STUDIES IN SECURITIES 
RE a ie] 
jis 
square miles, 19 cities, and 162 smaller communities make up the 
whole territory. Around 40% of revenue is from sale of electricity 
for power, so that 24-hour use of the plants is greater than with 
most companies, and is assisted by the increasing daytime residence 
consumption shown in averages of 415 k. w. in 1920, 460 in 1923, 
and 519 in 1926. Comparing 1926 and 1921, the gross revenues 
were $44,855,000 and $23,383,000, the funded debt was $86,337,- 
000 and $64,299,000, and the stock outstanding was $86,543,000 
and $28,013,000 in the respective years. The present stock in- 
cludes $32,269,800 exchanged at par for convertible debentures sold 
in 1923 and earlier. In 1926 $15,000,000 5% junior mortgage 
bonds were offered to the public on 4.90% basis, and in 1927 $20,- 
000,000 more at 4.85%, indicating Detroit Edison’s high credit 
rating. 
Upon the $172,880,000 capitalization beginning 1927, the annual 
interest requirements were $4,531,000 and the dividends at 8% are 
$6,923,000, the total being 6.6% on bonds and stock together, or 
well within the accepted fair return on public service property. 
Earnings for the stock were as follows: 
11.3% 
a7 
1.0 
1923...: 
1922... 4% 
1921... 
Varying reserves are made from earnings against plant deprecia- 
tion; the unused balance in the fund was $2,848,000 in 1921 and 
$14,079,000 in 1926; in three years 1924-26 $13,515,000 was ap- 
propriated from earnings and $2,043,000 from surplus to the re- 
serve, and it would according to official statement be adequate for 
the next few years without additions. 
The immediate advantage to stockholders of the policy of financing 
by partner subscription is the receipt of valuable rights. Offerings 
of new stock were in 25% ratio in 1923 and 1924 and 10% in 1925 
and 1926, and in the last two years the subscription right was worth 
$3 to $4, or a sizeable bonus with the cash dividend. Detroit Edison 
stock is a sound investment affording a good income return. 
Erie R. R. 
Only four railroads run all the way from New York to Chicago 
and of these only Erie R. R. does not pay dividends. By tradition 
the Erie capitalization of $200,000 per mile of road is extravagant, 
but an estimate of $700,000 a mile was recently placed on record 
as the current cost for construction of a vital trans-Pennsylvania 
segment to make up a proposed fifth trunk line. Apart from pres- 
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