Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-02-18

ON~Nn ASANAAAAA6Ss
sometimes very heavy losses, on its
mortgage investments? AS to bonds,
some people seem to consider that
there Is magic security in the label
bond. This popular belief is not sup
ported by experience. The surplus
earnings and margins of many COM
panies, over and above the dividend
requirements of their stocks, are much
greater than the surplus earned by
other companies in excess of the in
tereSt requirements of their bonds
Few experienced financiers would
claim that the bonds usually offered
are safer than, or even as safe as,
stock of such companies as the
Montreal Light, Heat & Power, Ameri-
can Telephone and Telegraph, Com
monwealth Edison, and many others
could name. The payment of the in
terest on the bonds is certainly no
more sure than the payment of the
dividends on the stocks. In the very
unlikely event of the dividend on any
such choice stock being reduced. It
would be certain to be far more than
Offset by increases in the dividends on
others. Our own average interest rate
has been steadily mounting year after
year, due solely to increased dividends
and bonuses received on our stocks
beyond the rates payable on those
stocks when We purchased them. AS
an Illustration. take the common
stocks purchased by us in 1923; the
actual cash yield from these in 1928
represented a return of 2.38 per cent
on the purchase price greater than the
dividends payable on these stocks at
the time of purchase, while the
average value of the rights and
bonuses received during the interview
ing five years has amounted to a
further SO per cent per annum.
Only Tested Securities Purchased.
Our Canadian law wisely excludes
stocks OF all companies that do not
have long record of dividend paying
and prosperity. But we go much
further than that. We limit ourselves
almost entirely to CORPORATIONS thar
have attained outstanding financial
strength, with great reserves and re-
sources already established, that
supply some product or service essen
tial to the life of the community, and
that usually are dominant in their
respective spheres. Such corporations
have their roots deep in the life OF the
nation they serve. and are almost part
OF the nation itself. The nation
cannot grow and prosper without their
growing and prospecting. The opera
tons Of such corporations can hardly
fail to expand. and their profits 20
increase, surely and steadily: and this
Is but another way of saying that the
stocks of such select and outstanding
corporations can hardly fail 10 be Of
greater intrinsic value five, ten and
twenty years hence than they are
today.
Let me repeat what have already
said on many occasions. We do not
speculate. We buy to keep. We never
sell the stock merely because it has
risen to high figure. Stock exchange 4
quotations influence our decisions as 20
whether we should buy a security. but \
not as to whether We should sell II
quotations be high. We can ignore |
them, and, in fact, do ignore them.
Policyholders' Profits Again Increase.
There is no department of a Com
pany's business which deserves closer |
study and investigation than the in
veStmentS of its funds. No other de-
partment will give such a generous re-
turn for the attention devoted to II.
ut is to its investments that our
Company owes its limpregnable posi-
ton. and the magnitude of the profits
in which our policyholders rejoice.
Many years ago I expressed the hope
that I would be able to announce an /
increased scale of profits every year
for at least ten years. We now make
that announcement for the ninth sue
cessive year. and 1 certainly cannot /
say that expect the increases to stop
with even the tenth announcement. Il
Our profits are accommodating as never
before, and it Is inevitable that a
larger and larger proportion will be
disbursed to our policyholders with the
passing years.
A Company With a Soul.
But there are other features TO
which my mind revertS with pleasure.
One OF the most delightful compli-
ments ever received was when was
once introduced to an audience as the
president of a corporation that had a
soul. That this was no mere phrase is
shown by the sympathetic comrade-
ship that exists between all ranks of
the Company's service, both at head
office and in the field. 1t is seen also
in the enthusiastic support accorded /
us by our legions Of policYholders. Our
relationship with them is something
more than that of mere business CO.
operation. The sense of mutual con- Il
fidence and mutual appreciation is SO
strong as to be akin to friendship. and /
1t is as our friends I like to think of /
them. This delightful relationship Is |
the reward of unwearied and success
full service on their behalf. and It Is a
reward which is greatly priced.
II now move the adoption of the
Report. 1t Is, venture to think, one
Of the most eminently satisfactory and II
reports ever presented at
an annual meeting. 1t records the III
of one OF the greatest. ii
strongest and most beneficent corpora
tons in the world, and 1t is worthy OF
the Company"