The Washington herald., 1907-05-24
WALL STREET NOTES
Selling Of New York Central
Check to the Rally.
DIVIDEND MAY BE REDUCED

Rumored That II VIII Again Become |
> Per Cent Stock-SteeI Common |
Thrown ON Market, but Price Soon /
RaIIies-Object of Hove Not Made /
CIcar-Traders Benrish on Reading /
New York. May 23.-What perhaps. |
more than anything else tended TO check /
the rally I'm the market this morning was |
the selling Of New York Central which !
seemed 20 be a resumption of the liquida- |
ton noted on the preceding day and by |
many supposed to have been completed /
then. That supposition. while probably not |
far wrong. was not wholly correct What /
little liquidation had been left over from /
Wednesday broke out again, and the bear |
traders utilized It to get the price down /
with considerable effect As a result they |
found themselves with contracts on their /
hands and no great supply Of stock avail |
able from which 20 hll their requirements |
The bulls c0utended that none of the |
selling really represented liquidation. AT /
tempting 10 explain il as an attack based |
ON the report that the company had or /
dcred curtaIlment of expenditures but /
this explanation could not pass muster |
There was liquidation. that was plain. and /
the bulls would have made a better argu- /
ment had they boldly admitted the fact
and appealed 20 sentiment on the ground /
that the end of this kind OF selling had /
/ been reached. As for the retrenchment
order, the fact has been noted by every
member of the board that "a large section |
of the street has come % look upon re-
tre1chment with favor and 20 give its ap-
proval o. every measure % reduce eXpeu- .
di.urcs where this can Zoe done without
sacrificing the present standard OF eff
cheney.
Rum0r became very busy with the sub
/ iCnt of the alleged intention OF tine Now
/ York Central directors 20 reduce the diyi-
deuds on tine stock and by noon at which
time the liquidation had ceased and the
/ bears We're wondering how they could get
stock To cover, the street was filled with
fantastic tales Of friction iu the manage
mout OF tho road TIE trading I'm the
stock savorgd OF bCIush manipulation /
Perhaps it was net such matters cannot /
as q rule. De determined absolutely but
.
/ IL was entirely safe tp say that "a good
part of 10 was Of that character
80 one said absolutely that the diyi-
deud would be reduced No one said
definitely that it would be maintained. /
and even if assurances Co this effect had
/ been given hy some influential interest u
the board TJm1r would probably have
asserted that other interests held com
trury opinions. and that the friction all
/ legged tU exist would make itself felt at
/ the forthcoming meeting. The mysteri-
ous liquidation iH the past couple of days
of course prepared the street for al sorts
of rumors bearing ON the stock the future
market action of which viii be watched
closely as au Indication rf the amount OF
truth iu the various adverse reports.
New York Central has paid two quar-
trrlr dividends 20 tle rate of per cent.
/ IF an. directors should decide to put
. it back upon D. per cent basis II might
. ua found chat their action had been dis
counted lu the stock itself but such au
f announcement could not fail % exert
] depressing Influence oa the market as "a
/ whole. The bears would Doe sure 90
utilize it 90 the fullest extent arguing
that it was the first of the dividend ra-
ducti0ns. and that others would follow
/ I'm view of the place which New York
/ Central has always held in the first rank
+ of American railroad corporations. there
can be 100 question as 90 how am arsu-
meut of that kind would be received
All sorts Of suesees were being made
as Co Tn, source of the selling OF United
/ States Steel when iu the second hour
| some light was thrown upon the subject
I iU rather unexpected way This was
| when fae floor member of a NOT very
large house rushed into the Steel crowd
ard began Offering the stock ia large
/ blocks at amy price Doe could get for IL.
F He quickly broke The price from % t. 90
/ a5 although tla buying ON the decline
/ looked good. Just as soon as De had
finished selling the price recovered to
. So IL and inside of an hour it touched
g. None of the traders could figure out
+ the purpose of the excited selling by the
+ broker who made the strange price move
meuJ but III the purpose was to stampede
/ the bulls, it certainly failed siga1lly
/ The reports ot selling by prominent i'm
I teTests was denied on good authority
/ The traders turned bearish Iu the first
/ hour on Reading Wry they did SO was
NOT very clear. Perhaps some Of them
+ regretted it latter and covered ou the raIIg.
. b"t it could NOT ba said haJ any c5nsid-
erEblo number were found oa the bull side
/ of Jae stock at any time during the day
; The only argument heard 10 explain the
/ haarish attitude of the professionals 10.
/ ward trs stock was that its price rela-
/ lively 90 its dividend return was alto
gether out Of line with the rest Of the
] -G+ Ff
/ as the same conditions have prevailed for
! "a couple of wears past. and il has yet 10
/ Doe shown that lhe stock on the basis of its
/ intrinsic value is selling. OF has ever sold.
/ too high.
/ Based on dividend yield. the stock is not
/ cheap, but if dividend yield is 20 deter
mine value. then Union Pacific is too low
/ II is. of course, Inconsistent to make the
/ dividend yield the sole test of value i'm
/ the one case and disregard it altogether in
the other. The conditions that determine
/ value are deeper than the mere rate of
/ dividend paid al "a certain time. and the
arguments that would make the rate of
dividend on q stock the only test of value
are too superficial % he made the basis Of
stock market operations when the bears
begin TO display inconsistency to an ex-
tent as great as they have displayed IL I'm
I this instance it is time To question if
they can win by brute force what they
cannot by their intelligence.
/ While the bears made little mention Of
/ the fact. there is little doubt that their
real theory i'm regard 90 Reading was
shat the large interests whose opera
tons made the stock one Of the most
. active features of the trading on the
New York Stock Exchange in the past
couple of years had either sold out their
/ speculative lines OF this security or were
for some other reason temporarily indif-
ferent TO its fate. They prOfessed to be-
lieve that one very prominent individual
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