Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-08-20
OUTLOOK FOR UTILITIES
NOW MORE FAVORABLE
National City Company Experts
Review Conditions as
They Now Are.
(By National City Bank.)

Confusion in the mind of the In
weston has been the greatest factor
in holding back a merited improve
ment in tho popularity Of public util-
ity securities as desirable investments
The investor has not been sufficiently
educated as to the merits Of these
securities: he has not been in a po-
sition to discriminate between desir-
able and undesirable public utilities,
and he has, in a vague way, aSso-
ciated all public utilities with the
street railway situation. and has fall
ed to realize the strong position of
electric power. light. telephone and
certain of the gas and traction prop
critics.
There are some traction situations
which merit confidence, but there are
many others which require favorable
local adjustment before the securi-
ties of these lines are brought into
a position warranting the investment
Of funds.
The present census is showing enor-
nous increase in urban population.
and we know that during the past
decade there has been but little in
crease in traction mileage. 1t has in
nowise kept pace with the growing
communities. This has resulted in a
great increase in the number of pas
sengers carried, and it also simplifies
the adjustment of earnings to profit
able basis.
If certain traction and gas COM
panieS are eliminated from public
utilities, the investment position of
such securities, as a class, becomes
most attractive.
Prosperity for Power Company.
Corporations furnishing power and
light are enjoying unequaled pros
perity. There has been an enormous
increase in motor-driven machinery
operation the slight expense in
volved in the installation of power in
the factory, the elimination of the
dangers and labor incident to the OPP
GRAFTON of small steam or gas plants
| in mill or loft building, and the in
creasing costs Of fuel and labor in
the operation of such plants have
power the twentieth century method
of plant operation. This has result
ed in constantly increasing demand
on the power companies to supply the
current.
Under old methods of power pro-
duction, the handling of fuel. firing
and operation generally called for
much heavy work and many labor
ers working in unpleasant surround
ings. Today power is produced by
i mechanically perfected methods
| which eliminate large part of the
| drudgery. A considerable percentage
| of power is generated by hydro cleo
trio plants.
| Large central stations have dem
| onstrated their ability to produce and
| distribute power at such an econom-
| ical unit cost that their position is
permanently assured.
! What has been said of the demand
for power. the growth of cities and
the increased density of population
| is reflected in the growing demand
for light. AS an Indication of the
| future growth Of this business, it
/ has been estimated that there are
now fourteen million homes in the
United States still to be supplied with
le!ectrIc light.
Discriminating Investor.
More and more we find discriminat-
ing investors analyZing the public
utility situation. and as a result there
| is an increased interest regarding
this class of securities. The field is
one which requires careful study. 1t
| tho investor through liberal return
and strong security. The power and
flight businesses have not approach
| ed the limit of their growth. The
transportation business, through re-
Will also offer many attractive issues.
New capital is required in every
| branch CT the public utility field. and
! this company is doing the investor a
| favor in seeking to bring to his at
| tention carefully analyzed situations
| which Justify the highest confidence.
| Before the war public utility secu-
rites issued by corporations of I'M
doubted strength, and based on strong
values and earning power, were sold
| on basis to yield around 5 per cent
to 51s per cent. Now. with largely
increased values and increased de-
| mand for the output. the same class
of securities can be bought on a
basis to yield from per cent to y
per cent. Investors are now turning
| to such issues. and we believe that it
! is only a matter of time when the
yields will again approach lower
levels.