San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1923-01-01
Trend in Bonds Is Upward
The Year Closes With Money Rates Stabilized and
Bonds Firm and Showing Some Tendency
Toward Higher Levels.

the changing fashions in investments.
| For many years there were only two
classes Of bonds in which there was
any wide Stribution-railroad and
industrials. Under the head of indus
trials. public utilities were included.
Railroad issues, however, were regard
ed as entitled to at least 20 per cent
of attention. There is still large in
tereSt in rail bonds and railroad financ-
ing and railroad offerings were promi-
nent topics all through the past twelve
months.
1t was not rail issues, nevertheless,
that made the greatest advances, nor
was it industrials, but rather the utili-
ties. Part of the favor shown TO the
utilities was due 10 fundamental causes
and part TO the fact that, during the
war and postwar period of high costs,
utility bonds had been depressed out
of proportion TO other securities. There
was complete reversal both in opin-
ion and in quotations during 1922.
With the exception of the fractions,
all the utilities shared the improve
mcnt but the gains were greater in
the electric light and power and the
telephone issues.
Hit BY Wage Increases.
Taking up the case of the fractions
first. the street car companies were
especially hard hit by the rapidly
mounting labor costs. Corresponding
increases in fares were very difficult
to obtain. For some reason or other,
public service commissions were more
reluctant to grant relief TO traction
companies than to any other of the
utilities. The five cent fare had be-
come a tradition. In the public mind
it had merit not possessed by four
cents or six cents.
When rates were finally raised, as
they were in most cases outside the
larger cities. great inroads had already
been made into SURPRISES and some of
the weaker companies had gone into
bankruptcy. Practically all of them
had suspended dividends on their stock.
Investors Fought Shy.
1t became impossible for street car
companies to do any new financing
| except in cases such as that of Mon
| treal TramwayS where there is a con-
tract with the city which insures the
payment OF interest on the company's
bonds. Investors even fought shy Of
the bonds of holding companies. any
I
derived from street railroad earnings.
Aside from the political factors. the
growing competition of the private pas
sengcr car and the public motor bus
frightened capital away from fractions.
Even the very recent influx of taxi
cabs charging lower rates than ever
before was not without its effect.
The street railroads made good
fight against all these obstacles. They
introduced the one-man car and
economical in operation in every pos
Sible way. They also adopted the
motor bus as a feeder and in cOnse-
quence, it is probably true that their
credit at the end Of the year was bet
ter than at the beginning. Traction
securities still sell to give high yields
compared with other utilities.
Favor Shown Gas Issues.
Gas companies Jared much better
than the fractions. Increasing favor
was shown toward their securities all
through the year, although they, too,
suffered from the attitude of the pub
lie authorities in insisting that rates
be reduced fully as fast il not faster,
than costs.
Electric light and power and tele-
phone issues have been eagerly bought
at advancing prices. Expansion in
| both these fields has been steady. The
| electric light companies find difficulty
| in keeping up with the demand for
additional service. There seems TO be
no limit to the increase in the number
| Of telephones. The result is that good
first mortgage bonds Of either of these
utilities cannot be secured TO give
| much better than n > per cent return.
| Even the preferred stock Of these com
Danies finds a ready market among
| investors and in one notable instance,
! that of the American Telephone 4 Telc-
| graph company. financing was done by
| the sale Of common stock. In fact,
| the distribution of stock to the amount
| of S115,000.0 900 BY this company with
! ont any underwriting was one of the
| most significant investments develop
! ments of the year American Telephone
& Telegraph has now the largest num-
Der Of stockholders of any American
CORPORATION.
Among the electric light companies
| the Brooklyn Edison successfully
| financed its needs by the sale of adili-
| tiOaal stock TO its shareholders. There
are many other instances in the case
Of smaller corporations scattered all
over the country. All this had very
| favorable effect on the market price Of
telephone and electric light bonds.
Customer Ownership Popular.
Along the same line was the develop
ment Of the customer ownership plan.
Many utilities. especially in the middle
veS.. utilized this method of financing
to great extent during 1922. The idea
is TO sell small lots of preferred stock
to the people the utility serves. thus
making them partners and securing
their moral, rs well as their financial
SuDDOrt for the corporation.
The stOry.is told of a western utility
which had n case pending involving
rates before the local municipal authori-
ties. At the public hearing the rep
reSentativcs Of the company were
astOnishCd when prominent attorney
who had never been connected with
the utility in any way. made an Clo-
quent plea for fair treatment, speak
ing simply as a citizen.
After the hearing was over the at
torney for the corporation expressed
his gratitude and asked why this gem
tleman had come 10 their assistance.
The answer was that the speakers !
daughter had bought one share of the
company'S preferred stock. To protect
that 500 investment this attorney |
made a plea for which he would have |
charged any client at least $500.