The Jersey City news. (Jersey City [N.J.]) 1889-1906, 1906-04-16
Holders Of Public Service
Securities Are Not So Sure
They viii Benefit By the
Promised Dividend
VALUE or STOCK NOT RAISED
HISTORY OF THE CORPORATION
AND SOME OF THE THINGS IT
IS THE AMBITION OF OFF,
GALS TO ACCOMPLISH

There is some doubt in the minds of
stockholders in the Public Service Cor
poration as to whether they will benefit
in the near futurelby the decision of the
directors this week to declare dividend
on the $12 $4,000 of the stock of the cor
porations outstanding and to raise money
for Improvements by the issue of three
year five per cent. gold notes, convertible
into stock in 1909. One man remarked
today that the action Of the directors had
not increased the market value of any OF
the securities of the corporation a frac-
tion of a cent, though many persons We're
of the opinion that the announcement
that dividends on the stock would be
paid in the near future was made to
boom the stock, the great bulk of which
was held by institutions and rich indi-
viduals. He added that before the di-
rectors met an officer of Public Service
had said the management did not care
rap what effect any action of the direc-
tors would have upon the securities of
the corporation, if the old officers We're
continued.
IF the corporation made, as reported,
upward Of $1G00,O00 over and above its
fixed charges in the last fiscal year" he
said, this yearly profit will be increased
hereafter. Why could not the surplus be
used for betterments in the trolley lines,
where they are badly needed, instead of
raising money by issuing $6,250,000 of
gold notes, on which the annual interest
win amount to S312,500? Suppose there
should be financial panic in 1909 and
the holders of the gold notes decline to
surrender them for unused stock of the
company and demand cash instead of the
stock In that event Public Service
would be called upon to pay S6,2o0OOo
to cancel the gold notes. The 81 ,250,O00
five-year 5 per cent. notes now out tall
due in 1909, and the interest on both
issues Of notes in that year would be
about 800, 600 Besides this, the rate of
interest on the certificates of the corpora
ton increases each year until 1912, and
this adds to the total amount of the fixed
charges each year.
when the Public Service Corporation
was organized in 1906 with $25,090,000
Of capital stock, $10,OO0,OO0 of the stock
was underwritten by the Fidelity Trust
Company, with the assistance of the Pru-
Dental Insurance Company and the
United Gas Improvement Company.
Soon after the company got to work
President Thomas n. McCarter attended
Al meeting of the Board of Works, at
which the condition Of the trolley lines
in Newark and Essex County was de
nounced vigorously. He boasted that
with the $4,000 COO in the treasury of
his company he would soon give better
ears and service He said the $10O00,-
O0O would last long time. He made
like statement at a meeting of The
Board of Trade. 1t was not long, how
ever. until $2,5O0,00O of the stock was
issued to raise money, and 81 ,25O,O00 Of
fve-year 5 per cent. notes were also sold
to raise money for Improvements and
betterments. All of this money has been
spent, / understand, and the trolley SER
vice and the condition of the trolley cars
is poor. This is the fault Of the man
agement of the corporation. Why did
not the Fidelity Trust Company offer to
underwrite the new issue of $6,250,O00
stock instead of letting New York bank
ers and the u. G. I. Company. of Phila-
delphia, do it7'
An officer of the Public Service Cor
poration 10 whom these remarks were re-
peated, said the S6.250.OO0 to be raised
by the issue Of gold notes would be used
by the corporation during the next Two
years in betterments, especially on the
trolley lines, and that every improvement
made in the plants would benefit the
holders of all of the Public Service Sc
curities. including the bonds of the UNDER
lying companies, and the small amount
of the stock of those concerns not con-
verted into perpetual interest bearing
certificates of the corporation. Only 5 per
cent. Of this stock had not been surren-
dered, he said.
IF we can lay all our trolley tracks on
a concrete foundation, with Trilby rails,
at least in cities, as we did in Broad
street. he said "it viii largely increase
the value Of the property, and that will
make the value of the stock and certif-