The Washington herald., 1907-05-05
Bulls Feel that Day Is Not
Wholly UnfaVOrable.
PRICES IN REACTION TWICE
Reading Used 10 Check Declines.
Little Heard of the New Union
Pacific Holding Company - Bank
Statement Is Far from Pleasing to
the Majority of Traders-GOssip.

some extent. by further reports of crop
damage. although the latter factor was
largely Offset by predictions Of fairer
weather and an actual rise in temperature
ia the Northwest.
Prices went of sharply, but were rail- |
lied about the'end oe the first hour under
the leadership of Reading, only TO suffer
another reaction on the publication of the
bank statement which showed a much
heavier loss Of surplus reserve than had
been counted upon. At the end of the ses-
sion the bulls as a rule seemed to think
that matters had gone their way, or
rather had shaped themselves in such a
way. in spite of some unfavorable factors.
as To furnish the bears with little encour-
agement They said that If the weather
in the West should not improve to any
marked extent over Sunday, the opening
on Monday might prove quite interesting.
The bank statement was thrown out Of
joint by the inclusion of the figures of the
Fourteenth Street Bank, and by the mon
ey transactions involved in the payment
made by Baltimore and Ohio for the
bonds of the Chicago Terminal Transfer
Railroad. The latter involved temporary
borrowing by the railroad. but the loans
will be repaid within a short time when
funds deposited with Out-Of-tOwn banks
and other ways beyond the company
reach at the moment are collected and
transferred TO New York. To a consid-
erable extent the statement was affected
By the conditions that had prevailed In
previous weeks since the low rates for
.fa.yi
and the Out-Of-tOWn banks 10 withdraw
from the market. throwing upon the asso-
ciated banks the burden Of loans formerly
carried by them.
When Reading was used to check the
decline in the market in the first hour no
news of any kind circulated TO account
for the action of this particular stock.
and the only bid for popular favor was
the appearance as q buyer Of an operator
who a year OF two ago had been quite
active on the bull side when the historical
upward movement OF over 100 points was
in progress. The traders looked on, but
those who on the early break had thrown
over stocks bought the previous after
noon when the chart indications were
so rellgi0usly followed. showed no incli-
nation TO take a new position.
Little vas heard of the alleged plan OF
Union Pacific 20 form holding company,
but on the other hand there was a de-
cided revival or interest in the rumors
that the company would in the near fu-
ture announce some plan of new dnanc- [
ing to provide for maturity OF the exist /
ing notes next fall and supply the funds |
TO carry on the extensive scheme Of bet |
terments now being worked out upon the
system That the money can be OBJ
tained on comparatively favorable terms
was admitted in every quarter. One Of
the most plausible Of the recent rumors
regarding Union Pacific is that assur-
ances have been given by some of the
largest interests in the property TO Ger
tain prominent capitalists that the next
semi annual dividend TO be declared in
August would be at the prevailing 10 per
cent rate. This puts the possibility OF
an ultimate reduction so far into the
future that it no longer figures as a
market factor
Apart altogether from such assurances
there. il is hardly any reason TO doubt
that the next dividend would be at the
regular rate. Enough has been seen Of
absolutely certain that the results for
the twelve months ending June 30 next |
viii be better than those for the fiscal
year on which the directors felt justified I
in basing their action when the present !
rate of distribution was adopted last sum-
mer. II there was ground for the action
taken at that time there can be abso-
lutely no excuse for departing from it at /
the next dividend period. The fall divi- /
dend viii be drawn from the earnings of /
the year now nearly elapsed, which viii /
leave a very handsome margin over and /
above requirements of the present rate, /
and it is hardly TO be expected that the /
directors under the circumstances, will /
take action that would be tantamount 10 /
an admission that the course followed by 1
them a year before was unwarranted /
The best justification Of last years action /
Will be strict adherence TO Il until the /
conditions Of business change materially 1
One reason why Southern Pacific has |
been such a laggard in the market, COM /
pared with Union Pacific is found in the 4
earnings for the month Of March. which /
were relatively unfavOrable on account of /
the floods in California during the latter /
half of the month. As a result of wash |
outs and other inconvenience caused by i
the unusually heavy rains freight traffic /
in that State was practically tied up for /
days. and the company was obliged to /
make expensive repairs out of earnings. /
This implies that not only was the volume /
of business curtailed. but the cost OF 4
handling it was increased, both factors 4
combining to make the net returns much 1
smaller than they would otherwise have
been With the returns out of the way, it /
viii be practically certain that succeeding /
months will show up very well, and Il Is
not at all improbable that the bull inter-
ests decided that it would be better for
the success of their operations that they
should wait until the public saw and un-
derstood the only unfavorable statement
of the year before going ahead.
Floods in California in the month OF
March are by no means an unmixed evil.
They may cause considerable damage and
for the time being interrupt business. but
they mean an abundant supply of water
for irrigation and assure the success of
the States most valuable crops. Nor is
the business that they cut of from the
railroads lost permanently. On the con-
trary. the traffic accumulates to swell the
volume Of business Of the lines iust as
soon as they get into condition TO handle
IT, La all probability, had the Interrupt
tion occurred in the first half OF the
month instead of the second half, much
of the loss could have been made up before
April first, but as it was, the recovery
will not be made evident until the April
statement is published. OF course, a fac
tor in the situation, so far as Southern
Pacific is concerned. is that the enormous
growth in the earnings of the road With