Evening star., 1907-05-26
Financial News Letter
BIZ ". O. NIcaoLAA
cial Correspondence Of The Star.

Special Correspondents Of The Star.
NEW YORK. N. z, May %. 1907.
The slump in the market this week.
which carried some stocks down below the
level Of the March panic prices, was due
very largely to the LIQUIDATION by some
prominent capitalists, who had "that tired
feeling" and who wanted to exchange some
of their securities for cash. The market
wasn't in q condition to take this hQuida-
ton with very good grace. The crop situa-
tion Is disturbing. the public Is not buying
stocks. and the big interests are not in q
mood just now to help relieve somebody
else's burden.
A rather remarkable thing occurred
Tuesday, when Steel common actually
loaned nat. This is the first time In the
history Of the steel corporation that this
has occurred. As there are 5000. 600 shares
of Steel common outstanding. such q scare
ity Of the stock In the loan crowd arouses
great deal of interest The stock loaned
nat because some Of the liquidating cap
italists who had Steel common In their
strong boxes in Pittsburg and other In
terror towns. borrowed the stock here to
sell It against their holdings. This is
favorite device for liquidating big lines of
stock. It creates the impression that the
selling is speculative short selling, and that
the stock will have to be bought in the
market later to cover the short selling. One
Of the capitalists who thus sold Steel COM
mon this week is understood to have been
Charles Schwab. Mr. Schwab is very
rich man, of course. but since he left the
steel corporation he has extended his
financial operations over various parts of
the country. He is largely interested in
the Bethlehem Steel Company and has put
great deal of money into mines and min
ing prospects in the west. It may be that
Mr.. Schwab thinks he can get better re-
turn on his money In mines than he can in
Steel common. Mr.. Sohwab. however, is q
great bull on the Steel stocks. Three years
ago. when Steel common was selling at SO
a share. he told his friends that he knew of
no better speculative investment In the mar
ket than this stock He predicted that 1t
would sell at $50 within three years, and
that the time was not far distant when it
would sell higher than the preferred stock
on its dividend merits. The first part Of
Mr.. Schwab's prediction has come true.
The bears on the market are talking about
$40 for Steel common. They base their
prediction on the belief that we are to have
an Industrial setback before the presidential
election next year, and that this setback
will be most pronounced in the steel trade.
About half the output Of the steel plants
there can be no question that the railroads
are going to be less lavish with orders for
a while than they were last year. They are
having great difficulty In raising capital on
favorable terms, and all over the country
they are meeting with antagonistic legisla-
ton which makes them very reluctant to
plan for more capital expenditures.
The street has taken the Union Pacific
financing with bad grace. Prior to the
announcement of the plans for raising new
capital for the Union Pacific and Southern
Pacific, Union Pacific was made to sell
above $3.50. or $50 above the March panic
price. This week the stock was forced
down below $133, and the new Union Pa
cific oonds sold in the market below the
subscription price to stockholders. The
stock was put up above $50 in April for
the purpose of making the new bonds look
attractive to the investors. They don't
look so attractive now as they did when
they were brought out. However, the
banking syndicate, which Is supported both
in this country and abroad, Is ready to take
all the bonds not subscribed for by the
stockholders, and the road Is sure Of getting
Its money.