New-York tribune., 1912-01-16
FEAR CORNER IN LEH|CA
Icborts Scent Real Peril in Coal
Segregation Plan.
EXCHANGE TAKES A HAND
onles Trades in Stock, Except
! for Cash, Shall Be Ex 10 Per
Cent Dividend.

situation disturbing to many stock mar
:, operators has grown out of the Lehigh
my Railroad Company's plan for segre-
',,on of its coal business. announced last
s"rsday afternoon. following a special
ting of the directors in Philadelphia.
~ situation has in II some of the ele-
It's Of a possible corner. although the
.a that the directors of the Lehigh VAL
~ would consciously abet the working OF
r.orner in that stock is credited nowhere
4, the street.
rho railroad company board announced,
s..si.he remembered, that the Lehigh Val
-soaI Company, controlled by the rail-
"a Company, had authorized the forma-
~, of a new corporation. the Lehigh Val
,.,g,rosa Sales Company, with slO,0COOOO au-
.rxiIsd capital stock, of which s6060, 500
IA bc issued at the outset and that
e..b dividend of 10 per cent had been voted
= ,he stockholders of the railroad COM
NV amounting TO s6.060,Sc0, the privilege
S.irr given the railroad company's stock
s.,dsrs 10 subscribe at par for the new coal
las companys stock, which they would
.sus secure without cost TO themselves.
- ofer Was. however, hedged about with
-.,r,sions said TO be practically without
.rscedent in the local stock market.
then "melon is cut" in ordinary cir
..,etanees the stockholders assume that
,hsy have rights" representing the privi-
80 10 subscribe for new stock and some
= them naturally proceed TO market the
.,ivpege. SO. on Friday, there was for
while brisk trading IN the Iehigh Valley
SnI xtTnp -,
,ot,oe came from the LehiGh Valley Rail-
road Company that no subscription war
i,sn,s we're to be issued and by implica-
,o, that the subscription privilege was
,on.transferable. Thereupon all OF the
,r,nssctions in rights" were cancelled.
Ruling by Stock Exchange.
n vas late on Saturday when the New
York Stock Exchange was officially ad-
vissd Of the plan of the Lehigh Valley,
and Il was not until yesterday afternoon
hat the Stock Exchange authorities took
action 10 meet the peculiar conditions
created BY the features of the offer TO the
Isbish Valley shareholders, the commit
tee on securities issuing the following rul.
ing;
information having been received that
stockholders of the Lehigh valley kaI-
read Company of record January ~, ISL,
will receive dividend OF 10 per cent ana
will be given the privilege 10 subscribe 10
capital stock of the Lehigh Valley Coal
Sales Company 10 Ihe extent or ~ per
cent Of their stockholdines; SAID dlNloenu
Of 70 per cent being applicable TO the pay
ment Of said subscription: the committee
on securities rules that all TRANSACTIONS III
lehigh Valley Railroad Company STOCK on
January 10, 1912. except for casn' shsII 20
* the dividend of 10 per cent and the prlNi-
lcse 10 subscribe for capital stock or the
IShigh Valley Coal Sales Company.
Transactions in said stock made prior 70
,esornpanied by a due bill for the STOCK
NJ the Iehigh Valley Coal Sales company
sccruing thereon. unless the receiver nitl snal
on or before January "a notify the oeUv-
srsr that he will require the payment OF
tbs cash dividend OF 10 per cent instead OF
the stock OF the sales company; NouTe On
date for the redemption of due bilis VIII Dc
given hereafter.
Shorts See Real Peril.
tehieh Valley. the market for which used
IA be in philadelphia, was listed on the New
York stock Exchange in November. 1910.
,,d bagsof late become very active WITH
4. increase in activity there has naturally
rrov,n IN a considerable short interest, and
ne shorts are now menaced with what ap-
pssrs 10 them TO he a real peril The new
Coal sales Company stock. when issued
opened on the curb on Friday at lS5 ana
fold up 10 200, on the common understand
Ing that IL would pay 10 per cent DIVIDENDS
although no authoritative statement on that
mint has been made and II ruled around
1s5 Yesterday Lehigh Valley Railroao
stock on heavy transactions, rose Yesterday
to 1887, a new high level. closing at 1904
+. A trader short OF the railroad company's
stock can. of course, avert trouble forshim-
self bv buying stock and covering oetore
January 10 taking his loss. But " ne eIects
10 remain short, he must. when he nnaily
covers. give 10 the person to whom he had
sol4 the stock due bill for the allotment
Of Coal Sales Company stock to which the
railroad company stock is entitled
Tho only place where the short can buy
Coal Sales Company stock is on the Curb
where he must pay nearly 200 for H. this
Investment representing a heavy loss 10
him
Many brokerage houses called up the
Stock Exchange yesterday 10 ask ior IN
formation on the Lehigh Valley complca-
ton. and the committee on securities was
SsccOrdipely convened, TO give dehnlte
and binding ruling on the matter. In the
taitvaihns uncertainty many customers
long OF Lehigh Valley stock gave stringent
Instructions 70 their brokers not TO loan H.
and others ordered their borrowed stock
called IN. The committee on securities met
Immediately after the close OF the STOCK
Exchange, and on the announcement OF
their ruling Lehigh Valley loaned fiat IN
the loan market, with urgent demand FOR
the stock
When the Delaware, Lacfawanna
Western Railroad Company organized It's
cal company. I'm 1909. 1t made restrictions
similar 10 those OF the Lehigh Valley; but
Lscks wanna has for many years been very
ipaetiyeq and there was virtually no snort
Interest shr il. so that no complications
larose, as in the present case, and no ruling
was made by the Stock Exchange au-
thorities.
Syndicate in Novel Position.
There was much speculation in the
Street as 10 the compensation which is 70
be received by the syndicate headed b.
DreXel & Co, OF Philadelphia. which is TO
underwrite the issue Of Coal Sales Company
stock. This syndicate is in effect 10 act
throughout In the novel position OF trustee
for the railroad company's stockholders,
making their subscriptions for them, on
Their powers Of attorney, turning over for
hem to the railroad company in payment
ior their allotment Of Coal Sales stock the
- per cent cash dividend to be received by
them and delivering TO the stockholders
their respective blocks Of stock OF the Coal
Sales Company.
As the stockholders can, by paying in
ne amount OF their cash dividends, receive
at 100 new sinck which now has a market