The Washington times., 1911-04-30
PUBLIC UTILITY BONDS FAVORED
BY I. A. FLEMING.

Bonds Of the public utility corpora
tions have become very popular with
the average investor and the banking
fraternity, seeking either long or short
term investments. The Comptroller Of
the Currency issued a statement some
time ago, in which he called attention
to the fact that bankers were reducing
their holdings of municipal and railroad
bonds and adding to their holdings
of public utility issues. The compari-
sons were shown as Of June 30, 1909 and
June 30, 1910, the decrease in municipal
bonds being $46, ,739, ,7ss. and of railroad
issues $106, 6,060, So There was reason
for this reduction. The net returns on
| municipals were not especially inviting,
| although safe, and the banking fra
| ternity alive to the issues of the hour
probably foresaw the approaching
period of prolonged dullness in New
York stocks, and naturally feared for
the course of the bond market as well.
In this comparison the increase in the
bond holdings of utility companies ex-
ceeded s23,OOo.OCO.
1t is extremely doubtful il a compari-
son today would not indicate a very
| heavy addition to the total of railroad
UOIlOS anu ~ Tic puDllS
utility issues.
Money has been so very easy, the
demand from legitimate business In
terests so comparatively light and the
supply so large, not only in the larger
cities but in all sections of the country,
that bankers have turned to investments
with ayidity, taking millions of snort
term railroad and corporation notes ana
loading up with bonds of utility cor
porations High grade municipal issues
that may be used TO secure GoVerhtneht
deposits have also been sought
But right here in Washington the de-
mand for utility bonds has been remark
able SO much so that high grade local
) per cent issues are selling from lOe 10
l121z, while the demand is always IdrseI
than the supply, the banks competing
with the investors for the securities.
The figures of the Comptroller were Tor
all banks in the country, STATE natloHdl'
and trust corporations.
The public utility or service BOND Is
favored because of the character of the
business of the corporation issuing tne
securities-it rarely lags in dull seasons
is not affected by crops or other m
fluences that depreciate stocks OF ran
roads and industrial corporations de-
pending on consumption. Gas, cleo
tricity, water, and transportation are
always in demand, and the amount OF
bonds underlying this class or securlles
Is ReDeTdllV lar DelO" IIldlCildl
ton of the actual property, TO say hoth-
ing of franchise.
OuI local banks have added heavily
to their holdings of bonds and securities
during the last sixty days. During me
last year, or between January !, 1910,
and March :, some of the largest lnsti-
tuticns reduced their bond and security
holdings materially. probably lnnuenced
hv determination 10 have less Ne"
York listings during the period when
49, Sff i1l PXnPHfed.
The Second National. Riggs. CONNER
ciaI. Union Trust Farmers and Me-
chanics', National Savings. and Mer-
chants and Mechanics banks were tne
inGs. The American National, Capital
District, Lincoln. and Bank Of Wash
inpton added in moderately large
amounts to their holdings
The increase toteled in round ngiIes
$50 on. ard the decree Sc 81, 700. 900. The
excess in favor of the lessened hold
ines was brought about largely by the
reducing of bond and security holdings
of the Riggs National from SSt9, o.
January 81. 1910. to Sl.726, ,964 March I.
Io11. although the greatest reduction was
between January 7. 1911, and March T.
1911. Just about the time the trust de-
cisions were expected.
Washingtons stock market is enjoy
ing boom such as II has not known
years, and a broadening trading list
that Is extremely satisfactory to the
members of the Exchange. Early in
February a year ago, when the Gas
melon was ripening and an expected
cutting date near at hand the market
for Gas shares showed something or
the activity of yesterday. It was man
inpulated market then, II looks much
like a manipulated trade in Gas to-
day The advance of seven points dur
ing the last three weeks gives it this
appearance. But traders and close OBJ
servers of the daily trade declare that
the buying is by stronger interests than
it has ever been.
1t is evident that something is on,
and the general belief is that 1t has to
do with the sale of the heavy realty
holdings of the company now occupied
in part by what is known as the west
side plant, at Twenty-siXth street and
the river It is believed that this plat
of land can be disposed of in the COM
paratively near future, the consolida-
companies effected, and great plant
with capacity for diminishing all the
gas needed for the entire city con-
structed on cheap property. With this
in operation other sites might be sold
and a distribution of the proceeds made
to shareholders. 1t is said with posi-
tiveneSS that either this or some other
plan for a melon-cutting in -the inter
est of shareholders is on the tapiS. The
record of Gas in the past is one of ex-
ira dividends, certificate of Indebtedness
dividends equal to the extent of stock
holdings. and continued fattening of the
shareholder.
Holdings of Hutton & Co., of New York !
City. admittedly the largest of any of
the pools. larger than the Letter, or Ord |
Preston holdings, and estimated from 5000 .
10, coo shares, have been largely mar !
keted during the last two weeks, but |
the market has taken 1t splendidly. |
Much higher prices are predicted. One |
thing that has caused some surprise is |
that long time holders of Gas shares !
have not been tempted by the sharp ad- |
vance to gather in the tempting profits. !
The recent statement of the Comptrol-
Ter of the Currency showing that banks
with less than $4,000 capital have the
lowest percentage of surplus is inter
esting, although the figures show that
these banks carry an average of per
cent above the required surplus. Banks