselves retired, as was duly
provided, by an issue Of Union Pacific
common stock; and in the report Of the
Union Pacific company just published
the Oregon Short Line and the Oregon
Railway and Navigation Company stocks
again appear. although twice covered by
an issue of Union Pacific stock. as assets
Of the company, the Oregon Short Linz
stock being entered as free and unpledged,"
while the Oregon Railway and Navigation
shares nave been placed as collateral under
the new Oregon Short Line refunding mort
gage. Facts such as these necessarily
enter into any accurate determination Of
the value Of the present Union Pacific
capital stock, and it is not in intimating
in the slightest that anything illegal has
been lone in this connection but only as
showing how difficult it has become for in
vestors and others to know exactly what
has been lone in the case not only Of Union
Pacific but in many other companies that
mention is made of the matter.
FINANCIAL AND COMMERCIAL.