New-York tribune., 1922-01-22
We Try To Be Unpreiudiced

Question-Though I read your financial
news and answers almost daily with much
attention and interest this is the frat
time ] am writing you. Every chance you
get you seem to belittlc Cities Service
,curities Perhaps you are right. but I
hope not. AS the pOssessor OF 20 Bankers
shares, "a preferred and dabentures D
ihalf OF each bought al about the lowest
price during the slump Just passed). am
naturally much interested in all you care
puzzle me: why is the preferred about 50
per cent below par, whereas the common
IT the investment is such a poor or risky
venture. why has the common climbed so
much lately-say. from 100 to over 200?
In q newspaper article OF November 7
Sperling & Co.. large banking concern OF
London, after careful investigation, in
bankers would risk or sink that great sum
in failure? Yet with all that. ] might
be induced to sell. on your candid advice,
when l can without loss. Many years ago.
when NJ. X. & 7. wasn't considered Sucn
a bad investment, l bought seven shares
preferred. Through late newspaper arti-
Giles [ see reorganization has heen per-
fected. but received no official notice or
Information from any authorized source.
What will have to do or pay to conserve
my interests, and will it be worth while to
10 to protect my seven shares2 What
do you think OF United Oil Products Com
pany Of pelaware per cent participating
recently lost points?-E. II.
AuSWcI--l Ou are very MUCH his
taken if you think that we deliberately
belittlc the securities Of any corpora
tion or group of corporations through
sound investments suited to the re-
qurements of the people who write
to US as far as we are able to Judge
those requirements from the informa-
tion they give. In the course of this
work we often have to tell people that
we consider certain securities lacking
in investment value and advise their
sale and the placing of funds in secur-
tiles which more nearly fulfill our
definition Of an investment, that is,
reasonable assurance Of regular pay
ment Of income and principal as they
fall due. We think the fact that the
income of Cities Service is to large
extent dependent on the earnings of its
producing subsidiaries puts an element
Of speculation in its securities which
varies with their place in the financial
structure Of the company The fact
that the common stock was selling
at the time you wrote in the neigh
borhood of 200 and that it has
fuctuated widely in price before and
since indicates that the security mar
ket also considers it speculative. The
fact that London banking firm is
willing to speculate in it to the amount
Of $10,ooo,0oo has little bearing on
the inve stment value either of the
stock or the other securities of the
Cities Service Company, in our estima-
ton. If you wish to assent to the
plan of reorganization of the M, X. 8:
T. you should deposit your stock with
the Equitable Trust Company, 81 Wall
Street, New York City, accompanied by
payment of SO per share as the first
;nstallment Of the assessment of $40.
You will receive in return for each
share of your preferred one share of
the common stock of the new company,
s14 par value, of ten-year prior lien
mortgage 6 per cent bonds and $6 in
adjustment mortgage s per cent bonds.
4 he United Oil Products Company 8
per cent participating bonds arc not
a high grade investment, in our opin-
ion.