The Washington herald., 1907-05-10
MARKET GETSABLOW
Announcement by Hartman
Not Well Received.
BIG DROP IN UNION PACIFIC
Common Breaks : IL Points When
New Funding Plan Is Made Public.
Instead Of Distribution, stoeiShOId-
ers Are 10 Be Observation-Disclosures
Dubious About Prospects of Issue.

hour Of business on the stock exchange
to-day dealings in securities, although
perhaps slightly more active than they
were yesterday, were still such as TO
suggest no change in the apathetic con
dition of the market. In the early trad
ing the market was depressed for a time.
although in a very triding way. by weak
ness in the stocks of the local traction
companies. owing. presumably, 20 the
strong indications that the public utilities
bill. now pending in the legislature, viii
become a law without substantial modi-
fioation from the form originally pro
posed.
There are many people who maintain
that the enactment of the law IN question
will not seriously affect the value of local
securities of the kind ascribed. the con-
tention being that the new law viii put
an end 10 the recurring haTassments by
the State legislature each winter of street
railways and similar corporations, and
that thus the securities of these ccmpa-
MES will be established on a soVnder
basis than they have been heretofore.
Whatever truth there may be in this
view, the common stock of the INTERIOR
ough-Metropolitan Company broke to-day
10 a new low record price for the year
thus far. The preferred stock of the com
pany was weak, and the Brooklyn Rapid
Transit and Consolidated Gas shares also
declined. Union Pacific stock, on the
other hand, which has ever since the
panic day of March H. been the real
leader Of the market, held with notewor-
thy frmness, and upon an official state
ment that, before the business day was
over an important announcement would
be made regarding the cOmpany's affairs,
advanced nearly three points above It's
yesterdays final price. II was understood
Of course, that this announcement would
have relation 10 the new financing ar
raagements which have so long been sub
Jects of rumOT. and the presumption was
dear to the heart of spectators for the
rise that in some way the money-raising
necessities of the company would be so
treated as to be in the nature OF boon
10 the company's stockholders
Expected "a Holding Company.
The story most commonly heard on the
subject in Wall street for weeks past has
been that a holding company was to be
organized for the purpose Of taking over
the investment interests of the Union
Pacific system. and that by reason Of a
gift thus TO the Union Pacific stOckhold-
ers of shares in this holding company the
shareholders would in turn be willing 10
subscribe the money required TO put the
company in the possession Of the cash
sums needed.
While the terms OF these plans as they
were finally put forward during the day
were indistinct in many particulars. and
while therefore, final criticism of them
should perhaps be postponed, it must at
least be said that they were received in
Wall street. and apparently for good
reason, with griev0us disappointment
The new plan was announced shortly
after . o o'clock in the afternoon and in the
succeeding half hour the Union Pacific
common shares broke ~ points from
their previous high price OF course. the
whole market was carried downward by
this, and declines Of from one 10 three
points ia the standard shares generally I
occurred. The selling OF stocks on the /
break, however. seemed TO be rather spec /
Ulatlve than otherwise, and the market, /
with the exception OF the Union Pacific I
shares. made a fiar recovery before the /
end OF business. Naturally the undert0ne [
of the market was greatly confused and 4
unsettled by the new developments.
The Union Pacidc's and Southern Pa /
cihc's new borrowing the necessity for the /
opera ton in the case of the last named /
being something of a popular surprise. (
although a matter fairly well TecOg- |
nized by well-informed people, consists in |
a proposition to the stockholders Of the /
two companies, first, to authorize and 4
issue of S1O0.O00.O00 Union Pacific common /
stock, S75,C 900 of which is reserved for /
conversion at $l75 a share into an issue /
OF S75000,000 new debenture bonds Of the /
company at a price of 90
Preferred stock to Share.
Just how long the period OF conversion /
is 10 run appears as yet undetermined. /
Secondly, the Southern Pacific Company
is to issue S36,O0O00O of preferred stock at /
par. and the present Southern Pacific and |
Union Pacific preferred stock is to share /
as well as the common stock Of the COM /
panies in whatever rights may be brought /
TO exist 10 the privilege of subscription /
TO the new security issues.
All this means, in substance, that the /
Union Pacific Company, instead of dis
tributing' any assets TO stockholders. IS !
to increase its fixed charges S3.009.9a0. ana I
that the Southern Pacific is to put $751; /
O00,000 Of preferred stock ahead OF its out
standing common shares. entaiiing a /
charge ahead OF the common shares OF /
s. 500001
Pessimistic criticism was excited by all I
this on many grounds. AT the price and I
interest rate of the new Union Pacific /
bonds they yield less than ~ per cent
10 the purchaser and as such, devoid OF /
their clause regarding convertibility, they
can hardly be considered attractive to in
vestors in the present money market
while the restrictions as regarding price
upon any conversion OF the bonds are
such as were generally considered in Wan
street to-day as not greatly adding to the
0esirability Of the investment
Furthermore. in case such conversion
does at any time take place it viii OBJ
viously add to the volume of Union Pa
cine stock and diminish in corresponding /
degree the value Of the equities of the
stock in any claim 20 the company's un-
divided assets 1t was again duly re-
membered that the new Union Pacific
stock was being issued In part TO pay for
heavy purchases of stock of other COM
paaies by the Union Pacific Railroad
Company since July last. which now
stands the company a loss, at present
market prices, Of over S1S,000,000.
As regards Southern Pacific, the COM
pany has, it seems, a floating debt very
much larger than was commonly sup
posed, Sl4,oo0000 Of which lies in the
shape of advances made by the Union
Pacific company that must be paid of 1
while the remaining SIS 000.009 has been
caused by purchases of the stock Of oil
companies and OF interests in similar out
side corporations. In order 10 nquidate
these claims the Southern Pacific COM
pany Is. by its issue Of preferred stock
borrowing money at the rate of per
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