The Washington herald., 1907-05-19
The InterbOrOuEh-M h-MetrOpOIitan and
Brooklyn Rapid Transit Corpora
tiOns Believed In Need of Funds.
Latter Concern Plans for Exten-
sive improvements.


Under such circumstances the subject
Of corporation borrowing was resorted to
as on account Of the number of com
panles that had been obliged to appeal tC
the money market within the last ter
days or SO It possessed sufficient vitality
to make it q serviceable factor In beaTgi
operations. No very specific instances OF
prospective issues Of new securities or in
terest- bearing obligations were mentioned
but from the general trend It might
almost be supposed that every trader
knew for a certainty that the railroad.
and other corporations would soon be eH-
gagged in grand struggle for whatever
money there was 10 be found in the
street.
4 characteristic rUmor on the subject
OF new financing was that a New York
corporation would soon come into the
money market with a demand for new
capital on much larger scale than any
company had done I'm q long while. No
name was mentioned, but ms INTERIOR
ough-Metropolitan was at the time maxi
ing the lowest record prices in its history
and the company was a New York corp0r-
alton. the traders soon fastened the rumor
on it,
They were the more ready 10 do so he
cause rum0rs on the same subject had
been heard before. and had gone uncon-
tra5ieted, although those IN which the
name o. the company had been mentioned
did not shake off any very large needs.
The best informed opinion was that the
company would not be under the neces-
sity Of borrowing on very large scale
now, but the extreme weakness iu tho
stock made some of the trading element
willing 20 do almost anything.
An important factor i'm causing the de-
cline in Inter-Metropoiitan was the fail
ure Of the company. according TO its own
statement Of earnings. 20 come anywhere
near fulfilling tho prediction voiced uy
official authority q year ago that the svs-
TEN would not only earn AN fixed charges
and preferred dividends, but would show
fair annual surplus for its common
stock But while the preferred dividend
put into circulation failed 20 take notice
that the company has IN It's first year
earned something over and above an
fixed charges. including guaranteed diU-
dends and has made progress enough %
encourage the hope that not only can Il
continue 20 meet all its obligations. bur
that IN the course of year or two IL
viii earn dividends on its preferred stock.
The opening Of The Brooklyn Subway
within a few months viii mean a good
deal in the way Of increased revenue
without adding To- the fixed charges. and
viii make she problem Of earning the
equivalent To the preferred dividend.
whethe, it is paid or not much easier oc
solution than it is at present When the
street should settle on the conclusion thar
IntcT-Netrrp0litan after eudcavoriug to
place q Sl5Vo01J note issue had decided
90 let the matter 60 over until later in
the year, It began 20 turn its attention
20 the alleged needs Of Brooklyn Rapid
Transit and by the time the market
closed the sum which fl was said this
company would require had grown 20 an
amount equal % about the entire issue
Of capital stock
As the total was increasing with acceIe-
rating velocity, there is no telling what IT
might have grown 10 had not the early
closing hour interpOsed 90 cut it short
But disregardiGg extremes was wide
spread belief that Brooklyn Rapid Transit
would need "a considerable sum. variousIy
estimated at from $4,000 Geo 20 S2O.C1o.00G %
finance the extensive scheme Of improve
ments that has been under way for a
long time past. and which is designed not
only 90 increase the gross earning power
of the system, Int to make possible a con-
siderable reduction I'm tine relative cost Of
operation. The company. of course, has
still "a large amount of its convertible
bonds available, and it was supposed that
the permission obtained from the railroad
commission q few days ago for q bond
issue by the Canarsie Railroad and for
capital issues b. other subordinate com
panies meant that the new securities
would be used as additional collateral to
secure the parent compdny's bond so that
a block Of these might be placed upon the
market On the other hand. the theory
that on account OF the relatively low
value Of the conversion. the privilege as
surinE It 10 be fixed at par. temporary
financing might have TO be resorted TO.
There were so many theories-some Of
them contradictory, many Of them alb
surd, all of them incomplete-that il was
evident there was little more than guess
work and probable bearish activity to
base them on.
Even United States Steel could not
escape the rUmOTmOngers whose favorite
theme was Of new capital. and It was
noised around that this company would
soon surprise the street by announcing
an issue of new bonds. This would, in
deed. be a surprise so much so that no.
body believes there IS one chance in a
thousand that it would come true. The
Steel Corporation is very strong in cash
and cash assets, and is more likely TO be
a lender Of money than a borrower under
existing conditions. For some DAYS past
there has been a rumor that the corpora
tion might buy control Of Tennessee Coal
giving its per cent bonds therefore but
the story has found little CredenCe in any
quarter. To-day's version was stiIl more
improbable.
The more favorable weather in the West
and the decline in the grain markets did
not help stocks, for the traders were Of
the opinion that there was scattered llqui-
dation, and for this reason were not in
ciincd to recede from their position on the
bear side They conceded willingly that
the borrowing demand for stocks was
large, but argued that this did not neces-
sarily imply a heavy short interest. con-
tending that a good part Of the borrowing
was done by sellers who had the stock to
deliver, but preferred to borrow so as 10
conceal the real nature Of the operations
that were under way
Many Of the bulls Oh Union Pacific have
become more or less discouraged by the
Indifference Of the underwriting
syndicate to the market, for the new