The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1907-02-05

1
a feature it was in the lack Of aggressive
bullish effort. the buyers Of stock being
I apparently much more bent on getting
bargains than on bidding up prices. All
/ the aggressive action, 20 some of the
keenest observers on the floor OF the ex-
change was in the direction Of lower
prices, and the opinion expressed by these
brokers was that under the circumstances
the market as a whole did not act badly.
Frequent repetition does not seem 10
/ lessen the interest which the bears find in
the rumor Of new financing by Erie, al
though it must be evident that the decline
in the stock since the story was first
started has been sufficient 10 discount
great deal of an unfavorable nature. The
demani for stock in the loan crowd is
indicative Of q considerable short in
teTest.
Many brokers commented fayorably on
the letter Of Vice President Brown, OF
New York Central dealing with the prob
able results of a policy Of hostility 10 the
railroads. and the hope was entertained
that such presentations of the railroads
see matters In a new light.
Very little doubt is now felt that the
Union Pacific dividend, to be declared this
month. will be per cent for the half
year-the rate which was established last
August In fact. it is asserted in quar-
ters where positive statements are not
made unless there are good grounds for
them that there can be no question what
ever about the maintenance Of the present
rate OF 10 per cent a year. What was
done I'm August was not meant as special
action based on unusual conditions, but
as the establishment Of a permanent
policy. and nothing has since occurred TO
induce any of the directors 20 favor
change.
So far as the action of the market
affords any Indication as TO the Union
Pacific dividend it furnishes circum-
stantial evidence sustaining the truth of
the assertion that from the earnings Of
the six months. ended December 81. 81
dividend OF 8 per cents per cent from
operation and per cent from income
yielded by investments-will be declared,
for quiet accumulation has been ~
progress. the larger interests taking the
stock just as fast as they can get It with
out putting up the price
When this buying first appeared many
of the traders assumed that il was in the
nature of support 70 prevent the trading
IN the stock from getting into condition OF
decentralization, but that this theory was
incorrect would appear To pe fairly estab-
1ishcd by the fact that advantage has
not been taken Of rallies 90 sell out what
was bought lower down.
When large interests are forced TO lend
support by buying stock which they do
not really want they generally take adj
vantage Of the first favorable opportunity
TO unload Unless they do this it may be
taken for granted that they expect still
better opportunity later The Union
Pacific interests. however have not only
held ON 10 what they bought at the low
level. but what is even more important
they have continued 10 buy on every lit
tie reaction since.
Such expectation as there was a couple
Of weeks ago, of an Increase in the South
ern Pacific dividend at this season has /
now entirely disappeared, and while bull
Hsh sentiment on the stock has lost little
OF its strength 1t is not based entirely on
the excellent earnings of the system and
the fact that the property is in good
physical condition, while its financial
needs can be provided by sale of the
lands which will be placed upon the
market next summer.
There is no room for disappointment |
What the earnings are every one can see.
That the property is in fine condition
those who have been over the road re-
Gently viii admit and that the lands are
there and are valuable needs no special
demonstration. Sooner or later increased
dividends must come, but those who are
buying stock now viii not be disappointed
if the rate is not raised this month
At the end of January the statement /
was made on apparently good authority /
that the amount of orders on the books /
of the United States Steel Corporation were /
then greater by about 100000 tons than at
the end Of the previous month. The i'm /
portance of this fact has just begun TO /
receive recognition from the rank and
file Of the specializing public
The really important point is that one
of the causes of the recent severe decline |
in the stock market was the fear that in 4
the current year business of all kinds 1
would contract, and that the steel trade 4
would be one of the first to feel the /
change which would affect 1t not only in /
reduction in the volume of new orders |
but i'm cancellation Of a large part OF /
those already on hand. Those who be /
came beaUsh on these fears may now
hesitate when they find the steel cor 4
pOratlOn making q phenomenal increase /
in the amount of business on it's books 4
for this not only implies that new orders /
are coming in for next spring and sum- /
mer but that the appTehended canceIla- /
tons have not occurred
Among the causes other than fear Of
contraction in the steel trade that in
spired the bearish attack on the market
which precipitated liquidation and brought
prices down to their present level there
are others, such as the talk of trouble
that had no more foundation. and there is
reason to believe that some of the lead
ing bears are OF the opinion that the de-
cline has gone quite far enough.
Generally when stocks that are borrow
ed by a short interest are returned the
usual assumption is that as the short in
terest has been reduced the position of the
market is thereby weakened. This may
not be the case in all circumstances,
and It is doubtful if it is the case at
present. Little doubt now exists that
powerful bear Clique has been operating
in the market for several weeks past.
This party. by its skill and resource, was.
able TO depress prices, and practically de-
trading~sO that a great deal Of
liquidation was produced, and ire
mendOus volume Of other short selling en-
sued
Now, if the organized bear clique has
come to the conclusion that another year