The Washington herald., 1908-04-09
WALL STREET NOTES
Price on Erie Represents
100 Cents OH Dollar.
ROAD NOW NEEDING MONEY
Trouble Anticipated in Making Loan
Because of the Financial cOndi-
tions-s'Sforteage the scenery" Is
Suggestion of One 0Id-timer-Crop
Report Not Up TO Expectations.

New York. April s.-Erie closed last
night at 161s. This price represented a
cash investment of about 100 cents on the
dollar for the holders of the old New
York and Lake Erie paid an assessment
Of sl2 a share at the time of the reorgan-
ization in 1895. when they exchanged their
holdings for the new Erie Railroad stock,
share for share. The present common
stock represents. at least, the investment
of So about twelve and half years ago.
and. If interest is figured in, that invest
ment should be worth at least the pres
ent price Of the stock to-day. The trou-
ble is that the road needs money at a
time when It is very difficult matter 10
Obtain a supply Of funds.
Several years ago a New York banker
was presented by the author with a book
which, in a very interesting way, re-
viewed the history of the Erie. After
reading the volume through, the Wall
street man remarked that It was pity
blank leaves had not been left at the end
so that additional matters of interest
might be, noted down as they occurred.
Some interesting chapters have yet 10
be added" he said He now thinks that
the present situation we'll deserves 10 be
so recorded. The way banking interests
have rallied to the support of the road
on the present occasion would make a
pleasant contrast to some of the chapters
in the early history of the Erie. The old
Erie notes were In class by themselves
They were the only absolutely unsecured
issue put out By any railroad since first 1t
was found necessary TO resort TO the short
term note as an expedient for financing,
but among bond houses ths fear Is quite
generally entertained that the market for
all classes OF notes will be hurt by the
Erie incident
Recently inquiries have been received
from holders OF some Of the safest and
best secured notes in the market as to
whether it would not be advisable TO sell
out. and in some cases those making the
Inquiries have not felt entirely Satisfied.
even when assured that the collateral Sc
curing the notes was more than ample TO
pay of the principal and interest Of every
note.
The fact that Erie does not seem 10
be able 10 ind sufficient collateral 20 fully
secure its proposed issue of new notes
reminds me" said an old-timer. "of a
Western road used 20 be interested IN
long ago The road had borrowed a good
deal OF money and had mortgaged about
everything that a mortgage could be
placed upon, but more cash was needed.
An official appealed 10 for suggestion on
the point. replied that he could not see
any way out. refectively, unless we
mortgage the scenery.
On the publication Of the crop report.
which was not up to expectations. the
traders attacked the market but sue
.ceeded in forcing out very little stock.
There was no appearance OF support ex-
cept at one or two points. but the total
absence Of anything Ike liquidation served
to discourage the bear operations. A
broker who watched what was going on
expressed the opinion that the market
was in a condition Of stable equilibrium,
and that important news OF some kind
would be required for an important move
ment in either direction.
Union Pacifc's response TO the better
outlook for Erie was natural A default
of the latter road on an obligation would
have seriously interfered with Union Pa
cihcs financial plan. and this stock had
been sold short to q considerable extent
in the expectation that such a difficulty
was likely TO be interposed.
A few of the traders are said to have
hedged purchases OF the Erie notes by
sales of Union Pacific on the ground that
if the note plan failed to go through,
Union Pacific would probably decline
sharply. The great difference in the mar
ket conditions surrounding the two securi-
ties, however, prevented an operation of
that kind being entered upon except on
a small scale by ultra-speculative traders.