Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-02-24
FINANCE AND TRADE IN
MARKETS OF THE WORLD
Financial News Letter
NICHOLAS WALL STREET LETTER.
peciaI Correspondence Of The Star


Special Correspondence Of The Star
NEW YORK, N. Y, February %, 1907
All Wall street is waiting for the reopen
ing of the interstate commerce commission
| inquiry in New York on Monday. Wall
street is as keen after gossip as an old
woman, and the expectation is that there
will be plenty of material for gossip when
! the government inquisitors put on the rack
such prominent Union Pacific financers as
E. II. Hartman. the head of the road; ia
iscob II. Schiff- the head of the great banking
house of Kuhn. Loeb & Co., which has
played so large a part in the hundreds of
millions of dollars of Union Pacific financ-
ing; Otto H. Kahn. the managing partner of
| this same banking house; William c. Rock
efefer, one of the Standard Oil directors on
| the Union Pacific board; Alexander Milar
and William Mahl, secretary and auditor
respectively of the Union Pacific. Some of
| the most important testimony that was
brought out in the insurance lnVeStlgatlon
two years ago was that that had to do with
the fiscal relations of the Equitable with the
Union Pacific ffnanciers. Now, it is expected
the interstate commerce commission will
delve more deeply into the methods of high
finance. as eXempified by the enormous ifs
cal operations in the Union Pacific. Without
doubt the Union Pacific treasury, in its re-
| markable growth during the past four or
five years. has been the most interesting
thing in American finance, not only from
our own point of view, but from that OF
financial interests abroad. Mr.. Hartman,
by his astounding operations in railroad
! finance by which he has placed the Union
Pacific treasury in a position of strength
| never occupied before by any American
railroad, has attracted the attention of
leading financierS of the world.
Sinister rumors have been ahoat in Wall
street this past week to the revelations
that are to be made in the interstate COM
| merce commissions investigation of Mr..
IA iIila n c
Union Pacific stock was selling at SIT. 1t
has declined steadily since then on heavy
selling, some of it from bear operators, and
some of it certainly from interests close to
Mr.. Hartman. 1t would appear that IIr.
Harriman's friends have been clearing their
decks for action. not quite sure what turn
the inquisition next week might take. Many
of the rumors that have been aflOat have
undoubtedly been manufactured by oper-
ators for their effect on the market. They
have not reached print. and so have called
for denial from Mr.. Hartman or his
friends. But they have been very persist
ent, as sinister rumors of this kind in Wall
street usually
MIR. Harrimans friends saying that
the government investigation of Union Pa
cific affairs. instead of cas- ing any shadow
on Mr.. Hartman leader of American
railroad finance. will really show in greater
vividness what genius he is. and what
wonders he has worked in the upbuilding of
the properties with wh:cf he has been iden-
titled 1t is TO be noted. in this connection.
that much of the adverse comment concern
ing Mr. Hartman and his handling of the
Union Pacific treasury has come from Lon
don. Mr.. Hartman made the mistake,
when he exploded his Pacific >-iyidends last
August of not giving the English bankers
forewarninS. The Englishmen have been
pretty sore ever since. leading financial
CONNIE ntatOr, speaking of the Englshmens
injured pride. without special reference to
the Pacific dividends incident. says: "A
salient feature of the English character is
its pride. and the pride of Englshmen has
ately been sorely wounded by the fact that
the London financial market is no longer the
commanding market of the world-or at
least not commanding in the sense that it
once was-and that English bankers have
been forced as the result Of the prosperity
in this country and in Germany to the use
countrys financial position. This injured
pride has assumed the form of sales of
American stocks, and 1t has also led to the
creation in England of considerable short
interest in American securities, and results
of the establishment abroad of this specula-
tive account for the decline already be-
ginning to make themselves felt
That foreign bankers and investors, how
ever. are not yet convinced that American
railroad finance is as bad as it has been
painted is evidenced by the success that
leading railroads have had within the past
few days of financing their capital require
ments abroad. The amount of American
railroad bonds and short term notes placed
abroad within the past few weeks is enor-
nous. The New Haven has sold $4,000. coo
of it's bonds abroad on considerably more
favorable terms than they could have been
placed in our own market. The Pennsyl
vania has borrowed $6O,O0O.O0O on short
term notes. $50. 100000 of this being an ex-
tension of the Paris loan falling due in No
vember. The foreign investors. who are
accustomed to very low rates of interest,
seem to be ready enough to put their money
into American securities returning from
to per cent. The French always seem to
have more millions boarded away to put
into foreign loans. The American railway
securities being sold in France are issued
in denominations of 800 francs, or 500.
The French investors are not accustomed
to buying bonds in ST Geo units, as is the
custom here. The comment has beer made
in Wall street that American investors
might be much reader to put their money
into gilt-edge railroad bonds if they had a
chance to buy them in smaller units. Many
investors of the middle class in this coun-
try who usually at a loss to know where
to invest their funds with safety are I'M
able to buy bonds in 81 600 units. If these
bonds were cut up into 500 even $50
units they would have a much wider mar
ket among investors. AS 1t is now, the chief
buyers of railroad bonds are savings banks
and other institutions, who in reality are
using for this purpose the funds intrusted
to them by the great army of small deposit
ors. The bonds of our leading American
railroads security of the very highest
class These roads year in and year out
| make large returns on great masses of pre-
ferred and common stocks that come after
the bonds, and many of these stocks sell
around a per cent basis
X
Leading railroad presidents continue to
speak of their great needs for new capital
| and the difficulty they have of raising this
capital in this country because of the anti
! railroad agitation. President Smith of the
Louisville and Nashville says that his road
should have 800, OOO. 900 Immediately, and as
| much more annually for the next four
years. President Baer of the Reading
1 complains of the timidity of capital under
| the existing political conditions and while
he does not say so. it is pretty generally I'M
| derstood that the Reading management
| would like to raise a very considerable
| sum of money to increase its inadequate
| coal car equipment and replace many cars
! of obsolete design.
| President Truesdale of the Lackawanna
speaks along the same lines. He tells the