The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1907-01-20
WALL STREET NOTES
Expected Decline Is Not as
Great as Predicted.
PENNsY's PLANS WORKING OUT
stocks of Subsidiary Lines Being
Taken Up and system VIII Be
Operated as One HOMOGENEOUS
WhOIe-SteeI Preferred CIassed ms
an Investment Security.

hOAe-Steet preferred Ciassed as
an Investment Security.
New York, Jan 19.-When the market
opened this morning the brokers offices
we're filled with customers anxious to see
how their stocks were going to fare after
yesterdays severe decline. The most
gloomy feelings were entertained. the dis
cussion that had taken place last night
AT the clubs. the cafes. the theaters,
wherever Wall street men met. having
tended to intensity rather than relieve
the feeling of depression that had been
produced by the slump that had occurred
without any known cause. Under the
circumstances it was but natural that
there should be further liquidation, and in
view OF this it could not be said that the
market acted badly.
II the bear party hit upon yesterday
by accident, instead of by design. to de-
liver its attack upon the market. II was
for them a lucky accident, for it left a
long period Of uncertainty on the point of
whether the clearing house sheets had
gone through all right The sheets for
each Gay in the week are put trough on
The following morning except those for
Friday, which go over until Monday, and
thus the trOuble-m0ngers We're given an
additional day in which TO reiterate their
sinister prophecies. As to-day's session
wore on, however the belief gained
ground that everything was all right, and
traders who tried TO cover shorts just be
fore the close found that stocks were by
no means as plentiful as they had sup
posed.
Some light is thrown upon the proposed
Increase Of capital stock by Pennsylvania
in the announcement that the directors OF
the Philadelphia and Erie have approved
a proposition 70 accept an exchange of
Pennsylvania stock share for share. for
the stock of their company. This bears
out what was said in weil-infOrmed cir
cles at the time the Pennsylvania finan-
cial plan was announced that consider
able amount Of the new stock would not
come upon the market. but would be ex-
changed for stocks of controlled roads
which were to be merged in the big COM
pany. Philadelphia and Erie is the first
Of these 10 be- heard from. but others win
be taken up from time to time so as to
secure the obvious advantage from the
operation Of all as one homogeneous
whole.
Not the least interesting part of the
offer made 20 the holders Of Philadelphia
and Erie stock is that they are given the
option OF taking a share OF Pennsylvania
or s6S cash for each share OF their hold
ings, the cash offer being equivalent 10 a
price of l3G for Pennsylvania stock on the
New York Stock Exchange This indi-
Gates that the company has assurance /
That II could obtain this minimum
figure for any stock Il might need 10 dis
pose Of 60 make its purchases.
Bankers do not usually agree 70 take e |
stock at a fixed price without feeling
pretty sure that the basis is low enough /
10 afford them fair chance for prodt. /
and il looks. therefore. as if the buyer Of
PENNSYLVANIA at current prices has the
backing Of tine best-nformed opinion as
TO the value OF the stock
Pennsylvania was one Of the stocks /
that acted well throughout the session I
the strength OF the stock being the more
notable in view Of the bearish rumors
that were heard Regarding it, II was
predicted that an unfYvorable announce /
ment of some kind. probably in connec- /
ton with the proposed increase Of CAPT /
taiizati0n, would be made in the near /
future but the action Of the stock: de- 4
spite the influence Of the stories current
seemed to indicate pretty clearly the
purpose for which they were circulated 4
No part of the new securities can be \
issued until after approval has been OBJ
tanned from the stockholders at their /
annual meeting on March %
There Is 50 far no certainty whether
HnH ga a.
asked are 10 bee cOnvertibIes ON this
point viii depend whether a good part
of the new stock win not be retained in
the treasury Tor the purpose Of CONVEX
sion, but IL Is already made clear that
one OF the purposes contemplated is the
taking up Of existing stocks. SO that there
cannot be $2Q0e00,000 of additional secur-
tiles
The strength in Steel preferred gave
point TO the arguments regarding the in
vestment value Of this stock. which have
recently been heard in conservative cir
Giles here, and have begun to find an echo
IN some of the financial centers of
Europe. The gist of these arguments is
that as the railroads will be forced to I
eXpend a great deal of money In the COM
ing year 10 complete the improvements
under way and to increase their facilities /
0rdersafoT rails and other lines of steel
supplies must necessarily be heavy while
the very conservative policy which the
has followed in putting the
greater part Of its surplus earnings into
Improvements viii so greatly add 10 the
capacity that in time 20
come the dividend on the preferred Will
be represented by a smaller proportion
jf the profits on the years business. The
element of speculation has practically
gone out of Steel preferred and the stock
now receives attention mostly from in
yestors who are in search Of a reason
ably well-secured return that is well /,
securities.
For a considerable time there has been
marked difference between the market
tction of Union Pacific and that OF
southern Pacific in favor of the latter.
md perhaps at no time has this been evil
lent to an extent equal to that of the
'ast couple of days. The difference has {
ed many people who formerly discredited
he rgmor to incline TO the belief that
he dividend on Southern Pacific would ,
De at the end of the present fiscal year. Z
n anticipation that seems TO find encour- {
cement in the phenomenal increase in
arnings, which the road has reported y
Monthly since last summer J.
Many brokers who noted the relative
trength of Southern Pacific to-day were G
ather timid about commenting, upon the y
round that a stock that held up its head
vas sure 10 become the target for .
Usiiiade from the bear clique Sentiment q
vas so denoraized that those who had \
niniouG were afraid ~ avnraSS fbar, 4