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Financing of American Water Works
||American Water Supply Company
American Water Supply Company was incorporated in Maine on December 27,
1888, probably by Charles H.
Payson, George F. Thurston, and George S. Payson of H. M. Payson
& Co. of Portland, Maine to manage the water properties they
owned. They had also been involved in forming the American
Water Works and Guarantee Company (Limited) in Pennsylvania in
1886, and which had been incorporated in New Jersey on January 26, 1891
to take advantage of that state's corporation law that allowed
corporations to own stocks of other corporations. The same day, a
law was introduced in the Maine legislature to give the same privileges
to the American Water Supply Company, which was passed in early
The 1891 law modified the charter of the American Water Supply Company so that it was "authorized and empowered to acquire, hold, vote upon and dispose of shares of the capital stock of corporations engaged in supplying cities, towns, villages, corporations and individuals with water and gas and electricity for lighting and other purposes."
Few references about this
company have been found, and it is not known which water
companiescompanies it owned. It was dissolved at some point and the
Payson firm formed the Consumers Water Company.
1891 "The Maine Legislature," Boston Post, January 27, 1891, Page 5.
Augusta, Me., Jan. 26. Bills were introduced today in the House today to authorize the American Water Supply Company to acquire the property of other corporations.
act relating to the powers of the American Water Supply Company.
February 6, 1891.
The American Water Supply Company, a corporation organized under the general laws of the state of Maine, on December twenty-seven, eighteen hundred and eighty-eight, is hereby authorized and empowered to acquire, hold, vote upon and dispose of shares of the capital stock of corporations engaged in supplying cities, towns, villages, corporations and individuals with water and gas and electricity for lighting and other purposes.
Corporations Licensed," Daily Illinois State Register, June
13, 1903, Page 6.
The American Water Supply company, with headquarters in Portland, Me., with a capital stock of $1,000,000, was also licensed to do business in this state.
Works," Municipal Journal and Engineer 23(23):700 (December
Albion, N. Y.—At a recent meeting of the taxpayers it was voted to appropriate five hundred dollars to locate a pure and adequate water supply, and to investigate the advisability of establishing an up-to-date sewer system for the village. There has been much complaint against the water furnished by the Water Works Company that is providing the present supply, and the analysis made by the State Chemist at Albany, H. D. Pease, Director of the State Hygienic Laboratory, of the samples of water sent to him, have shown it to contain a large percentage of disease germs. The people agree that a municipal system of water works and sewerage would be a good thing for the village and that a sufficient supply of water can be obtained about three miles south of the town in the natural basin formed south of Benton's Corners, and which is a continuation of the veins from which the village of Medina gets its supply. The American Water Supply Company, a Maine corporation, has been making preliminary surveys for a mammoth water system supplied from Lake Ontario and with a large distributing plant at Albion to supply other neighboring towns. It is proposed to establish a plant at Oak Orchard Harbor, from which the water will be pumped in three divisions to Albion, which has an elevation of 521 feet above the level of Lake Ontario.
1954 H.M. Payson
& Co. : partnership for 100 years 1854-1954. by H.M. Payson
Pages 18-19: For many years Charles H., George S. and Herbert, as partners in the firm of H. M. Payson & Co., were active as the financial agents of all the American Water Works and Guarantee Company's properties.
With the organization, in 1888, of the American Water Supply Co., Charles H. and his partners became familiar with the operational end of water utilities, as well, and assumed a threefold responsibility: to distribute and deal in securities for the benefit of the public, to help finance and operate business enterprise, and to develop opportunities for the benefit of both.
As the owner of the American Water Supply Co., H. M. Payson & Co. purchased outright the securities of water companies all the way from New Hampshire to Kansas, and operated them out of the Portland office as a successful business venture. Eventually the American Water Supply Co. was liquidated. However, H. M. Payson & Co., has continued its interest in Water Companies through the Consumers Water Company which was organized in 1926 to own and operate water works properties. Consumers Water Company now manages properties supplying water to Biddeford, Maine; Sharon, Pennsylvania; Kankakee, Illinois; Springfield, Missouri; and other towns and cities.
Payson & Co : a foundation of trust for 150 years, by John
H Walker and Peter E Robbins
Page 20: Through his experience with the Portland Water Company, Charles saw the opportunity to finance, develop, acquire and operate other water utilities that needed capital and plant improvements. By the time he had left on his successful foray to London, Charles had started, with several partners, the American Water Works and Guarantee Company created to build and develop water properties, and the American Water Supply Company which owned and operated water companies from New Hampshire to Colorado - neither of which should be confused with today's American Water Works.
Through its very active underwriting of utility bonds, H.M. Payson & Co. provided the financing these two companies needed to buy and improve water properties. By the early 1900s, the Company had underwriting relationships with over 100 companies. It helped to finance other water companies from Maine to California - and had by then become widely known as "The Water Bond House."
Pages 21-22: In 1926, the partners of H.M. Payson represented by Herbert Payson, Charles's younger brother, and Harold C. Payson, HM's grandson, came together with five other partners, each bringing their respective expertise in the water business, to form the Consumer's Water Company. The Company had seven dollars in assets, representing the one-dollar contribution from each of the partners on the day of incorporation.
This Company provided returns to its shareholders that would be the envy of any venture capital or buyout firm today.
In less than six years, this new water utility holding company had 10 subsidiaries in seven states. Consumers total assets were over $22 million and common shareholder equity was over $4.5 million - or, again in constant dollars they created over $54 million in shareholder value. True, some of the value came from the utilities already owned by several of the partners that were sold into the new company, but the preponderance of the value came from making and financing acquisitions from third parties at favorable terms. (The whole story of Consumers Water Company is engagingly recounted in John Parker's recent book, From Maine to the Maine Line).
© 2020 Morris A. Pierce