Foreign Bonds of Five Big Electric Power Companies

Abstract

The purpose of this paper is to clarify the significance of foreign bonds for five big electric power companies, Tokyo Electric Light Co. Great Consolidated Electric Power Co., Toho Electric Power Co., Nippon Electric Power Co. and Ujigawa Electric Power Co. In this paper following the three interested parties which were concerned these foreign bonds are examined; (1) five big electric power companies which issued them, (2) financial organs in U.S.A. and U.K. which underwrote them, (3) the Mitsui Bank and the Industrial Bank of Japan which were entrusted with mortgages of them. In the period from 1923 to 1927, electric power companies themselves took a positive attitude to the issue of foreign bonds. Foreign bonds were advantageous means of raising funds to electric power companies for the terms of redemption of them were far longer than those of domestic bonds, and the rate of exchange in those days was under mint par. In the period from 1928 to 1931 the Mitsui Bank and American investment bankers, as Guaranty Co. of New York, took a positive attitude to the issue of foreign bonds of electric power companies. The Mitsui Bank aimed at collecting debts, while Guaranty Co. of New York aimed at gaining commissions. Foreign bonds were not always more advantageous to electric power companies than domestic bonds in those days. In the period from 1932 to 1934 it was impossible to issue foreign bonds, and the companies which previously issued foreign bonds took bad knocks because of a fall in the rate of exchange. Therefore five big electric power companies proceeded to the purchasing redemption of existing foreign bonds positively, and they organized the cartel named Denryoku Renmei (the League of Electric Power Companies) in April, 1932. The balance of money loans for electric power companies from the Industrial Bank of Japan decreased in those days. Consequently the commonly accepted theory is-not adequate, which asserts that the later placing the electric power industry under government management was based on the financing for electric power companies from the Industrial Bank of Japan.