The Washington herald., 1907-01-17
WALL STREET NOTES
Calls on Southern Pacific Are
in Heavy Demand.
RECALLS LAST YEARS MOVE
Deals said to BE Made on Expecta-
tiOn of Increase I'm Dividends in
August-Street Believes IL Is ''LOng
ShOt"-Intfmated n Play OF Harri-
man Interests to Manipulate Prices.

New York, Jan. 16-London option deal
ers are not likely TO forget the position
in which they found themselves last sum
mer when the Hartman stocks, on which
they had sold so heavy calls to New York,
received dividends at higher rates than had
generally been expected. The extent to
which they were forced to buy the stocks
to deliver on the declaration Of the divi-
dends was one of the most noteworthy
factors In the remarkable stock market
movement that then ensued, and cOnse-
QuentIy they are more than ordinarily
interested in the demand for calls on
Southern Pacific. good until the end of
September. that has already begun to
make itself felt
This demand is spoken Of even now as
heavy but probably in a relative sense
to imply that it is large, considering the
length of time that has yet to run before
maturity of the privileges sought In
this buying of privileges. as we'll as in
the houses through which buying orders
are executed, there is a remarkable SINH
larity in the present movement to that
in Southern Pacific last year
II is. OF course, what the street calls
taking a long shot" to buy Southern
Pacific in January in the expectation Of
an Increase in the dividend in August, but
it is well known that those who operate
on a large scale in the Hartman issues
make several turns on the public's an
ticipation Of each favorable development,
selling out whenever the enthusiasm Of
the trading element carries the movement
far enough TO enable them TO do so at
profit, and buying back later with
confidence that when the good news
finally comes out IL will afford them an
opportunity 70 clean up their operations
An increase to Z per cent in the Southern
Pacific dividend rate would mean addi-
tional "other income" for Union Pacific
equal to nearly 1 per cent on its stock.
There is no intimation that Union Pacific
would distribute this to it's stock
holders. hut it is not at all certain that
it will not do so. Union Pacihc's pres
ent dividend rate is 10 per ceut-6 per
cent from the operations Of the railroad
and per cent from returns on securities
owned. and while from the operations
large amount is set aside for betterments
and possible requirements OF the future.
the returns on securities owned can be
distributed with little deduction. This was
done last year, and may be done again, 50
that it is not at all improbable that. II
the returns on securities owned by Union
Pacific should be so much larger than "a
year ago % justify the change the rate
of distribution Of this source might be
raised 10 5 per cent AZ the end OF the
present fiscal year. The argument that
a rate of II per cent on Union Pacific
would not be symmetrical could hardly
hold when II was understood that it really
represented per cent of the operations.
Brokerage houses having Western con-
nections say It has become a matter OF
considerable comment out West that on
all business received By the Union PaCidC
for points reached by St Paul and North
west. and on which the railroad is given
the privilege Of selecting the route. the
preference is always given to ST Paul
This, IL as said, applies equally on pas
senger and freight traffic. and is a marked
change from the conditions which pre-
vailed. a few years ago when the North
western and Union Pacific were con-
tinvally exchanging favors. The change
in the relationship Of the Northwestern
and the Hartman lines may hasten d
project for Chicago and Northwestern
line to the Pacific Coast which many
people have long regarded as inevitable
The new issue Of Northwestern stock may
have some relation 10 such a project.
In the early stages OF the break in the
market to-day St. Paul showed remark
able strength, but when the weakness in
the general list became pronounced, it de-
clined with the others. only. however. to
show that the buying that had at first
sustained it at the high figure was still
continued at a lower level. Just what
that buying is based on was as much q
mystery as ever. for the ordinary trader
thinks the stock is high n this level. His
way of looking at il is that if the value
Of the rights is added to the price OF the
stock ii makes a quotation Of nearly 100,
which is not very much below the high
record made in December last. and which
most people thought was only made be-
cause the stock was practically cor
nered-"
Whenever the bears are looking for a
pretense TO break the market, they are
likely to twist every circumstance so as
to make it subservient to their purpose.
This they did this morning when they con-
strued the statement issued by President
Finley, Of the Southern Railway. rs bear
ism on the stock. II was impossible to fol-
low their lines of argument, which con-
sisted in attacking the stock first and then
asserting that there must be something
in the statements made by the president
Of the road TO cause the selling.
AS a matter Of fact, all that was in the
report was Of growth of business beyond
the ability of the road adequately TO take
care Of and tie bears inferred all sorts
Of things that We're never intended: that
Il was an intimatiOn that the preferred
dividend would be reduced or passed, and
that shOrt-term notes would be sold to
provide the means Of carrying on i'm
pTOvements Later. however. the char
acter of the selling of the stock was
shown. when it WIS reported that prom
incnt banker interested in the property
was seriously i'll, although, as was after
ward learned. he was at that very time
attending meetings of railroad boards.
from which he could easily have absented
himself if he were not in his usual health
and vigor-
The break in Southern Railway unset
tied the whole market. For time the
weakness was confined TO the stock con-
trolled by one banking interest, but these
formed such an important group that Fl
was impossible that they could continue
to decline without exerting a sympathetic
effect on the whole list and so prices
gave way all round the volume of selling
increasing as quotations declined. Many