The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1923-06-21
ME THODS VARY
.FORF|NANC|NG
UTILITIES
Many Large Investment Or
CARNATIONS Make Speciality
of These Securities.
By w. s. COUSINS,
Copyright. 1923 by Cosmopolitan News
ServicO.)

By w. s. COUSINS.
Copyright. 1923. by Cosmopolitan New
ServicO.)
NEW YORK, June 21.-Financ
ing of public utility enterprises has
involved assurances Of millions Of
dollars worth Of securities, gener
ferred stocks. The methods EN-
may be classified under three sub
divisions.
First, investment banking or
CARNATIONS. which purchase securi
ties in blocks from the utility com
panies and distribute them to their
own customers.
Second. engineering and mana
gerial concerns which not only su
pervise the operation and extern
sion Of the utility companies, but
also sell securities necessary to Sc
cure funds for such operations.
Third. the customer-ownership
plan Of selling stocks and bonds
direct to the public by the officials
Of the utility companies.
A number Of nationally known in
vestment organizations having their
headquarters in New York, Chi
cage and other financial centers
have made a speciality of public
utility securities. In order to in
sure a safe and profitable selection
of such bonds it has been nece0.
sary for them to maintain a skilled
mechanical and engineering staff.
These engineers make a. thorough
examination of property on which
it is proposed to issue securities
and carefully inspect proposed plans
for expansion and extension. Then
the financial experts take into con.
sideration the prospects Of the earn
ing companies and subject their
financial statements to searching
examination.
Successful Operation.
The managerial companies, such
as j. G.. White Company, Bylsby
& Co. and the H. L. Dohertv Com
pany, have been successful in the
extension of the services Of public
utility corporations. Properties Sc.
lected by them have been operated
according to a systematized plan
and generally at lower operating
costs than is possible with isolated
companies.
Customer ownership" Of securi-
LICE Has OOCh I'LL OAb6I1AtAAAAA N~
velopment Of public utility financ-
ing during the past few wears. ana
while it has not vet reached such
large proportions as some OF the
other financing methods. 1t bids
fair to increase in popularity and
in the years to come.
The customer-ownership commit
tee OF the National Electric Light
SAYS: Among comma
MES that have used customer own
ership plans for a number Of years
the cost of distributing additional
securities is becoming lower each
year and has reached a basis hitf.
erto unheard Of in market oneras
tions for the raising of new capital.
Financing Easy This Year.
The public utility companies have
been fortunately situated with re.
spect to financing this year. The
of public utilitv bonds
aggregated about 100000, 900, as
with $433, 100000 in 1922.
and $305 900 900 in 1921. It is al
ready reported that IS per cent of
this years operations have been
today.
Public utility companies have
taken a leaf from the experience Of
industrial managers and municipal
officials who have issued their
bonds in small denominations. It
is possible at the present time to
secure a choice of public utility
bonds in denominations of 800.
with income yields approximating
per cent. Preferred stocks Of util-
ity companies are also entitled to
q high rating and compare quite
with securities of railroad
and industrial concerns.
Investors who may be inclined to
purchase Of public utility securities
should consider carefully the CAPT
talization and the earning reports
Of the companies in which they are
The accumulation of a
good surplus, a long record Of divi'
dend payments and conservative In
vestment will always constitute a
good recommendation for a public
utility concern.
Billion Dollar Utility.
Take for example the American
and Telegraph Company,
the only billion-dollar utility COM
pany in the world. Reports show
that the net earnings Of this com
pany from all sources during the
past twenty-three years have aver
aged SO a share annually. For
more than forty years the com.
pany has paid dividends to the pub
lie Of not less than $3.50 per share
per year. Beginning with July, 1871.
payments had been at the rate OF
50 share.
In making the latest increase in
the dividend. the directors of the
company stated publicly that thew
were actuated by desire to main
tain the popularity OF their securi.
ties with the investing public. How
successful they have been is seen
in the fact that the company has
on it's books 1853 300 separate stock.
holders an INCREASE Of IS per cent
since January. This does not in.
clude thousands of owners of it's
bonded obligations.
The best grade of public utility
bonds yield the investor from 5h
to GA per cent 1t is possible.
however, to secure a bond Of fair
rating, giving the investor a very
large return on his money. Pre-
ferred stocks yield from 6 to per
cent.