The Washington herald., 1907-05-18

each occasion those best informed on
the property said they were essentially
true, although their fruition would not
come until there was an Improvement in
the money market. Apparently the
money outlook is now sufficiently clear
70 warrant the management Of the COM
pauy in taking the preliminary steps 10
carry out the plan.
For a considerable time past Chesa-
peake and Ohio's financing has been
of a piccemeal kind, embracing the sale
of notes. brauch-line bonds and driblets
of the general mortgage bonds. The road
has been spending money. and could have
used a great deal more 10 advantage had
it been able TO obtain it on fair terms.
The failure 90 raise money for the full
development of the COmpany's POSSIBLE
ties has retarded the progress OF the
road and involved the use Of all surplus
earnings for bettcrmcnts beyond the PAL
Try per cent paid annually as a dividend
TO the holders Of the stock.
The trouble was that the road could not
sell any considerable amount NJ the gen
cral mortgage bonds. all Of this issue
having already been sold. except what
WAS reserved for the consols and the ad-
diu0nal amount that could he disposed of
for double-trackinE. OF course. the COM
pauy needed other Improvement work
than constructing additional double track,
and. as this was all the general mortgage
could be used for, it became necessary
20 raise funds by any and every means
untI The present limitations interposed
by the mortgage could be removed.
The creation Cf a blanket mortgage biz
enough to provide for an future contin-
coueles will not necessarily imply that q
large amount Of the bonds will be sold in
the near future. The contrary is more
likely 20 be the case. but the road will be
.E position. after the stockholders take
necessary action, 20 avail itself OF favor
able conditions IN the money market
whenever these arise.
No indication Of such an increase in the
floating supply Of Chesapeake and Ohio
as must have occurred had the recent sell
ing Of the stock been genuine liquidation
can be found In the street On the con-
uary, the demand in the loan crowd is
enough 10 keep the rate somewhat under
the average. and az times It is not all
easy 10 borrow the stock.
The supposiHon that prominent bank
ing firm. which last year bought the bulk
Of the Pennsylvania holdings Of Chesa-
poake and Ohio, has been lquidating. is
too absurd % De entertained. The price
at which the b.nkers bought the stock
was far above the present market quota
uons. The intrinsic value Of the stock
has increased since. although the market
price has fallen more than 80 per cent
Il is much more reasonable to suppose
that the banking Interests have bought
the stock so as To make lower average
price for their holdings than that they
have been prominent among the sellers
when the stock is. in the opinion Of some
Of the best judges Of value in the street,
intriusiCaIly the cheapest on the stock
exchange list.
Last year the road earned about : II
per cen, on ITS stock, and il promises TO
do even better this year. The property
has been placed i'm q state OF relatively
high efficiency and a comparatively small
outlay would enable it 20 further increase
its net results quite materially It is not
often that the stock of such a road while
earning between and per cent can be
bought for less than $40 Il share The
earnings for the stock are equal to nearly
20 ncr cent on the market price, probably
higher than in the case Of any other rail-
road stock on the entire list.
London supplied bullish advances on
Canadian Pacific. but these were of n
purely technical nature having no bear
ing on the value Of the stock. In short
they were that selling for the account Of
an English operator in the stock had
ceased. and that something Of a bear
interest had been created. The situation
here was similar, there was no longer
liquidation, and the short interest seemed
o be of considerable proportions. There
was little in the way of news bearing or
the crops character, although, of course.
nobody attempted 10 deny that unless
the weather during the remainder Of the
crop season was unusually favorable the
yield of wheat would be smaller than
usual.
/ Two small issues Of notes, one Of
/ S. 100000 by the North American Com
pany. and another Of S1,500.OOO by a leased