Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-12-21
MEN AND MONEY
By NJ. S. Rukeyser.
Copyright. 1920

By NJ. S. Rukeyser.
(Copyright. 1920
The expanding public utility enter
prlses of the country have found a
new and abundant source of capital
far from the traditional money
centers.
In their successful customer own
ership campaigns the companies have
sold stock directly to patrons through
gas filters, meter readers ana tele-
phone operators. In 1925, according
to figures compiled by the National
Electric Light Association, the public
utility companies sold directly to Gus
toners 2,926;271 shares, valued at
1927, 500. When the figures for
1925 are compiled they are likely to
be nearly as large.
In going to Main street as we'll as
to Wall Street for funds the well
managed public utility companies not
only help themselves, but turn many
hitherto thriftless individuals into in
veStors. Some of the money sub
scribed is taken out of boards buried
under the house; others take 1t from
under the mattress or from behind
the clock. Moreover. individuals who
used to patronize the bucket shops
coined the little fellow when the big
investment houses and corporations
ignored them, are now actively buy
ing stakes in the largest and best
managed enterprises In the country.
Telephone Company Pioneer.
No single concern has carried on
this pioneering work as effectively
and over so far-flung territory as
the American Telephone & Tele
graph Co, which today has nearly
400. 900 acknowledgements than any
other corporation in the world. -Four
and one-half years ago the company
appointed David II. Houston, who
served in President Wilson's cabinet
for eight years, to supervise this proc
ess of scattering the ownership of the
telephone company over the country
and to q wider array of individuals.
Before the war virtually all the stock
had been held in New York and New
England.
In addition to the 400 900 holders of
American Telephone & Telegraph
stock. there are 100000 owners of
preferred shares Of associated tele-
phone companies-the subsidiaries Of
the A. T. & T., 10000 holders Of the
common shares of the associated COM
panies, most Of whose stock is owned
directly by the holding company; and
100000 bondholders in the Bell tele-
phone group. There is, of course, some
overlapping in these figures, but 1t
Is apparent that half a million in
dividuals are investors in the tele-
phone business.
Employees Stock Statesmen.
Every telephone employe is a stock
salesman as a sideline. The parent |
company does not sell new stock in
this way, but facilitates the purchase
of outstanding stock at the Stock Ex-
change. Through the Bell Telephone
Securities Co., subsidiary which |
the matter. any individual can |
buy American Telephone & Tele-
graph stock at the current market |
rate. paying for it in 10 equal monthly |
installments and receiving per cent !
interest on the funds paid in until the |
buyer gets the stock itself. More than !
10000 individuals have applied for |
shares in this way in 1926, and the !
purchase was only 3.S shares. |
In the last five years, $165 200, 900 of |
stock has been sold directly through |
the company's efforts.
The company has pioneered in ad- |
vertising it's own investment merits, |
instead of leaving the job to less
outsiders.
The advantages gained, in the opin. |
ion of officials, are twofold. First the
company strengthens it's financial
base by getting In this way a ready
made market for the sale of new
securities, which are periodically
offered to stockholders to finance
expansion.
Secondly, the process Of widening
ownership increases the number of
individuals interested in the problems
or the industry. 1t heightens the
number Of friends of a corporation.
No Limit to Project.
80 far as can be seen," Mr.. Hous.
ton pointed out, there is no limit in
America to this development of popu. |
lar ownership. Corporate business
Will grow. The number of corpora |
tons will increase. The policy Of in. |
vtting general ownership will doubt. |
less persist. The only limit would APP
pear to be that placed by the willing |
ness OF the laborers Of every class to |
work. to exercise will power. to save
and to invest prudently."
Thus far the customerownership |
has been confined to public |
utility corporations.
1t Will eventually be extended |
further.
The stronger railroads ought to take |
q leaf from this new experience OF |
the public utility companies. have |
urged for several years that they do |
50. and am now able to report that |
one Of the largest and most important |
railroads OF the country-an Eastern !
systenl-has recently been studying |
the customer.ownership movement in |
detail with an idea to adapting 1t to |
Its own needs. 1t Is wholly likely that |
Pullman porters, conductors. brake. |
men and ticket agents will be drafted |
to sell securities as a sideline.
Some of the largest and most sue
cessful Industrial corporations might |
eventually adopt the idea, but great |
must be shown by in.
vestors in selecting Industrial securi- |
ties. Unlike the railroads and the |