South Bend news-times. (South Bend, Ind.) 1913-1938, 1917-10-28
Local and Foreign Markets

market stands on the Threshold of
an important event. The campaign
for the second Liberty loan is end
ed and have speculation runs high
as &c how the American people re-
sponCed 20 the loan. Well-informed
persons express the belief that there
Will be an oversubscription of the
0,C0O,O 600 issue by at least 81,
000,0000OO. Wall street is hardly
prepared for such remarkable
demonstration. All precedents have
been upset again in the street in
the course of the second campaign
TO float government bonds. In the
case of the first issue there was
wild buying of stocks because il was
realized that the loan would be
oversu described. In the present in
stance the impression has been
created that the banks OF the coun-
try will have 10 fill a big gap by
subscribing 10 several billions at the
last minute. This belief induced
liquidation instead of buying A last
minute surprise may upset calcula-
tons to such an extent that the
stock market, with its thousands of
short accounts, will be in turmoil
at the beginning Of the new week.
There has been a good deal of
puzzlement as 10 why houses here
which held stocks for enemy aliens
abroad would want TO sell them,
even considering the trading with
the enemy act" In return for the
cash they would get cash and the
cash would still be held on their
books for account Of the alien
enemy, and as such would have 20
be reported on Nov. 6. It could not
OF course, be RENTED to German
holders abroad, for there is no Ger
man exchange market. a plausible
theory has been advanced that
these stocks We're held as collateral
for loans TO Germans abroad. Sell
ing Of the stocks would therefore
merely cancel the loans and wipe
the transaction off the books. Any
liquidation for German account
which there may have been in Union
Pacific apparently ceased today. As
the day (Nov. O. when institutions
here must make report of their
holdings for German holders resi-
dent in enemy territory" is so near
at hand, il is probable that any
selling on that account has been
completed Canadian Pacific and a
few other of the so-called German
held railroad stocks were again
weak at times. The explanation by
A
custodian, that the trading with the
enemy" act did not in any way deal
with enemy aliens in the United
States at least helped to curb that
part Of the selling which had been
based on misconception.
II can be stated that Kuhn, Loeb
& Co. were buyers of Union Pacific
on Thursday. 1t was this buying
that stemmed the wave of selling
in this issue. This house, in normal
times. has been a big buyer for
French and German accounts. 1t is
worth noting that this foreign buy
ing power. always emphasized in
such a sterling security as Union
Pacific, is now eliminated from the
market. II has been found necessary
to substitute American investment
buying for this foreign buying The
process has been slow. but encOurag-
ing to date While Kuhn-Loeb buy
ing stopped the raiding in Union
Pacific today Canadian Pacific went
TO a new low since 1915. Selling Of
Canadian Pacific is probably COM
ing from wealthy holders who are
subject 10 income taxes which will
take half Of their incomes. Such
men don't look upon Canadian
Pacific as a 10 percent stock, be-
cause they have to deduct their
taxes. The same things hold for
Union Pacific. These stocks are now
proper investments for the laborer
who does not pay income taxes. The
shifting in ownership in the high
raid railroad stock will amaze Wall
street a year from new.
Official announcement that a
committee has been appointed by
the International Mercantile Marine
directorate to draw up a plan for
having OH the 90 percent va n
dividends on the preferred stock
confirms the reports printed in this
column about 10 days ago. In we'll
informed circles three plans are IN
der discussion and each Of these
makes the preferred stock, on
basis of conservative valuation for
the proposed new securities, worth
more than 12O. The plans are very
much alike. The first calls for ID
percent in cash, 35 percent IN six
percent serial notes and so percent
in new common stock. On a basis
OF 90 for the notes. 90 for new
common stock and s5 for the old
preferred. free OF accumulated d.
vidends. the present preferred stock
would he worth III 1-2 If this plan
were approved. The second plan
calls for 90 percent cash, 30 per-
cent in notes and so percent in
common. on the same basis Of cal
culation. this plan would make the
preferred worth 122. The third plan
calls for 80 percent cash. 20 per
cent in notes and so percent IN com
mon stock. and on the same basis
OF calculation this plan would make
the preferred worth 1913. insiders,
L--aorr sfara talking