The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1890-03-30
THE CITY GAS STOCK.

In case the city shall sell its gas stock
THE HERALD is confident that the sale will
not be in the interests of the corporations
financial welfare. 1t is well known that
the returns on the stock owned by the city
have been about S per cent per annum.
There is every reason to believe that the
dividends will increase instead of decrease
as our city grows; on the other hand, the
rate of interest will come down. The
lower the rate of interest the greater the
benefit to Salt Lake city and all others who
are the owners of dividend paying prop
erty that is increasing in value. We are
confident that there is no person in this
city who will pay $50 per share for gas
stock, and yet there is a surplus profit to
the city in case its gas shares are kept in
the treasury at that figure. The city
can get money with perfect ease
for 5 per cent, and as the gas company
earns more than ~ per cent, in case the
stock shall be sold for less than $3.50 per
share, or even at that figure, there will be
loss to the city. In addition to the actual
loss of money there might be great in
crease in the gas bills which the city would
have to pay. So long as the city holds the
balance of power by being the owner of
large block of the stock, just SO long will it
be impossible for the gas company to get
more than il should for the gas which is
consumed by the city.
In addition to the dividend which the gas
company has paid, there have been thou
sands of dollars expended in the extension
of the mains, which money has come out
of the earnings of the company. Had all
of the money needed for the extension been
advanced by the proprietors of the COM
pany in the shape Of capital stock THE
HERALD does not hesitate to assert that the
gas company could have paid fully 10 per
cent. dividends for very many years past.
Now, as these dividends have not been
plant of the company, and has enhanced
the value Of the property.
1t is fact which can not be disputed,
that as a city grows in population the gas
companies and the street car companies in
crease wonderfully in their capacity for
paying dividends, and on the other hand
the rate of interest goes down. As this
fact cannot be disputed, should the city at
the present time, when there was never a
brighter prospect ahead of the gas company,
sell its stock? With THE HERALD and
every fair-minded man in the city, we are
sure there will be no difference of opinion
on the subject, that there is no occasion
for the sale. 1t is only q question of lit
tie time when the gas company will be able
to pay 10 per cent dividends, and in thai
event, the stock will be worth 200 per cent
to the city. lnasmuch, as the
} city can protect its own interests by being 6
holder in the gas company, it is justified il
retaining the stock so long as there is nc
actual loss to the city by so doing, but il
has absolutely no legal right to purchaat
more shares. We have shown that there is
profit TO the city in retaining the stock
even at $50 share, and in case there shall
be sale at a less figure we maintain thai
the sale will not be ia the interests of the
, city. Where is there man with the bust
/ ness ability Of our present mayor WHIT
) would dispose of dividend-paying property
at two thirds its actual valuei The valu,
: of stock to an individual or corporation
is based not alone on its own earning ca
t pacity, but also on the ability of the owner
to secure money at low rates of interest
/ A government bond would have been com
paratively worthless some years ago at
per cent. interest, as its sale would hav,
: had to be made much below par; and why
Because the credit of the government
could not command money until recently
2 at so low rate Of interest.
, AS the government could not get money
, for per cent years ago it was in tn,
: best interests of its financial welfare tina
bonds be issued at q higher rate. 1t wa
better to pay higher interest than to sci
bonds at less than par. 1t is only recent,
that Salt Lake city has been able to ge
1 money at less than per cent. Now it car
( obtain all it wants at and the rate vii
3 never be more, while the chances are tina
r it will be less. The day will never com
r when the gas company's earnings will b
less and we repeat that sale of gas com
e pany stock even at $50 per share will no
a be in the interests of the financial welfar
, of our city.
I An individual could not afford to pa
; such price, as there are no persons in GU
city who have the!ability or. the standing
Q financially to enable them to secure none
at the same price that the city can obtai
q it for, and therefore it is impossible for tn
: stock in the gas company to ever be a
5 valuable to the individual as it is to tn
corporation. We venture the assertio
!, that were the present mayor able to borro,
! money for ten or twenty years at 5 pc
q cent. it would be difficult thing to induc
that gentleman to dispose of per cen
S stock at slight advance in price, especial
y so with decided chances in favor of an il
s crease Of dividends.
e The HERALD asks that the city's intel
ests be looked after as if they were privat
}. and individual affairs and then we have u
y fears Of sale Of gas company stock.