The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1907-02-20
WALL STREET NOTES
Pennsylvania Loan Does Not
Look So Formidable.
NEXT ISSUE ONLY 100000
Gossip About the Readings RumOred
Need of MIIIiOns-Tidewater Notes
Garry High Rate of Interest
Through Bad Financiering-HoVv
Some Big Stocks Acted.


New York, Feb. 19.-The market acted
this forenoon as if Wall street was afraid
Of drawing too much money from Paris.
/ When a trader asks what will become of
| the market after the railroads have alb
lsorbed all the money supply, and asks this
with special reference TO financing that
will be arranged abroad, it leaves one in
doubt whether the average trader can
think at all, or whether he supposes that
holders of securities can be forced to let
go their holdings on account of something
/ that, rightly considered, should furnish
ground for encouragement rather than
uneasiness.
The railroads are engaged in bringing
their facilities up to their requirements
/ of the magnlficentIy prosperous conditions
! that prevail throughout the length and
/ breadth of this country to-day, but the
/ fact that the money of the country Is ac-
lively employed hampers them greatly in
their undertakings. The work they have
/ in hand contributed greatly TO the existing
pr0sperity-giving employment to great
numbers of men-but its completion will
contribute much more by extending the
/ facilities for an extension of general bust
mes whose growth has been limited by the
present inability of the roads TO bring
forward supplies and remove products
promptly.
/ In such an emergency the stock market
bull sees matter for congratulation in the
J fact that the French purse has been found
ready TO supply the means 10 carry out
projects so essential to the growth of
American prosperity as the prosecution of
railroad improvements.
When money is brought here from
abroad on account Of the sale Of railroad
/ securities. the roads do not lock it up in
! their safes or take it al once and scatter
! il far away from Wall street. where Il
7 can be of no use TO the speculator in
stocks. Railroad companies generally an
/ tiCipate future wants in arranging their
! financing, and the money not needed inn
mediateiy is either lent by the road
/ itself on call OF allowed 10 remain in the
hands Of bankers with the understanding
that they viii turn il over at stated times
/ 10 meet the purposes contemplated I'm the
] issue Of securities. The bankers naturally
I use the balance in their hands in making
call or short-time loans so that some OF
( the money is already finding its way back
/ TO the strect-after having been expended
/ In various ways through the countTy-oe-
I fore the last Of It has been drawn from
the bankers. and. on the average. good
proportion of IL is at the disposal Of the
financial community at the time
/ The announcement Of the sale at $780,
0Jo,c00 Pennsylvania notes and the official
assurances that this would provide for the
S50CO0000 notes which mature next fan.
and would represent all the financing that
the company would undertake this year.
made it clear that all the new capital in
volved in the new issue over which some
! of the traders had almost become hys;eri-
cal Was Sl0.G00.000-a paltry amount for a
company whose operations are Of such
magnitude as those of the Pennsylvania
Railroad. In addition there will no doubt
be an issue OF equipment trust certificates.
but as there can be no question as 10 the
purposes 10 which these will be applied
the street can hardly lose it's equanimity
over the issuance Of them. Another pos I
sibility is that one Of the subsidiaries Of /
the Pennsylvania may do some financing
on its own account through a note issue.
When the truth about the Pennsylvania /
notes became known it is was natural I
thai the market should rally The street I
could not understand how the amount Of /
new capitalization could be so small but /
as one trader said, Facts are stubborn /
things.
There was a recurrence Of the rumors 4
Of an issue Of short-term notes by the /!
Reading with the difference, compared /
with Monday, that whereas on that day /
it was said that the road would need a I
large amount OF new funds, yesterdays /
story had it that Sl0000O00 would suffice |
for all the needs of this company and its /
controlled road, the Jersey Central.
In explanation of the alleged need for 4
new money il was said that e the Read /
ing could collect It's bills receivable it /
would have all the needed funds, but that 1
on account Of the extent 10 which all /
classes of the mercantile communities had I
their money actively employed it was /
much more difficult than usual to collect /
bills AS a rule brokers smiled at the |
explanation. although a few said there /
might be something in il
Baltimore and Ohio did not escape at |
tention from the rumor mongers. who |
made a speciality Of the note-issue brand /
Of bearish material, but few traders were /
willing to accept that particular story as !
genuine. The stock did not act conform !
ably to the rumOr and it was recalled 4
that only a little while ago it was an 4
nounced that the road had decided TO re- /
duce the amount Of improvement work /
this year TO what was absolutely neces- /
sary for the efficient operation of the /
property.
Il was said that the S1O.0O0.0OO notes of |
the Underwater Railroad had been sold by /
them on about a II per cent basis. the /
notes according to rumor. having been
distributed among bankers on "a per |
cent basis, but the cost of the money to
the road was said to have been the !
higher figure The Tidewater Road has
been thoroughly well constructed SO far
as the work has gone, and the notes are /
secured by a deposit of abundant col
lateral and bear the personal indorse-
ment of II. II. Rogers. The sale of these
notes represents the highest price yet .
paid by any railroad for new funds.
II the sale Of the ridewater notes really /
showed the actual conditions OF the mar
ket for good railroad notes, then, indeed,
the outlook would be dark and the only
prospect for relief would be in liquidation.
But in bond circles the blaine for the poor
price obtained is put upon Mr. Rogers,
who is said to have managed the trans
action badly. Money is dear. but the time
for rate as high as Z per cent has not
yet come