Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1889-09-21
AS SEEN In THE EAST.
How a Trade Journal Discusses the
Natural Fuel Problem.
GAS YET A FINANCIAL CONUNDRUM
Genuine Mushroom Methods of Ohio
Municipalities Shown Up.
AN INTERESTING QUESTION OF LAW
CORRESPONDENCE OF THE D1spATcH.l ]

CORRESPONDENCE OF THE DIsPATcH.l
NEW YORK, September 20.-The Finan-
cial and Mining Record will print the fol-
lowing tomorrow: Although the natural
gas industry is in its infancy, being but
seven years of age in Pittsburg,
the pioneer city, it has had an i'm
portant effect on commercial enterprise
and economic condi tions. Throughout
the whole area of natural gas production,
from Western Pennsylvania to the fields OF
Indiana, manufacturing has. been stimula-
ted, the production of manufactured COM
modities and the consu mption of raw mater
ials vastly increased, the effect of which is
not limited to the gas-p producing territory,
but is diffused throughout the nation.
The purely financial considerations attend
ing this new industry and enterprise have as
yet taken form so little removed from the
speculative and experimental, as to make
definite conclusions nearly impossible.
Financiers have nevertheless
HAD CONSIDERABLE EXPERIENCE
with the stocks of corporations engaged in
the industry; bonds issued in furtherance of
order is so gradually emerging from chaos
that indications Of permanent truth and re-
liable principles are making their appear
ance.
At present, to find a natural gas stock on
the ,narket worth par is decided exception,
Notwithstanding the fact that several have
been paying dividends from to II per cent
per annum regularly for a term OF years and
are still in a position to continue them. All
natural gas stocks are speculative and SUBJ
jected to so many influences against which
no human foresight can afford protection,
that however valuable they may be as i'm
mediate profit payers, they have never risen
to the dignity of investments. They cannot,
for many years at least, from the fact that the
sources of supply are beneath the earth
where the human eve can never penetrate,
and unlike many other mining operations,
the extent OF the "vein" or "lode" cannot
be even surmised, much less surveyed.
TWO WAYS OF LOOKING ATT
That several of the companies have been
successful in finding new and prolific terri
tory is matter for congratulatIon to stock
holders; but such extensions involve expen-
diture not contemplated in the earlier days
of the enterprise. 1t is evident that the
wells cannot be brought to the pipes. The
pipes must be extended to the wells. Every
new well drilled and every foot of pipe
laid to make its production available Gf,
indeed, there be any production) causes an
additional outlay OF capital which would
not have been the case had the wells been
originally inexhaustible, as contended.
Natural gas may be inexhaustible in the
aggregate; the supply may be all that is
claimed for it by the most sanguine of those
engaged in the industry; but the extension
of lines and additional expense on account
Of the exhaustion of wells in all known
fields is truth too we'll established to be
successfully refuted. How far this may
have to be continued, with what rapidity it
may be required to supply the demand in
the future, cannot be known.
The petroleum industry was long recog-
nized as being the most uncertain and specu-
lative of mining operations, but natural gas
is even more speculative than petroleum.
All the uncertainty in production of oil is
present in the production of natural gas,
but in oil the uncertainty ends. Petroleum
has market throughout the world. Gas
has no market except at the end of the pipe.
RIGHT DOWN TO MUSHROOMS.
In Northwestern Ohio, widely different
conditions exist from those in Western
There, municipalities have
engaged In the natural gas business, issued
bonds to enable them to construct and ope-
rate natural gas plants, and, like other mu-
nicipal securities are accompanied by no
tangible collateral whatever, but are based
entirely on the public credit. In the way of
bond issuing, these afford the most interest
ing financial considerations in connection
with the natural gas industry.
The exhaustlbility of supply and con-
stant search for new territory applies there
as elsewhere. The business risks and ex-
penses of municipality are at least as
great as those of business corporation, and
are liable to be much more. Natural gas
trustees are generally gentlemen of success
in their vocations, but without practical
of the details of production or
of natural gas.
Practical affairs inevitably become more
risky under inexperienced management
than under the direction of experienced
men. Bonds issued by municipality un-
der such management and having nothing
but public credit behind them, cannot be
SO desirable as those issued by business
whose affairs are conducted by
persons of experience in every department.
and which give collateral on their tangible
plants as well as the security of experience
and actually invested capital.
Municipalities invest no capital in their
natural gas plants. The capital is bor-
rowed on bonds sold. They have been uni
formly induced by class of persons who
desire to ''boom the town." who desire to
induce manufacturers to locate in the CITY
Or in its suburbs under the proclaimed ad-
vantages of "free gas" or "cheap fuel'' at
least, provided largely at public expense.
To borrow money wherewlth to erect a
charitable institution, or one to be conducted
without profit, cannot enhance the value
Of bonds upon which such capital is bor-
rowed.
WHERE THE TAXPAYER FEELS IT.
Experiment has shown in a number of
cases the effects of municipalities entering
upon the natural gas business. Besides the
creation of bonded Indebtedness for the
of the plant and setting it in
operation, the expense of operating has
caused deficit to be supplied by taxation.
At first, prices to consumers are reduced so
that business corporations are forced out of
business, and the price is then advanced
often to twice the rates charged by the busi- |
ness concerns. Excitement has run riot for |
4 time. values of real estate advanced, and |
tracts have been unloaded at high prices on |
favorable terms to taking it back on the |
mortgage. Manufacturers have been led to |
ocate there merely to find the gilded prom |
ses but empty bubbles from the natural |
cause of failure of supply. Cities claim |
ing to have ''gas enough for all the world" |
, couple of years ago, were chilly last
winter for want of fuel, and Councils are
sailed upon for further appropriations for |
'unds to put the plants in order for the |
coming winter.
The whole subject has been brought up |
In the form of legal proceedings in tho o;tv |