The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1907-02-25

only a period Of four days time or but 4
a day more than half the usual length, /
it was still OF such sort as 10 be rather /
discOuraging TO holders of securities /
bought speculatively Tor the rise, and it /
must be confessed that at the end of 1
the week there was no ineonsiderable /
revival in speculative circles of that 1
spirit Of pessimism which became so
prominently developed during the month I
of January
Seemingly without adequate cause a I
selling movement broke out in the mar
ket, which was carried on with such in
tensity as to suggest the. idea that the
recovery in prices that had taken place /
during the preceding fortnight had been
due TO no other force than that of "a mere
buying back of contracts entered into
speculativeIy for the fall This conclu- !
sion was not. of course. absolutely forti-
fed, and il was indispUtable that occur
rences during the week were not of
nature to make people highly enthusiastic
over the Immediate future Of the market.
There was for one thing, another out
break OF railway short-term note issues
Hoped Borrowing Was Over.
Wall street had begun to entertain
strong hopes that the bulk Of borrowing
of this character had been completed, and
it lost heart when it discovered that its
views as 10 the extent Of the competition
that the stock market would have to
suffer from the output of high inrv%=st-
bearing railway obligations had been al
together too sanguine.
The issue announced at the close of
the week preceding of S29, co. Of the
New York. New Haven and Hartford
Railroad COmpauys debentuTe bonds was
not altogether liked, although the dispo-
sition was 20 make the best of the matter
in view of the gratifying fact that the
bonds were placed exclusively with for
eign investors But a few days later
came the news Of the Pennsylvania Rail
road S sale of s600J0.000 of shOrt-term
notes and the $4,000, 900 worth OF similar
securities of the Tidewater Railroad Com
p1ny-
II was, OF course. explained that d
favorable Interpretation should really be
placed upon the Pennsylvania borrow
ing, inasmuch as this involved a large
eut-down of the previous plans therefor,
and it was stated that with this note is
sue the demands that the Pennsylvania
would make upon the money market ia
the present year would cease II the
Pennsylvania management does what IL
promises % do il will il seems only ask
for Sl000O.000 from the public in the pres
ent twelvemOnth although, presumably.
the shareholders of the company viii be
asked to carry out the programme OF the
directors, already announced. and author
ize at their annual meeting next month
the issue of S1000lO000 convertible bonds
and 100000 stock thus planned The
they do not propose TO offer any Of these
new bonds or stock for sale this year
and that Of the $50 000. coo short-term notes
that have just been sold S50000,000 viii go
10 retire the same amount of notes fall
ing due at the end of the year. It is
70 be remembered that the Pennsylvania
viii be In receipt throughout the year of
large sums Of money in payments made
upon the cOmpany's recent sale of its
Norfolk and Western, Chesapeake and
Ohio. Reading, and other stocks held in
its treasury
Case of TideWater Notes.
The significance Of the sale Of notes
by the Tidewater Railroad Company lay
IN the high interest rate which the notes
bore It is very well understood that this
railway has been built by a great capital
list whose personal credit is second TO
none in the land. and that the road gives
the most substantial promise of being
a very profitable business enterprise. The
property in question has no mortgage in
debtedness whatever. although 1t viii not
begin 70 produce revenues for d consid-
cradle period. That under such circUm-
stances il should be compelled 10 raise
money at e y per cent interest i'm
pressed Wall street, rightly or wrongly.
with the idea that the money market was
really in "a more comfortable position than
had been commonly supposed.
As the week wore on the quotations Of
the TidewateT notes, as dealt in hy the
bond and investment houses advanced TO
a premium over the price OF the issue,
but this occurrence was the exception in
the market for short-term notes gen
orally. The price OF these notes de-
veloped heaviness, one reason therefor
being, as was stated, the fact that the
original vendors OF the notes. when sell
ing them 10 large banks. did so upon a
promise 70 place in sUch banks tie pro
ceeds of the sale Of the securities. This
amounted TO Offering the notes to these
buyers at q concession from the list price.
Rith the result that such purchasers
We're enabled to offer the notes to indi-
vidual investors at somewhat lower prices
than were commonly quoted.
The situation of railway business at
the moment is. as Mr. Hill remarked dur
ing the week. one of semi paralysis under
the immense development of business
that has come about IN the last two years.
Money for the purpose of proper ex-
penditures for the purpose of graphing
with these conditions is what the rail
way companies imperatvely need But
what likelihood is there that investors
viii be willing to buy railway stocks and
bonds when they see evidences of such
animus, veal or assumed. against the
railroad companies as are now presented
Ia almost every State legislature in the
country?
Prospects of Lower Passenger Rate
There can be no denying that il appears
likely that in many OF the States of the
Union there viii be directed before the
end OF the winter reduction of railway
passenger fares to rate Of or 2l2 cents
a mile. The courts no doubt VIII be
asked 20 adjudge the constitutionality OF
these acts, but che prospect for the rail
roads in the matter is not Gattering.
Behind it all looms up the scheme
which it is understood has the backing
OF the President of the United States
for a sort OF formal valuation of railway
properties, with the idea OF making th,
facts thus obtained the basis for an APP
peal TO the national lawmaking body
20 pass laws looking forward to a redUc
ton in railway freight tariffs. The rail
way companies probably would not oh
ject TO such investigation il the stand
ards of valuation were TO be fairly an,
properly adjusted. That is to say, tbs
railway cOmpaniesRsis only as q MATES
of right that they be allowed to credi
themselves with the increment in tn
value Of their investment and that IL
estimating the worth of the propertie