The Washington herald., 1907-01-12
WALL STREET NOTES
Pennsylvania Stock Issue the
Chief Subject of Comment.
PAY FOR CONVERTIBLE BONDS
Cassatt. I'm Discussing
Conditions Last june, Spoke Only
Purpose of New Issue Not An
nOunced-Canadian Pacific Heavy.

4NhW VI ~ Jan " iifil tliF AfAtN 4 Af0i-
dent Cassatt, of the Pennsylvania Rail
road. returned from Europe last June, he
issued a circular regarding the purposes of
the $50000,000 loan previously fioated in
Paris, and detailed the future require
ments Of the system in the following
terms:
THE Improvements now authorized and
under contract include all the heavy work
at present contemplated, with the excep-
ton Of the additional relief lines referred
TO in the last annual report, and it will
noJ be necessary TO proceed with these for
several years, except TO secure the right
of way, which is now being done. The
company viii not, therefore, so far as can
now be foreseen, have 10 meet any large
capital requirements for some years be-
yond what viii be necessary to pay off the
Sj0,co009o OF notes maturing November /,
1907, and to provide the money needed
after the close Of the year to complete the
New York terminal This expenditure.
which will be spread over the years 1907
and 1905, is estimated at so, ,O00,C0O"
The above official statement forecasts
the raising Of SyO,O000O0 for new capital
by the Pennsylvania IN the next two
years. 1t is entirely probable that the
provisions which stockholders Will be
asked to make at their meeting viii
cover the requirements Of 1865 as well as
those of the current year, the usual Gus
tom Of Pennsylvania when asking su-
thorization for an increase Of its capital
stock being to make the amount SO large
that it viii not be necessary 10 ask fur
ther authorization within year or two.
Now. If il was definitely known, as many
in Wall street believe TO be the case, that
the iEtention is TO hold the new stock
against an issue Of convertible bonds. the
just made would be little
more than what was indicated by Mr. Cas-
satt half a year ago
The last issue Of convertible bonds made
by Pennsylvania were made convertible
into the stock Of the road at $50. If "a
similar issue should be made during the
current year on similar terms as TO con
vert this ii would require more than
z55. .Gog of the new stock of the CON
templa;ed issue of Sl00.010,00Q, and all that
would be then left for future issue would
DE something like S33.0l0.c0J or s34.90C01.
This might not be sold at all or used iu "a
way that would add to the amount of
Pennsylvania aloat in the street II has
been the policy of Pennsylvania for. some
years TO merge into its own system some
of the smaller lines controlled through
stock ownership by an exchange OF stocks.
This has very recently been done in
the case OF the Cumberland Valley Rail
road. and 1T an opportune time .vil be
done in the case OF other roads where
better results can be- obtained by making
the smaller properties integral parts o.
the big system than by continuing to
operate them rs separate or semi detached
organizations. The requirements in such
cases are in all probability provided for
ID the announcement just made. and rs
The stock used for such purposes does not
represent new capitalize ton, but merely
an exchange Of one kind OF security for
another, it cannot add to the glut OF
securities which Wall street seems 10 be
so apprehensive OF at present.
Taken altogether. If it is assumed that
the intention of the Pennsylvania Rail
road is 20 hold the new stock against
an issue Of convertible bonds, practically
the entire purpose Of the new capital pro-
visions has been already foreshadowed.
but. unfortunately. there is except that
money received from the sale Of the larger
part Of the roads holdings of Baltimore
and Ohio, Norfolk and Western. and
Chesapeake and Ohio stocks are left un-
accounted for in the estimate of expendi-
q.
on the ground that Pennsylvania has been
large buyer Of Atchison. but this is
only surmise as. indeed all theories as 10
the uses u be made Of the money bavon5
those indicated i'm the circular of June Is
last year, are but surmiscs. No one in
authority VIII commit himself to n state
ment at this time as to whether the in
tenuOn is 10 issue convertible bonds or
not. although 1t is said in reliable quarters
that no part Of the new securities will be
issued for "a considerable time
Pennsylvania has made a remarkable
record for seizing the right moment for
raising funds its operations in the money
market being conducted in a way that
have excited the envy of other roads and
the admiration Of the whole financial
community. There Is nothing. therefore.
particularly bearish in the fact that the
road is making timely preparations TO
seize future favorable opportunities TO
provide for needs already pretty well un-
derstOod. The announcement Of the pro-
posed capital increase is made so far in
advance of the annual meeting to accord
with the usual custom Of the road 10 give
about sixty days notice OF stockholders
meetings and y the business with which
they will be expected To deal.
Canadian Pacific was one of the stocks
picked upon as likely TO be affected by
new issue Of securities in the near future,
but an official denial received from Mon
treal put the quietus on that particular
rumor. The company, the dispatch said,
has $25.eJo,CJ0 cash, with the last issue
stock still unused in its treasury and has
no intention and no need 10 raise new
money for any purpose either at present
or in the near future.
one OF the large Eastern systems is
said TO he endcavoring to negotiate "a
sale of $-5.G90,o0o short-term notes. The
street seems to DC disposed to speak OF
every possible issue Of new securities. as
sale Of notes, as If K would imply a more
or less urgent need of funds ana an inn
mediate demand upon the money market,
which is not at present IN q position 20
stand q drain.
A further advance in the price Of the
metal and the oJt1Urst of bullish specu-
lation in the Boston coppers helped Anal
g1uated in the afternoon. and there was
a revival of the optimistic rumOr regard
ing the coming dividend declaration that