The Washington herald., 1907-01-18
WALL STREET NOTES
RumOrSOf Commission House
in Trouble UnfOunded.
SOUTHERN IN STRONG POSITION
Traders Comment FavOPabIy on Let
ter from President Finley-Equip-
OrdeFs-Erie's Showing SO Good as
to Cause Prediction for Dividends.

New York, Jan. 17.-To-day. as on yes
terday the street was filed with rumors
about taking over a large account from
a house which needed assistance, but
these referred to an old matter connected
with the break IN the Hill stocks last
December rather than to the decline
in the past few days. That the circum-
stances may be understood IT may be
well 10 recall a little bit OF history. In
the last week of 1906 a house which had
| already suffered heavy losses-some OF
them in transactions in no way connected
with the stock market-found itself un-
able to protect its holdings of the Hill
stocks in the decline that swept away
from these issues.
In order to avert the circumstances Of
the liquidation Of a large line of these
stocks at that time, a syndicate of five
banking houses agreed to advance 81
600 to the firm which needed assist
| ance and 10 take over large amount of
/ securities which were good. but for
which an immediate market could not be
found. The agreement between the syn
dicate and the firm provided that the
money should be paid over on January Is
and the payment was accordingly made
on Tuesday last As the whole matter
is merely a re-echo Of the decline in the
market three weeks ago. il cannot fur
nish any earthly grounds for uneasiness
al this time. II the bears can offer no
better reason than this for their position
on the market they may soon find it 10
their advantage 90 make a change.
/ The talk about a house in trouble
unfouuded. so far as It relates to the
present situation in the street-serves 10
draw attention TO thevery important point
/ that the lesson Of the December decline
has not been lost. There is not a single
/ house no matter how conservative 81
might have been before. that is rot pur-
suing "a more conservative policy since
/ that occurred. The position Of individual
! accounts have been thoroughly looked
into, and where the margins were not
/ large enough 10 stand almost any kind
/ Of strain, customers were urged TO put
/ up more money or tighten their load OF
! stocks. In many cases where customers
/ did not respond to their calls for more
/ margin and refused 20 liquidate "a paft OF
/ their holdings they We're requested 10 take
up their accounts altogether, and much OF
/ the shifting Of accounts around the begin
/ ming Of the present month which was
/ supposed to have resulted from dissatis-
/ faction with the rates Of interest charged
/ for December really arose from the Other
| cause. There has been thorough house
/ cleaning, so that the decline in the pres
4 ent week found everything in order. and
| all. except few individual spectators.
! ready 70 meet II with perfect composurc.
/ It is a very different thing whether q
! brokerage house is in trouble OF merely
/ some of its Individual customers. and
| there has been none of the first kind
! apparent in the market recently.
/ Read Mr. Finley's letter 10 the pa
irons of the Southern Railway" said
/ shrewd trader, and if you are not bull
/ llsh on the reads stocks by the time you
get through you surely will be on the
stocks Of the equipment companies Ny
/ impression IS. that If you carefully read
the letter through you will be buIlish both
/ on the stocks Of the road and those OF
/ the equipment concerns. but to the latter
l mean to confne myself. The dates given
! by Mr.. Finley show that the equipment
| builders are from three 10 eleven months
+ behind their contract time in making de
/ liveries. This delay is not the result Of
/ labor trouble or any such difficulties. Il
has arisen wholly from the tremendous
rush of business which has overwhelmed
/ the manufacturing capacity. Then note
/ the Increase in prices in the past eight
| years. Locomotives have gone up from
Sll.Sg2 to $4,000. passenger coaches from
$6.315 10 S9.35S freight cars from $500 10
500, and coal cars from S36S 10 81, l,I35. |
Combine the two facts and you will find
that il spells Prosperity for the equip
ment builders in very big capitals"
Speaking Of the report that the Erie /
Railroad will soon announce an issue Of /
notes to finance its Improvements. con- /
servative broker says: This rumor may
be true, or it may not-I have no abso- /
iute information on the point-but whether /
it is true or false, can see absolutely no /
reason why a holder Of Erie who is able /
10 carry his stock should part with it /
at this level The Erie management has I
proved its efficiency, but has been ham /
pered by the difficulty in getting money 20 /
make Improvement. The total needs of I
the road are small, and the company
can probably make better use Of $200)O,0O0 /
or thereabout, in improving its property
2nd in increasing its earning power. than /
any other railroad on this continent II |
Erie could raie ay S20OjO.000 at per |
cent, it could use il so as not only to earn /
the interest on it. but to show earnings of |
! per cent on its common stock. one !
would think that trunk line stock earn |
ing per cent was dear at 40 All | want /
TO make me bullish on Erie is assurance |
that the company can get the money it /
wants on any reasonable terms.
Rumors about the issue Of a large part I
of the $20O0c0.000 development and gen /
eral mortgage" bonds Of Southern Rail- /
way authorized last year, disregard /
the very important fact that the
amount of these bonds that could be sold I
in any one year for improvements and /
equipment is limited 10 S5,000,0O0, although 4
there is apparently no fixed limit TO the I
amount that could be issued in a year 4
in exchange for first mortgage bonds of /
railroadsan terminals hereafter acquired. /
The company is thus given a fair oppor- I
tunity TO make extension by organizing F.
companies to construct road or terminals. /
10 be afterward taken over by exchange
Of its own bonds to an amount exceeding
the actual cost. but in the matter Of the /
purchases Of equipment and the making
Of Improvements To the existing lines.
the availability of the S2o0. 100000 bond
issue is limited TO the sale Of $5,Gt0.OOl /
year.
At about o'cl2ck a rumor got around