The Paducah evening sun. [volume] (Paducah, Ky.) 1906-1929, 1908-04-21

crease in the minds of a specializing
public the attractiveness of the secur-
tiles of which those properties were
/ the base.
Thus the Rochester Telephone COM
pany's stock was taken over at 200
while the Stromberg- Carleson Manu-
] featuring company telephone sup
, plies) came in on a basis of 175 for
the common and 1875 for the prefer
red, in bonds with a bonus in all
cases of 40 per cent. in U. s. l. stock.
PUBLIC BOUGHT WATER.
The bonds were collateral trust five
per cent. and the quantity outstanding
Vas immense in proportion to the in
trinslc value of the properties covered.
They were of highly speculative
character and not an investment by
any manner of means.
This the people did not see and
great quantities were taken as invest
ments by widows, superannuated
clergymen, trustees. women with
small savings, and the stock was TAX
en- where 1t was considered possible
to wait two or three years for the re-
turns.
The real cause Of weakness was of
course the excessive amount of water
in the project and the natural market
was narrow and weak when the inter-
min certificates appeared.
The artificial market created to
stimulate demand for the securities
was not much better Only one
banker in Rochester saw the end in the
beginning and he informed two brok-
ers who were friends.
Z They sold when the securities were
a. top notch and even went short on
the stock and bonds.
THE MARKET SAGGED AND
JOHN c. WOODBURY., ONE OF
THE DIRECTORS. LOST HIS EN-
TIRE FORTUNE OF s75O,Oo0 PEG
GING THE MARKET, BUYING ALL
THE BONDS THAT WE'RE OFFER
ED.
on or about March 3. 1906, the first
OF a large quantity of bonds appeared
that was for several months unknown.
They were offered down and sold for
whatever they would bring. The sale
continued through March, April and
few DAYS in May. The bonds remained
ouiet for a week or two, but about
May 20 another quantity appeared
wi en- the price was about 6S. These
lalso. were offered down, and the price
fen off the net loss averaging about
two points per week for the entire pc
riod from June / TO September l.
The block sold in the spring
Amounted to about s75O,OOO, while
the summer block amounted to more
than 100000.
The announcement to the effect
that the company was in financial
Idificulties caused a sharp decline IN
the price of the bonds and stock, but
the market was manipulated and the
decline not only temporarily checked
but prices were given an upward
impulse that carved them higher
than they had been since midsummer.
Various reports by certified account
Iants on the condition of the parent
and affiliated companies were pre-
scented at the time the note issue was
voted. and the face of the evidence
was to the effect that not only the
subsidiary companies. but the water
logged parent as well were in a
highly satisfactory condition. Ac-
cording to these reports the U. S. l..
bonds at the prices then current were
al "buy." and many were bought, the
manipulation being aided by much
Legitimate buying. One director of
the company, who has since said that
he was misled by these reports, sold
large amount of high-priced divi-
dend paying stocks and put the en-
tire proceeds into U. S. |. bonds.
Awakening of Investors.
But il was an artificial condition
and before October, 1906, was well
Istarted another crisis appeared. Pres
ident Finucane faced an angry board
of directors and said to them that
the company was practically wreck,
and If anything was saved action
must be taken Immediately. An adj
vlsory committee of five members
was appointed upon the request of
Mr.. Finucane which took over the
general direction of the company's
affairs. including the duties Of the
president. an emergency loan was
made by some of the large bond
holders and the work of salvaging
the company was begun. The bonds
had sagged again and practically
every holder became alarmed.
Dressmakers, ministers, laundresses
clerks. servants and others who were
more or less dependent upon the In
come from the bonds telephoned to
or called upon the large bondholders
to ask as to their safety OF their
'investment" Everywhere in every
walk of life in the city the impend-
ing failure of the company had cast
its black shadow.
Nothing of moment was said by
the advisory committee until during