The Washington herald., 1907-05-03
WALL STREET NOTES
Union Pacific Holding Com
pany Under Discussion.
COMMON STOCK MAKES CLAIM
Also Demands Part Of
Contemplated Distribution-Exeei-
lent Market for Hartman shares
In Few Years-Tip that Price VIII
Advance 10 100 Brings Strength,

Advance 10 100 Brings Strength.
New York, May 2.-The Wall street law
yers to-day divided the financial com
munity with their contests and disputes.
The subject Of their wrangle was the
plan TO form holding company to take
over the securities owned By Union Pa
cific. and the particular phase of IL about
which the argument waXed warm was the
right Of the preferred stock to priority la
any distribution under the alleged plan
20 make a bonus OF the stock OF the new
concern. 1t was hotly contended In some
quarters that the preferred stock would
be entitled 10 share at least equally with
the common in any distribution that
might be made. and with still less mode
ration was the opposite contention sup
ported in other places. The noise seemed
TO be on the side OF the latter. the argu-
ment on the side of the other. The more
reasonable argument. too, was, In meas
ure, corroboTated by a sensational adj
vance in the preferred stock on transac-
tions in a comparatively few shares.
This, however, only made the opposition
all the more boisterous, and made the
advocates of the claims of the preferred
the more dignihed by contrast, the latter
beinE apparently satisfied that the future
would justify their attitude.
The gist Of the argument about the
claims Of the Union Pacific preferred to
participate in any disposition that might
be made of the companys holdings Of Sc
curities. was as follows; The preferred
stock would probably be held 10 be pre-
ferred as to the assets as we'll as 10
dividends. The Organization plans set
no limitation as 10 how far the preferred
has preference over the common, and
therefore il would probably be inter
preted as making the former preferred
in all respects. A prior claim 10 the as
sets being therefore apparently estap-
lished, the company could not distribute
its holdings of stocks in a way that
would not fully recognize THIS claim hoW
far the courts might be willing 10 recOg-
nize the right of the preferred became all
the more interesting in view OF the Opin-
ion recently rendered by Vice Chancellor
Pitney. Of New Jersey. wherein he rather
favored the contention that the preferred
stock of "a company is entitled 10 al
assets, the common representing only
good win. If the preferred stock could
be retired the difficulty would. OF course
disappear. but apparently the company
had not power 20 retire it except by max
inc some propOsitiOn which The holders
might accept or reject as they saw ht
Here. then. is the obstacle to the carrying
out Of amy plan TO segregate the Union
Pacific investments from the rail-
road and make them the basis Of
q distribution exclusively FOR the
benefit Of the common stock II is
was merely a question Of rights on new
issue of common stock, the company
might conhne the privilege TO the COM
mon By the placing Of new securities
behind the preferred. which would not
affect the latteT's value, but the dstribu-
ti0n Of assets which now help 20 give
the preferred its value would be another
matter.
At different times in the past couple OF
years attention had here been called 10
the excellent market always maintained
for Union Pacific preferred. In no sense
was there speculation in the stock. but
no broker who got an order on the selling
side from an investor seeking 10 realize
oa his holdings could fail 10 be struck by
the sense with which he could dispose OF
his offerings at the market It has even
haupened at times that q careful broker
having large lot succeeded in getting
better than the current market quotation
~ condition the very reverse of what eX-
isted in other inactive issues Another
fact that impressed houses that had sell
ing orders In the stock from time to time
was that nearly all their sales were made
20 the same brokers. This pointed 70
steady careful accumulation, and the
probability is that to-day the stock is
very largely In the hands OF insiders and
Of institutions and other investors friend
~ to them. Continued accumulation
cleared the way for the advance that
made the stock one of the features Of
the market to-day. and established belief
in the stories about holding company
as an essential article of the Wall street
creed. The buying Of the stock by a floor
trader did not look significant, but its
very insignidcance made the response 10
il all the more impressive
" Union Pacific common there was Il
resumption Of the buying by the interests
which had been the most conspicuous
before the reaction a couple days ago.
on Monday and Tuesday these interests
sold quite a little stock, but the opinion
was then expressed in very good quar-
ters. and has since been justified, that
on "a moderate reaction the stock should
be bought for a further advance. When
the advance was renewed quite a few
Of the traders were ready TO get aboard,
and their operations, combined with those
of the pool, easily sufficed to send the
price up 10 a new high level for this
movement
A few tips Ike that circulated on Mon
day-when Union Pacific was selling
around 1f5-that before the end Of the
week the stock would advance to 80,
might revive interest in the stand of pre-
diction. While tips continued to make
good the professional trader, at least, is
ready to play them.
Southern Pacific sympathized with
Union Pacific to a greater extent than
on any previous daH since the movement
in the latter began. although nothing in
the way of argument on the stock was
heard that had not figured in the rumors
previously. Such as were mentioned re-
ferred to good earnings and the pros
/ pect for an increase in the dividend next
August.
One of the shrewdest brokers In Wall
street made the remark that Union Pa
cifc preferred has always been preferred
by the directors" Knowing how it is
held" he said Il would bet on it every
time"