The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1907-01-17
HEAVY SELLING OF
STOCK HOLDINGS
Extention of Demand by Rail-
roads for New Capital
CHECKS PAYING DIVIDENDS
Statements of Presidents of Lehigh
Valley and Southern Railroads In
dictate Greater Outlay In
Improvements.
CHECKS PAYING DIVIDENDS

New York, January 16.-There was
heavy liquidation of securities on the
stock market due to the constant extern
sion of the demand for new capital by
the railroad companies. The most conspic-
ucus phase of the subject which was de-
iveloped today was the seeming intima-
Ition that the need of the resources in
lhand for the work of the railroad COM
lpanies might bring about check to the
disbursement of profits to stockholders in
lthc Improvement of some companies. This
suggestion proved especially influential to
speculative sentiments towards the low
priced railroad stocks. Companies whose
securities are in this class are at a nat
iural disadvantage in raising new capital
owing to the heavy discount which must
be allowed for the same kind of securities
with margin of net earnings SO narrow
as to reduce the security for the payment
of fixed charges.
Published remarks on the subject of
capital requirements by President Thomas
of the Lehigh Valley and President Fin
ley of the Southern railway were inter-
preted as threatening a necessity of great
er outlay of earnings in improvements
owing to the difficulties In the way of
raising capital.
The first effect of this new element in
the situation was most acute on the Nor
gan group of stocks. The Southern rail-
way stocks broke violently and the pre-
ferred stock especially seemed to lack any
bids for offerings pressed to sale. The re-
marks of the two railroad presidents re-
o-,.ft,r
cepted also in wider sense as enforcing
the universal requirement of the railroad
Industry for great additional outlay of
capital In the face of heavy growth in
the cost of material and labor. The feel
ing was revived in full force, which per-
vaded the market when the Pennsylvania
stock issue was first announced that es-
inmates hitherto presented of the capital
needs of the railroad corporations had
been grossly mlscalculated.
Erie was the earlier stock to follow
in close sympathy with the slump in
Southern railway, the rest of the market
being disposed for a time to ignore the
movement. The first spread of the move
ment was to other low priced stocks.
(which might be supposed to have similar
difficulty in raising capital.
The growing weakness of the market
was due very generally to the considera-
ltion of the same topic from different
points of view. The strength which has
been shown recently in copper stocks
on the talk of a merger of important
Michigan properties gave way to sudden
weakness in Amalgamated Copper, when
the suggestion found utterance that a new
issue of that stock might be involved in
the supposed merger.
The vulnerable condition of the market
invited aggressive tactics by the bears,
and they operated with great holiness
and on a large scale. This was manifest
in the rumors which circulated and which
net with authoritative denials and also
IN the extent of the demand to cover
shorts at times, when the liquidatio
spent its force. The forces of replenish-
ment of money supplies continued to OPP
crate, and the call money market showed
positive ease at 4 per cent and below.
Funds are reported to be flowing to New
York from the interior in large volume
and sub-treasury operations have yielded
to the banks this week $7.10960O. Discounts
in London yielded again and the inn
preston was strengthened that the Bank
of England discount rate will be lowero d
tomorrow Sterling exchange at Paris,
however, broke sharply. The continuation
of the liquidation caused stocks to sell at
the lowest of the day in the final half
hour but the demand from uncovered
! shorts caused a substantial rally, which
was held to the closing.
Bonds were irregular. Total sales, par