The Washington herald., 1907-05-25
WALL STREET NOTES
Union acificLOans NOtFath,
Omed by Spectators.
BIG SHORT INTEREST DOUBTED

borrowers Have No Trouble in Get
ting supply Whenever Wnnted-No
One Believes In Smelling Financ-
ing StOry-COnsOIidated Gas Gets
Little Support-S. p. nt Low Level.
New York, May 2L-Union Pacific
loaned fat in the first hour yesterday
Ordinarily this would have been indica-
tive Of the existence OF an overlarge
short interest but there were many
| brokers. even outside Of the ranks of the
bears, who doubted if il would be 50 re
garded at this time. There was a strong
suspicion that an effort had been made
TO create an exaggerated impression as
/ to the size Of the short interest. and it
was asserted with a good deal Of en-
phass that the borrowers could have
easily obtained all the stock they wanted
without taking it fiat had their principal
concern not been to make it appear that
the short interest was entirely out Of pro-
portion to the extent Of the floating
| supply.
Houses which are generally known TO
/ keep a supply Of Union Pacific on hand
/ at all times said they had had no inquiry
/ from borrowers, and were very much
surprised at the apparent scarcity Of the
/ stock in the loan crowd. They would
have been willing to lend at terms more
/ favorable to the borrower than fiat II
/ calls had been made on them, but they
said they did not care to go into the loan
crowd and offer stock 70 every Tom, Dick,
and Harry who was short without having
/ any business TO be so.
A few months ago most of the borrow
! ing OF stocks was done privately. Now,
/ according 20 the testimony Of some i'm
/ portant houses, there is but little private
| demand The borrowing is done in the
/ loan crowd. and the difference in effect is
/ that while. months ago the short inter
/ est was made 10 appear smaller than il
/ really was, il is now made 20 appear
/ larger than it actually is The borrowers
+ appear 20 be willing that the rates should
+ bee low. although that means q small re-
/ turn Of the money which they pay over
/ 90 the lender of the stock They seemed
]
/ appear MS urgent as possible. although
\ this would be against their own interest
+ II they really wanted 10 cover or % put
/ the price down lower. BY giving an ap-
pearauce OF strength 70 the technical po-
/ s,tion, the market might be worked up TO
! prevent the sale Of more stock. and. while
/ il may be going too far 20 assume that
/ the manipulation OF the l1aning rates has
/ been designed f0r the purpose OF permit
/ ting further liquidation there are many
/ brokers not az present bearish who think
/ 70 may have had that enj IN view.
II the borrowing demand s.. as some
brokers suppose merely to shield for liq
uidauo1, the fact viii be made clear
enough later when the sellers deliver the
actual certificates Of stock, against which
/ they are now borrowing Months hence.
/ nice. clean certificates, bearing well-knowu
/ names. and with only a single pln-hole.
/ may find their way into brokers' Offices,
/ and then there may be a great deal Of
/ talk about the character Of the selling.
/ although the real significance will be I'm
/ the light thrown upon the borrowing de-
mand that exists al the present time.
/ There was "a rum0r to-day about the
/ possibility of financing by American
! Smelling and Refining. but nobody be-
liaved IT, IN the popular estimation. this
/ company is strong in every respect, in the
physical condition Of its plants. in the
/ amount Of it's working capital and its
earning power. Where or how the rumor
originated no one seemed Co know except
/ that it was akin 20 the equally baseless
! one circulated in regard % the Steel Cor
t t-- % -Hss
was "a large short interest i'm Smeltors was
! indicated by the borrowing demand and
| perhaps this fact sufficiently explained
| the activity Of the rumcr mill.
/ Very little support was lent 20 Co1sgli-
dated Gas, and the stock slid of easily
on a comparatively small volume of sell
/ ing orders The bearlsh factor was. of
/ course. the city's suit 90 test the com
|pany's right % continue use Of the streets
/ on the ground that all but one OF its fran
/ Chises have expired. The same argument
/ was used 20 advance the price Of A1anhat-
/ tan Transit on the curb. although. Of
/ course. there was no real reason why it
should have worked that way. for whether
/ the right Of the Consolidated Gas Com
pany 20 the use Of the streets is denied or
/ not, there can be no doubt that this COM
/ Danv's lighting system will always con
[ tinUe % be operated.
| New low records for the year were
made by the Southern Railway stocks
on a revival Of the rUmors that the divi-
dend rate on the preferred would be re-
duccd at the time Of the next declara-
ton. There was also talk Of the alleged
need Of new capital bat both rumors
vero, in well informed quarters, de
! scribed as decidedly premature The ru-
NOR about an issue of new securities pos
sibly arose from a misinterpretation Of
/ President Finley's statement that If the
company is 10 keep pace with the in
/ creasing demands upon its service. its
present efforts must be supplemented by
| the expansion and Improvement of its
! facilities This did not mean that ad-
dtional capital for expansion and inn
! provement would have TO be provided AT
once, for the company has already made
/ some provision to that end.
| Selling ex-rights, Southern Pacific made
the lowest price in its history. This.
! however. marked no real decline from the
/ level Of 112 touched on the day before,
which was also the lowest Of the March
panic The reason for the heaviness Of
/ the stock was that the new issue would
bring the total ahount outstanding UP
/ to such a figure that the dividend would
no longer be as secure as II had formerly
/ seemed TO be, and that the floating sup
( ply would be so large that the market
/ position would be less strong than before.
/ Crop news was. on the whole. favora-
/ ble and had little influence on the price
/ Of stocks. Most brokers took the view
] that as the early reports of damage had
! been exaggerated. it might not be safe
! % relv imnlicitlr ON the nrst rennrts NJ