Condensed Steam

Already alarmed by the way their shares had condensed on the New York Stock Exchange last fortnight when dividends were passed (TIME, June 14), the unhappy preferred stockholders in New York Steam Corp. must have felt last week as if their corporate fires were about to go out. After the break which carried Steam's two preferred issues down 20 points in one session, the stocks rallied briskly, the 6% series having climbed by last week to $96 per share, the 7% series to $104.

Then at the opening of the market one morning the Steam specialists could find no bids fit to print on the ticker. Stock Exchange officials went into a huddle with the specialists. Nearly an hour after the opening a quotation finally appeared on the ticker--70 bid, 90 asked. After nearly another hour the first sale appeared--$73, off 30 1/2 points. But no bid could the specialists rustle up for the 6% series until 1:30 p. m., when the tape recorded the market as 50 bid, 75 asked. The first sale was $66, off 28.

These "air pockets" that even the specialists did not care to bridge were caused by an overnight decision of the New York State Public Service Commission. Steam's friendly neighbor, Consolidated Edison of New York, which has long owned stock control of Steam, last spring brought its ownership up to 96% in open market purchases which squeezed the price of Steam common from $17 to $33 per share in a fortnight. Anxious to merge Steam with its gas & electric properties, Consolidated applied to the Public Service Commission for permission to offer its own preferred stock in exchange for Steam preferred. There seemed no reason why the plan would not be approved. But the Public Service Commission, in a report dated last month but not released until last week, held that Consolidated's offer was far too generous. Among other criticisms the Commission pointed out that until last year Steam allowed only 1% annually for depreciation, an amount "entirely inadequate, with the result that past earnings have been overstated." What course Consolidated would now take, Consolidated did not reveal. Meantime the Stock Exchange launched an investigation to find out who was responsible for the royal whipsawing received by Steam stockholders in the two big breaks.

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