Within the last few years this class of bonds has come into considerable prominence. The ability to economically transmit electrical energy a great distance to generate power is the underlying factor in this industry. With a good water-power, and a demand for power at satisfactory prices within a reasonable distance of the property, there should be little question as to the success of these companies as a class. A low cost of operating has resulted in large profits in many instances. Far-seeing financiers look forward to a time when either the price or scarcity of coal will create a tremendous demand for electricity generated by water-power, and there is a growing belief that the better selected and located of such powers will become very valuable. The rapid inroads upon Niagara Falls for such a purpose, and the enormous amounts of money which have already been spent there in development of power companies, is an indication of this belief.

Where the cost of fuel is high and manufacturing centers frequent, will be found the most favorable locations for these companies.

1 J. W. Gilbart.

2 Gold is believed to have been first coined in England in 1344.

In selecting power company bonds as an investment, the usual facts as regards class of men behind the enterprise, management, contracts for business, etc., should be taken into consideration. But the main facts to consider are: The sufficiency of water-power for all time to come, and a plentiful water supply throughout the year; the location of the plant itself - near enough to industries of a stable character to create a permanent demand for the electricity generated; the likelihood of competition from other water-powers in the same section; if the water-power is not owned, the right to operate same must endure for a longer period than the life of the bond issue; and, finally, the climatic conditions under which power is generated and distributed, and the cost of fuel in that particular section, should be carefully studied.

To illustrate with regard to this last: In California, the price of coal is high, likewise fuel oil, except in sections favourably located as regards the oil wells. That State is practically free from thunder and lightning, and many of the plants are situated in sections of almost perpetual summer, all of which is conducive to cheap maintenance.

In some of the mining regions of Mexico most of the fuel is brought on the backs of donkeys, making the cost of generating steam power very great (about $200 per horse-power per year). Many water-power companies can sell power very profitably at $25 per horse-power.

It does not follow that the conditions mentioned in the last two paragraphs are essential to the successful conduct of such a company, but are some of the things favourable to success.

Other facts conducive to economical management in the operating of enterprises of this nature are, that they are naturally free from the dangers of anti-trust legislation, labour disputes, devastating fires, catastrophies, such as wholesale railroad accidents, and abnormal rises in the cost of raw materials, some, or all, of which factors may have to be considered in other industries.

Inasmuch as "power bonds" are a somewhat new security upon the market the investor has been able to obtain profitable interest returns by purchasing them, but there is very little question as to the extremely safe character of many of these issues.