10. The following was copied from a morning paper.

Explain it.

"The Canadian Westinghouse Company, Ltd., declared its regular quarterly dividend of 1% and an extra dividend of 1% on its stock, both payable Jan. 10."

11. Explain the following bond quotations:

MUNIc.i.p.aL BONDS

_Security_ _Maturity_ _Yield per cent about_

Albany, Ga., 5's Nov. 1, 1941 4.75 King Co., Wash., 4's Nov. 1, 1931 4.50

RAILROAD BONDS

Atchison, Topeka, & Santa Fe, general Oct. 1, 1995 4.20 mortgage, 4's Louisville and Nashville, unified Feb. 1, 1946 4.35 mortgage, 4's

PUBLIC SERVICE CORPORATION BONDS

New York Telephone Co., 4's Nov. 1, 1939 4.75 Chicago Railways, first mortgage, 5's Feb. 1, 1927 4.99

12. Why are the bonds of successful public utility corporations a good investment?

13. Which company do you think would grow faster, a light and power company or a gas company? What effect would the growth or the failure to grow have on the price of the stocks of each?

14. Should a street car company pay part of its earnings to the city?

15. If the population of a city doubled, what effect would there be on the price of public utility stocks?

=Exercise 308=

Topics for Investigation and Discussion

1. Harnessing our streams to secure electric power.

2. The growth of the Interurban.

3. In your own town:

_a._ Have gas rates increased or decreased? Can you explain the change?

_b._ Have electric light rates increased or decreased?

Can you explain the change?

4. Street railway, electric light, and gas company franchises.

5. The earnings of the street car company in your city.

6. Munic.i.p.al ownership of public utility corporations.

7. The effect of mergers and consolidations of big corporations.

8. The effect of a trust on compet.i.tion.

9. Trusts and prices.

10. Government suits against trusts.

11. The tariff and the steel industry, the wool industry, and the sugar industry.

12. Railroad rate increases.

=Exercise 309=

Write the following from dictation:

1

In New London, Connecticut, stands the oldest grist mill in the country. It is a picturesque building, having a water wheel like the one that it originally used when New London was first settled. The town was in the center of an agricultural community, and a mill to grind corn was a need that soon manifested itself to the settlers. Accordingly, in 1650 at a town meeting, six men were chosen to build a mill. John Winthrop and his heirs were granted the right to carry on the grist mill as long as they maintained the building placed in their charge. This is one of the first monopolies recorded in New England history.

2

The same standards by which a farming or a manufacturing investment may be judged are not applicable to a mining investment. A farmer may earn eight per cent on his capital, and with care his investment may increase in value. A manufacturer may earn eight per cent on his investment, and, if he keeps up his machinery, his business may be as valuable ten years, or even twenty years, hence; but a mine, after each dividend is paid, is that much nearer its end. Now, it is well known among mining men that the average life of a gold or silver mine is under, rather than over, ten years. There are exceptions to this rule, of course, but, granting that the life of a certain gold or silver mine is to be ten years, then, in order to pay back both princ.i.p.al and interest, dividends of at least sixteen per cent should be distributed. Copper mining, of which the statistics have been most accurately kept in New York and Boston, offers many inducements to the investor; but too much care cannot be taken in the matter of selection, for copper stocks, in not a few instances, have been boosted out of all reason. As with gold and silver mines, so it is with copper mines. They have so much ore to begin with, and after each dividend are that much nearer to the day when they will close down. For such mines, provided they have a good lease of life, eight per cent or even ten per cent may be regarded as only moderate returns. These are merely samples of some general principles to be followed.--_Roger W.

Babson._

3

Dear Sir:

At the close of a year which has presented many perplexing problems, not only to investors and dealers in bonds, but also to borrowing munic.i.p.alities and corporations, there are several factors in the situation which in our opinion offer strong encouragement to every one in any way interested in bond investments.

Of special significance is the marked change in sentiment which has recently taken place. There is every indication that this country enters the new year with an unusually substantial feeling of confidence.

While a notable increase in the demand for bonds would undoubtedly bring out a large amount of new financing, on the other hand, there has been an acc.u.mulation of funds during the period of depressed markets, and it is generally understood that investment dealers are carrying comparatively small amounts of bonds.

January has an almost unbroken record of higher average bond prices than the average prices in December. It is not our intention to predict an advance this January, although there are unquestionably many reasons for antic.i.p.ating at least a moderate improvement; but, viewing the question in its broader aspects, we find many convincing arguments in favor of the purchase of bonds at this time. It is recognized that the decline in prices has been due to a variety of causes, which, except in a few individual cases, are not the result of any depreciation in real values. Basic conditions are admittedly sound. We, accordingly, not only recommend the judicious purchase of bonds for the investment of surplus funds, but also suggest consideration of the advisability in some cases of converting short time securities into long time bonds.

What conditions could be more favorable from the standpoint of the purchaser of bonds than an extremely low level of prices; a wide-spread belief that fundamental conditions are sound; a general feeling of confidence that the problems which have tended to disturb business during the past year have been, or are being, solved; and a conviction that we are entering upon a period of probable ease in money rates?

Very truly yours,