The Washington times., 1912-01-28


event Of Wall Streets business week
from the speculative point Of view was
the reduction. on Thursday. of the st.
Paul dividend from to s per cent. II
was very much like old times, say n
dozen or fifteen years ago, to lia'tn to
the discussions of the financia! district
concerning this incident. st. Paul abb
sorbed the interest OF bankers. brokers.
| and customers alike, almost to the ex-
clusion of other topics. Tris ir as II
was in by-gone days. when the stock
was the acknowledged leader. In which
position 1t continued for SO many years
that ''As st. Paul goes, so goes the
Market became recognized axiom OF
Wall Street
Every broker and every financial
writer whose memory goes back half a
generation or so, recalls the old-time
potency of st. Paul Markets were
madc and unmsde as the stock was adj
vanced or depressed. There is nothing
like II today. Nsither Reading, Union
Pacific, or Steel common have quite
taken the place occupied by st. Paul.
Union Pacific. which is, of course. the
acknowledged leader Of the present
market, sells ordinarily at too high a
general range to be as popular as wls
st. Paul with the rank and file. Read
ing Is too closely held: tho floating sup
Fly is known tc be minority stock, and
1t, tco, sells Mt high range, while Steel
common Is an it.dustIial, and there is
a lingering prejudice agairs, ind,istrials
In Wall street to this day.
Some st. Paul History.
inc qualities rhich mule st. Pau.
the market leader In the eighties AMI
the ninetics of the last century, and
continuing down. ih fact, to the spring
Of 1901. was its wonderful MAJ ket ability
and ready availability in loans. and II
price which rarely carried the stock
| above par. II could always be sold III
| slight variations; 1t was always accept
able as collateral. ard it did not con-
| sumo as much of a brokers capital to
buy the stock as II does to deal in tn,
leaders Of today. 1t ~ rather interest.
| inE 10 note that st. Paul lost the posi-.
| ton Of leader when Mr.. Morgan and
, Mr.. Hill, without reckoning with tho
principal owners Of the property, tried
to purchase the control of st. Taul in
the open market.
The blow over the knuckles which
! they received In return for this from
William Rockefeller and Silent" James
Henry Smith caused a smart which in.
| duced the Morgan-Hill party to buy St
Pauls chief competitor, the Burlington
Then came the counter movement-the
purchase Of Northern Pacific by the
Standard Oil-Harriman- Kuhn, Loeb &
Co. party, the contest for control, the
Northern Pacific corner and the panic OF
7; May 8, 1901. AZ a result Burlington was
taken out OF the market. the holdings
Of st. Paul became concentrated in few
hands, the price advanced to such a
high figure that men could not trad,
in 1t freely, and the market leadership
among railways. passed from st. Paul
to Union Pacific.
Interesting Discussions.
Not for years has one heard the old
Wall Street story, of the trader who
dying. went TO heaven. and on seeking
admission at the golden gates asked ST.
Peter: "How's st. Paul?" The above
Is fairly typical Of the high regard in
which the stock was held as a trading
issue In the past, and. in fact, St. Paul
was a Wall Street obsession. Perhaps
this condition may return. for st. Paul
was again on every tongue during the
week. In advance Of Thursdays meet.
ing, men buttonholed one another in the
street. in Offices. clubs. restaurants
| everywhere. and piled such questions as
these: Would the dividend be retained
at the old rate, or would 1t be cut and
how much? Would the stock go on a
or a or a 4 per cent basis, and what
would be the effect on st. Paul and on
the market? Was a reduction fully dis.
counted in the price?" and so on with
out end.
dividend than almost any other that car
be named, with the possible exception OF
Pennsylvania railroad and Union Pa.
cific, for two reasons. First, because
the rate of per cent had been main.
tained unchanged for ten years. through
| Of 1907; and second, because of the dom
| mating influence in the property by the
Standard Oil party and affiliated inter
ests. When a company MAINTAINS
| to regard the dividend as quantity a:
hxed, almost, as bond interest. The IN
| fiuence of q reduction on Individual In
vestors in st. Paul stock. therefore
might have a very important bearing OF
| the market. This could not be antici
pated and It does not seem to be full!
determined yet.
A Conservative Action.
But from the Wall Street point o
was the suggestiveness Of the action II
indicating the views of the STANDARD
Oil party as to the future. OF course
1t has been known for upward of eight
cen months that the st. Paul road wa
not earning its dividends in full from
operations, and that 1t was able to pa.
| the full rate last year only as a result
of an extraordinary shifting Of credit
from the Puget Sound extension to tn
main company. AS 1t was, after a trans
fer of more than $5,0o0,00O to the 81
Paul from subsidiaries, at the end o
1911 that company was able to show bu
| Slz5,O 900 above the Z per cent dividend oi
| the common stock.
| In the first five months of its presen
fiscal year the st. Paul road showed
net decrease in revenue OF $l,3n, ,2Jl
while during the same period the PuGe
| sound division has not earned Il
| amount equal to a proper proportion
OF it's fixed charges. OF course, the lat
ter cannot repeat the transfer of credit
Of the preceding year, and. in conse
ouence, 1t assuredly was proper AM
| Conservative action on the part OF tn
ct paul to make the dividend reduc
tion. But, of course, that the compan
has reduced the dividend indicates I