Taking Stock: A Letter from Southern California Edison Company to Walter P. Temple, 18 May 1921

by Paul R. Spitzzeri

One of the most revolutionary developments during the Homestead’s interpretive era of 1830-1930 undoubtedly was the establishment of electricity as a power source, with it having massive influences on people’s schedules, whether for work or pleasure; how houses were outfitted and utilized for cooking, cleaning, personal care and in myriad other ways; for the use of dams and water for hydroelectric power; for transportation, especially with electric streetcar systems; just to name some examples.

Notably, Thomas Edison arranged for nascent power companies to use his patents for electricity generation if they included his name in theirs, because patents were then short-lived.  In 1909, Southern California Edison was incorporated, though the origins of what is now Edison International date back nearly a quarter-century earlier when the formation of local companies in California cities like Visalia and Santa Barbara.

Los_Angeles_Evening_Express_Mon__Jan_24__1921_ (1)
Los Angeles Express, 24 January 1921.

Los Angeles inaugurated electricity service in 1882 with the Los Angeles Electric Company.  There were several other local firms providing power to the city, especially as the Boom of the Eighties burst forth later that decade, while some outlying communities developed their own systems, as well.

At the end of the 19th century, the Los Angeles Electric Company and West Side Lighting Company merged to create the Edison Electric Company of Los Angeles.  In 1897, the City of Los Angeles passed an ordinance requiring the laying of underground lines to avoid the clutter of power (including for streetcars), telephone and telegraph lines that are very obvious in photos of the period.

Los Angeles Times, 24 January 1921.

The first years of the 20th century saw another major boom in greater Los Angeles and, meanwhile, the Los Angeles Aqueduct project got underway as water and power generation within city limits was put within municipal government.   In 1911, two years prior to the completion of the aqueduct, the Bureau of Power and Light was established to manage electricity generation and distribution.  Over a quarter century later, the bureau merged with the Bureau of Water Works and Supply to create the Department of Water and Power.

In those areas of greater Los Angeles not served by municipally controlled electricity departments, Southern California Edison grew to be the biggest regional supplier. One of its biggest sources of hydroelectric power was at Big Creek, northeast of Fresno, though that system was built by rail and real estate tycoon Henry E. Huntington and his Pacific Light and Power Company, with its first power transmitted south in 1913, the same year the Los Angeles Aqueduct opened.


Express, 24 January 1921.

SCE purchased Pacific Light and Power four years later and gradually enlarged the Big Creek system, so that 90% of the firm’s hydroelectric sources are from there and about 20% overall.  By the early Twenties, as a new boom was underway following a post-World War I recession, Edison had major plans for expansion to meet current (!) and future demand for electricity.

To that end, in early 1921, the company announced a major new issue of stock, which was advertised in the financial section of newspapers and promoted through a mailing which included a letter from company president John B. Miller (and on which is a great map showing the distribution system in Southern California); a terms and conditions sheet for the purchase of stock; and a subscription form.

A bond issue followed shortly afterward and one of those selling them was the Harris Trust and Savings Bank of Chicago, run by Edison director Albert W. Harris, owner of a horse-breeding ranch in modern Chino Hills.

On 18 May, a letter was sent by the firm’s Right of Way Department to Walter P. Temple confirming that

at your suggestion, I mailed Mr. Milt Kauffman [Temple’s business manager] regarding the purchase of some of the Southern California Edison Company stock and he informed me that he would recommend the purchase of some of this stock from you the First of June and First of July, either on these two dates, or one or the other.

Miller’s letter of 24 January outlines in detail the stock issuance began with the offer of the opportunity. along with 7,500 existing shareholders, “to become earning partners in a business necessary to our every day industrial and commercial life”  The firm, the fourth largest electric utility in the country “is proceeding energetically with the development of large additional sources of cheap hydro-electric power to keep pace with the growth of Southern California and the San Joaquin Valley.”


Consequently, the plan was to create 750,000 horsepower “generated by the falling water of our mountain streams” in the Big Creek area within ten to fifteen years.  This was made necessary because “not only are other sources of power—wood, coal, oil and gas—becoming less available” but the tremendous existing and expected “industrial and agricultural development” of these regions “makes the early construction of these water powers most advantageous.”

Keeping operational costs low and, with the regulatory oversight of the State Railroad Commission (now the California Public Utilities Commission) in place, “fair earnings are assured, so that for stability and safety, an investment in this security should be particularly attractive.”  Stock was $94 per share or, with $5 monthly installments, at $95.


The document added that “dividends have been paid without interruption since 1909” when the form was created and “may be increased when conditions and earnings warrant” because there was no limit on return rates.  These dividends were paid out quarterly at an 8% annual rate so that checks amounted to $2 per share every three months  Therefore, at $94 per share, there was a realized return of just about 8.5% of $90 per year for ten shares.

It was noted that this offer was such “as to place it within the reach of many who otherwise would not be able to purchase a security of this nature” and it also provided for “a very effective method of saving at a high rate of interest.”  These were tax free dividends in the state and “are not subject to Normal Income Tax.”  Those paying by installments would have interest at 7% annually and, once the full price was paid, the rate went to 8% and stock certificates issued.


As to the properties involved, they included seventeen hydroelectric and eight steam plants generating nearly 385,000 horsepower, but, as noted above, the plan was nearly double that amount with Edison “also interested in large additional power developments on the Colorado River which will have a capacity of over 2,500,000 additional horsepower, which will be an important factor in the development of the entire Southwest.”

To date, the firm supplied nine counties covering 55,000 square miles and serving 1,250,000 people and, of this, “over 250,000 consumers in 233 cities and towns and the surrounding country are supplied with electricity for power, light and heat.”  Again, the predominant use of water to generate power kept costs low and the company’s gross earnings skyrocketed from just under $3.4 million in 1910 to well over $14.5 million a decade later, while the number of consumers jumped to the quarter million mentioned above from 55,000 ten years prior.


With high-value property of assets of some $110 million, a product of necessity, a rapidly growing territory, and a wide array of uses for electricity, “it is a generally recognized fact that adverse business conditions have little influence upon the earnings of a security of this character, so that our stock has proven stable in its value and subject to enhancement..

Among the directors of the company were the president of insurance companies, banks, investment houses and railroads, with some major names being Huntington and his son Howard, prominent banker Henry M. Robinson, investment house owner William R. Staats, and Chicago banker and Chino area horse breeder Albert W. Harris.


The letter from Miller concluded with the confident assertion that:

Considering the value of the Company’s hydro-electric properties, both developed and undeveloped, the large and diversified market for electric light and power, and well-established earnings and the growth throughout the territory served, the continued success of the Company is assured.

A list of company offices at which subscriptions could be placed and the map constituted the remainder of the document and a glance at the latter shows just how far the Big Creek system was from greater Los Angeles.  The terms and conditions involved if stock was bought outright at the share price or on the installment plan and on the reverse of that sheet was the subscription form.

We know that Walter P. Temple did own stock in the company, though it may be that the purchases were made in person, likely in the Alhambra office not far from his home at the time.  Such an investment was typically a part of building a diversified portfolio and it is too bad that Temple did not have more of his estate tied to high-yield and generally safe investments like his taking stock in Edison.


Instead, as many did then and in other boom periods, he put more emphasis into the risky speculations of oil prospecting and real estate development.  In 1921, his income from the lease he had with Standard Oil Company of California at his Montebello ranch was still high, but would dip dramatically in ensuing years.  At the same time, his commitment of resources for drilling projects throughout greater Los Angeles and outside the region and for real estate development in downtown Los Angeles and the San Gabriel Valley rose significantly.

Within five years of this letter and documents, Temple and his associates issued bonds for his Town of Temple (renamed Temple City in 1928) and separately for other real estate projects in process.  As the decade came to a close, an escalating financial crisis was insurmountable and all assets were sold or lost except for the 92-acre Workman Homestead, but even that could not be saved.  In 1932, as the Great Depression, which began in fall 1929, worsened with massive waves of bank failures, the ranch was foreclosed upon and Temple lost all.


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