Boston Edison

During the early part of last week stockholders of Edison Electric Illuminating Co. of Boston were proud of their investment. They knew their company was in a strong position, furnishing electric light and power to a population of 1,280,000 in Boston and 37 neighboring towns. They knew it had recently soared to 440 on the announcement of a four-for-one split-up.

Later in the week stockholders of Boston Edison sourly wished their company had never decided to split up its stock. The Massachusetts Department of Public Utilities unexpectedly refused to grant the reduction in par value, publicly scolded the company for its rate charges, its dividend prices, and, most important to stockholders, for the price of its stock. While the Department was meeting the stock had tumbled from 375 to 360, then after the decision became known went to a low of 299, later rallied to 325.

Saying that a split-up "is likely to encourage the belief in the minds of many innocent people that it is the forerunner of substantial increases in dividends," the Department ruled that the par value should not be reduced until "the selling price on the Boston Stock Exchange more nearly approximates its real value." This real value was set by the Department at $169, a price it has not been at since 1924.

"We think," concluded the ruling, "that the investor in the petitioner's stock has no assurance that the company will be able to increase its rate of dividends in the near future, or, in fact, will be able to maintain the increased rate of dividends recently voted. Thus in our judgment, the approval of the company's proposal at this time, would have little, if any, effect in causing a wider distribution of its stock among investors. Such as would occur would, in our opinion, be to the disadvantage of the investor."