Who Said Utilities Were the Best Investment?
(Let the investor beware!)
Screen 1 of 2It was in July of 1925. I was thirteen years old and had just completed my freshman year at Bowling Green High School.
Upon the advice of an official of the American National Bank in Bowling Green, I had agreed to accept an invitation to come to the office of the president of Kentucky Utilities, a local subsidiary of the Associated Gas and Electric Company of New York, to talk about "my stock."
Now "my stock" consisted of one share of Associated Gas and Electric common stock, which I had purchased almost two years earlier with $50 I had earned and saved from delivering newspapers. At that time, several business men and bank officials told my mother and me to put my money in utilities. It's by far the safest and wisest investment, they all said.
And now the president of the local utility company wanted to talk to me--only a thirteen-year-old boy--about that one share of stock I owned. Why? I wondered.
I was told in words I really didn't understand at that time that the parent company now wanted to exchange a "much better" share of preferred stock for the share of common stock which I owned. The one being offered was better, they claimed, because it would make me a part owner of a particular utilities plant in Alabama. As it had been, they told me in some smooth talk, I was "merely a little stock holder lost in a huge corporation way up in New York." This was the gist if not the actual words of what the president said.
This explanation made sense to me--especially the part of owning something "down South," since many adults I knew still mistrusted those "damn Yankees." But before I agreed, I asked what the new share--the one they were offering me in exchange-- was worth. I was assured by everyone in the room, including the official from our bank, that it was now worth $50, but that in a year or two it would "be worth much more."
I was becoming quite excited about this "better" investment and willingly turned over to the officials my old certificate of common stock, after signing it as instructed. In exchange, I was given this beautiful, very impressive looking certificate with fancy inscriptions on fine bond paper. I could not even read some of it--especially the several paragraphs of very small print on the back--and did not understand much of what I could read. But somehow this didn't seem to matter too much. I remember I took great pride in owning something so formal and mysterious looking.
The following screen shows a portion of the front side of this Certificate discussed in this story. The reverse side is not reproduced - it is a full page of very fine print which would not be legible to the reader, as Travelstead points out in his narrative.
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