New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1912-12-04
Stock Markets Action Seems
TO Show That Investors
Regard 1t Unfavorably.
BANKERS GIVE OPINIONS
Belief That There Will BE
Little Change in Policy
of Pacific Railroad
Managers.

the Intimate outcome of the Hartman
merger decision would be. The action OIL
the market. however. seemed to Indicate
that the investing public has construed
tho decision in an unfavorable light
southern Pacific sold off 2ss points from
Yesterdays close, while Union PACING
common sold down to 1914, loss OF one
quarter of point IT was pointed out
by students of railroad conditions that the
element of uncertainty regarding the
future of the two systems had much 10
do with putting both stocks down. WINE
on Monday they exhibited substantial
gains.
Discussing the decision, Henry Clews
said
The Union Pacific decision has made tne
situation more complicated than ever as
no one seems to be in position 10 in,
terpret the verdict rightly. Until pan
of adjustment has been formuIateu or
sorts of opinions Will preValI, anu nnie
are calculated TO restrain many peobpio
who might otherwise be investors at tls
present price levels. Union Paclnc mas
exercised guardianship over the Sou IN
ern Pacific for many years; IN Iact, l;te
latter has practically been rebuilt by IL
AS regards the disposition OF the SCUM
ern Pacific stock held by the Union Pa.
ciflc. there seems no reason 10 aou ,t INC ~
In these days OF enlightened panhlne q.
plan will be worked out satisfactory "
All interests, and il can be taken Iot
granted that the Union Pacific Will not
he the loser.
Takes an Optimistic View.
William ]. Wollmann, of ]. s. Bache d
Co, was inclined to look on the sunny
side of the situation. although acknowi-
edging that at this time it was lmpos-
sble to predict anything definite regard
ing dissolution plans. He said;
Both the Union and the Southern Pa,
cific railroad systems have been brought
up TO "A high state of efficiency through
the able management OF the late II; H.
Hartman and his successor, Judge Low
EFT There is no reason to believe tnat
the stockholders are going TO be MADE 70
suffer to any great extent because OIL
the Supreme Courts dissolution decree.
The two roads probably will be under
different arrangements. but pracucall!
the same policy will be maintained that
has made them both so successful
A member Of the firm Of Dick Brothers
said it was evident that the holders OF
Southern and Union Pacific stock were
dissatisfied with the decision, despite the
general division of opinion as to whether
il should be construed bearishly or bull
ishly. OF the $126, $4,000 Southern Pacific
stock held by the Union Pacific SOS, 900 900
is deposited as a major portion Of the
collateral back of the $l00,00O,000 Oregon
Short Line refunding mortgage per cent
bonds, which fall due in 1929. The mort
gage securing these bonds provides that
the company may withdraw any par
ticular collateral and substitute either
cash or other stocks or bonds equal in
value TO the securities withdrawn. This,
he said, explained the sensational rise in
this issue on Monday afternoon following
the announcement Of the decision.
p. S. Swain, f. F. Hutton e. Co.'S man
ager, said it was impossible for any one
TO foresee what might develop. He added !:
Should the federal government go still
further AID charge that the New York
Centrals ownership of the West Shore
and the Pennsylvania control of some Of
its subsidiaries were Illegal a tangle
would result. The decision was entirely
unexpected, not only Wall Street, but. l
believe, by the railroads themselves. AS
q consequence / don't think that any elab-
crate preparations have been made to
meet the present eXigency.
Wagner. Dickerson & Co. were upti-
mistic. They said:
The Supreme Court decision In the
Union-Southern Pacific case will in all
probability result in an exchange OF Sc
curities on basis of income yield between
the two companies. AS the Arrangements
are practically identical. this exchange
will be largely matter of bookkeeping
and should be so arranged as TO make
counts. 1t is hardly probable that the
Union Pacific will give away any great
amount of its Southern Pacific stock. as
the resultant decrease in revenues would
be large While the decision affects the
investment position of many other rail-
road stocks, we believe that a solution
of the matter will be found by the Har-
riman officials OF such nature as to
strengthen confidence in the general out
come.
Possible Distribution Of Assets.
Union Pacific has s244,073,2oo unpedged
stock of auxiliary companies and siA, 40, =
5S5 stocks and bonds of other companies
unpledged In its treasury. OF the 500, 900, :
900 bonds $55,000,000 are owned by the
Union Pacific, leaving $45, 10000 in the
hands of the public. The Union Pacific
charter provides that the preferred stock
shall benefit as to dividends not exceed
ing per cent. 1t is not entitled to other
or further share Of the profits Of the road
In the past. Union Pacific directors have
said that in the event OF any distribution
of investment assets the rights Of the
preferred stock to share in a distribution
would probably have to be determined by
the courts. The last statement shows that
the Union Pacific holdings of Southern
Pacific stock amounted 10 SIPS $50, 600
Union Pacific common stock now out
standing amounts to $21S, 10000. There are
s36. 765, 600 in bonds convertible into Union
Pacific common stock at It's. and sss, ST.
40 Union Pacific preferred stock. Ac-
cording to figures compiled by Dow. Jones
& Co. on a market OF about 10 for
Southern Pacific. IL the distribution
should be confined to Union Pacific COM
mon, there would be 1888 per cent OF a
share of Southern Pacific. equivalent to q
cash dividend of about SIS on Union Pa
cific common shares Should the preferred
share equally, the distribution would be
equal to a cash distribution of about 81
to Union Pacific common and preferred.
Ii is assumed that Union Pacific will
ask to be allowed TO purchase from the
Southern Pacific the control Of the Gen.
trail Pacific from ogden TO San Francisco
The ownership OF the Central Pacific Is a
practical necessity for the Union Pacific,
and there seems to be no good reason why
such a purchase will not be allowed.
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