The Washington herald., 1907-05-21
WALL STREET NOTES
Union Pacific Fails to Rise
as Was Predicted.
BULL ACCOUNT IN THE STOCK

Instead of Going Up TO 100, Harri-
man Issue Drops from las 10 I3S.
Hill stocks Also Decline, Owing 10
Fear of an Interstate Commerce
Observation-Disclosures Reports.
New York May PA week ago Union
Pacific sold at 14S or better. and the
traders said it was a cinch to buy it at
that price, as the underwriting syndicate
would surely move it upward so as to
make a good market for the new converti-
bic debentures. To-day the stock sold
down almost 10 13S, and the argument
about the underwriting syndicate's pur-
pose to make it sell at 100 or better was
heard no more This is merely another
case of a Wall street cinch slipping up
somewhere.
That the syndicate will in the long run
sustain the market for Union Pacific in
order 10 help the hotatior of the new
bonds is a perfectly reasonable expecta-
tion This however, would be a very DIFF
ferent matter from helping lot Of specu-
lltors to make a profit on the bun side
OF the stock. That a good deal Of Union
Pacific was bought speculatively a week
ago 10 profit by the operations Of the
syndicate is about as certain as anything
can be.
That the underwriting syndicate knew
this and estimated IT'S bearing on the
technical position of the stock in the mar
ket is equally certain. Every one knows
that the effort Of such speculative buy
ing usually Is to weaken the market
position of the stock that is the subject
of it. This is the rule, and the effect Of
the speculative buying of Union Pacific
was no exception 70 IT,
The underwriting syndicate saw that a
weak and not very intelligent bull account
had been formed in the stock and that
such account. after the price had risen
substantially was far from being an ele-
ment Of strength II the syndicate or
prominent individuals interested I'm Il
wanted 10 improve the technical position
have been 90 eliminate this weak bull qc-
count and foster the growth Of a short
interest.
stock could have been thrown over %
be bought hack lower down. and when.
finally, the time came for real bull.sh
efforts, the greater buoyancy even AZ
lower level, would do more % stimulate
interest than the maintenance Of prices
ar the high levels could have done.
Union Pacific now has % contend
against condition such as the Hnl is-
sues. ST. Paul, and others active fin the
market have had 20 contend with for
some time past. the fact that interests
which might be expected to subscribe %
the roads financial requirements have
other use for their funds Tire hold
ers Of the Union Pacific stock.
who might naturally ha expected
On buy more ON declines. viii now
find other employment for their funds ia
subscribing % the S1G1uHu new bonds
which many 81 them would take on the
ground of duty 20 the property. even IL /
the convertible feature did not strongly
appeal To their understanding Of specula-
tive opportunities. The loss Of the huying
orders that without the bond issue would
come from present holders 0f the stock.
cannot but Doe felt. as % has been felt
under somewhat similar circumstances int
AtchisOu. which recently authorized the
sale of S25."1.sH convertible bonds. with
rights 90 stockholders, and has Jagged I'm
the market since.
While the decline in the Hiu stocks I'm
to-day's market was by traders attributed
Co the report that the Interstate Com
meTce Commissions investigation Of the
HID system 20 determine whether or not
the relations between the Great Northern.
the Northern Pacific. and the Burlington
constituted q combination in restraint of /
trade would De resumed I'm the near future
and searchingly conducted. it was really
nothing more than what might have been
expected from the selling that had broke.
out M the end Of last week, and which
had every appearance Of liquidation. al
though az the time there was nothing
that this class of selling could be at
tributed 10.
Perhaps some interests had early infor-
nation as to the resumption Of the in
yostigation, but 1t Is al least likely that
the real cause OF the selling was in the
fact that speculative interests which have
Tor some time been active on the bull
side OF the cereal market held a fair
amount Of stock i'm some Of the North
western roads. Their selling Of Hin
stocks may indicate that they have come
to the conclusion that the damage is not
confined TO winter wheat. but that the
spring crop also may be short.
The bear traders, who have been utiliz- /
ing to the utmost the argument Of the
effect on the money market Of corporation .
borrowing derived comfort from the
announcement that Interborough-lIet 7
politan had negotiated a sale of $1,000 I
90 notes bearing interest at 6 per cent.
The bulls. however. were willing that
those operating for lower prices should
have an opportunity to make whatever
capital they could out of the announce
ment, for IL quieted the worst kind Of
argument that the company had tried to
rise a loan, but found bankers unwilling
10 loan it any money except on prohib- /
tive terms
Conservative interests took the view
that as the worst i'm regard to INTERIOR
OUgh-MetrOpolitan affairs is now known
and the next year must show substantial
growth in the earnings, the bears might /
not thereafter find the stock such an easy /
prey as they have found it heretofore /