New-York tribune., 1921-01-13
Why Pay 50 Per Cent Premium.

Question: have been a reader OF your
paper for a number OF years and am there
oon,on oetn aS'ns op ~, shs Liberty Of asking your
/ have been approached by the Franklin
service Corporation. industrial developers
IN tho Elgin Motor Car Corporation Of
Chicago at SIS a share. All stock offered
IN Eisin Is common. non-a ssessa BILE, with
they paid Is per cent dividends and claim
20 have sold over sS.ooo.ooo worth OF cars,
They are raising additional pital through
MINIMUM shares ten ($l5o). $40 down and
SO month. I have few hundred dol
lars which / wish to invest. and would
and good standing OF thi. company and
the method OF raising capital through the
Franklin Service Corporation.--G. H. B.
Answer-Thc Elgin Motor Car Com
pany paid per cent, not 15 per cent.
dividend in 1920, and in 1919 per
cent, not in cash, but in stock. In
other words, If you had held the stock
two years your income would have
been at the rate Of about 21s per
cent year. on par. In the face of
this fact it is difficult TO under
stand the asking price Of SIS a share,
$5 over par, especially considering the
setback which even the strongest au-
tomobile companies have suffered in
recent months. The Franklin Service
Corporation pleaded, when asked by
US about the matter, that there was
no preferred stock or bonds ahead Of
this common issue and that in its opin-
ion the shares were worth $15. There
are two ways you can test this opin-
ion: first find out what you could get
for the shares and, second, compare
them with others of the same species.
In the first place there is no regular
market for Elgin shares. In the un-
listed market they are offered at con-
sderably less than par, SO and 50, with
few bids. II you wish to compare the
asked price of Elgin with that of other
motor stocks run your eye down the
list and note how many of them are
selling at premium, whether paying
dividends or not Elgin Motor Car
Company stock is not an investment
IN our opinion, but speculation. AS
speculation the price is too high. We
do not pass on the general merits of
brokers in these columns, though we
are willing to criticize any particular
proposition they offer, as rule.
Provisions Of Cosden Preferred
Question-Do you regard Cosden pre-.
much does 1t pay a year?-J. J. l..
Answer-Cosden &. Co. preferred
stock, par value S., pays IS cents q
year dividends, or per cent. The
stock is cumulative, convertible into
the common at SIS par amount of pre-
ferred for one share of common (par
So, and the preferred is callable at Sc
We do not advise stocks Of this class
for strictly investment purposes.
Has $4,000 for Low-Priced Bond
Question--Having high opinion OF your
financial column In The New York Tribune
would like to get your advice on St. Louis
g. San Francisco income So bonds. have
about $4,000 l would like to put into a
fairly safc bond now selling at a low
figure. with the prospects OF holding for a
year for an advance in prices. S. w.
Answer-Interest on the Frisco in.
come IS is paid annually. and only if
earned. This issue is the last lien on
the property, and, being dependent on
earnings, is speculative. Interest is be-
ing earned, however. In buying for a
rise you are speculating, and that is
a matter about which we do not under
take to advise.