Evening star. [volume] (Washington, D.C.) 1854-1972, 1898-04-26
Investigation Continued by the House
Subcommittee.
EXPERT HASKINS GIVES EVIDENCE
Changes Made in the Distribution
Entries.
Mr.. PITNEY'S QUESTIONS

Quoting the telephone inquiry reassembIed
this morning with Representative G1out
in the chair.
Mr.. G. W. Harkins, the accountant wao
has examined the books of the telephone
company, was sworn and proceeded, at the
request of Judge Wilson, counsel for the
telephone company. to relate his expert
ence as an accountant.
He said he had made an examination of
the books of the Chesapeake and Potomac
Telephone Company at the instance of
President Bryan. He had made an inves-
tsation of the earnings and expenditures
of the telephone company in detail for two
years. He had Investigated the amounts
expended for construction by the con-
paEy during it's existence.
Extent of minatiOn
How thoroughly did you make the ex-
animation of 1896 and 1872" asked Judge
Wilson.
Thoroughly enough to know that the
statements are correct"
Are the exhibits and statements of your
report accurate?"
They are" replied Mr.. Haskins.
Are the amounts On the books charged
to construction account properly charged?"
They are; also the items charged to
maintenance. operation and construction"
replied Mr.. Haskins. Continuing, he sail
there was no attempt at concealment in
the books.
Judge Wilson questioned Mr. Haskins as
to his experience with the ratio of eX-
penses to earnings of corporations.
Mr.. Haskins said he had examined this
question in the past with reference to
many corporation
The committee suggested that this line
Of evidence was not material, and that the
witness need not be questioned as to the
ratio of earnings and expenses of railway
r.. wit int he t.,
to the Chesapeake and Potomac Telephone
Company.
Judge Wilson stated the question again:
wv hat should be the ratio of the net to
the gross earnings of a corporation to sue
cessfuliy operate it, applied to this COM
pany?''
The committee then decided to admit
the question, but Mr.. Haskins said he was
not competent to answer the question.
Change of Entries.
Mr.. Pitney then questioned Mr.. Haskins
I'm what manner did you change the
distribution of entries on the books for 1896
and 1872
in small particulars we charged TO in
come account bad debts charged off. The
Ccmpary had charged il to expense ac-
count. In 1894 and 1885 we changed the
distribution of earnings" He said the
net result vas the same. to agree with
the books. the difference being in the dis
tribution.
How did you make your distribution
between the expenses of maintenance
For the items charged to maintenance
We were obliged to rely upon information
received from examination of the day
book of the work. The superintendent
keeps daily record of the gangs of men
and what they are employed upon. There
were no other means of determining what
ork was maintenance or to new construc-
ton
Upon closer questioning Mr.. Haskins adj
mitted that work which was in reality the
laying Of rev and additional cables was
charged TO the maintenance account.
Then. in that case, the company might
multiply the value of the plant three-fold
and not charge it to construction ACCOUNT
asked Mr.. Pitney.
possible.
Mr. Pitney called attention to the fact
that the T1aint enance charges for 1897 were
unusually large. in fact, being double hose
of the previous year. Mr.. Pitney asked ii
the charges to maintenance We're not too
large
Mr. Haskins thought that the charges
were not too high.
Were the Charges Too High.
MIR. Pitney said it was not question of
whether the work had been done, but
whether the items were properly cnarsed
to maintenance.
Mr.. Haskins said that betterments are an
The extension of line into a house. for
instance, is a charge upon maintenance. If
a corporation capitaliZes every improvement
that is put in, the system will end in bank
Iuptcy. Some railroads have tried the plan
and failed in 1t.
Mr.. Pitney said the unusual charges to
maintenance in 1897 seemed to indicate that
items not properly chargeable to tina, ac-
count had bean SO charged.
MIR. Haskins held that such conclusion
did not necessarily follow. A new conduit
was laid in 1897 and certain work which
was prevented in 1896 by rules laid down by
the Commissioners had been performed in
1891.
At this point recess was taken until
O'Clock.
District End Most Profitable.
After the recess Mr.. Pitney resumed the
questioning of Mr.. Haskins who said the
books did not keep separate accounts for
the Washington and Baltimore branches OF
the company. The earnings of the eX-
changes, however, were noted upon a sep
arate book.
Mr. Pitney, reviewing the figures, said
that the District of Columbia business Tor
seven years showed that the District end
of the business is the most profitable.
Mr.. Haskips said this seemed to be ap-
parent.
Mr.. Pitney showed that while the appar-
ent earnings were about 1871 per cent on
the total capital, the actual earnings would
be mora IL construction account has been
charged to the maintenance account.
1t was brought out that at all times since
the organization of the Chesapeake and
Potomac Telephone Company. the Ameri-
can Bell Telephone Company has held q
majority Of the stock.
The afternoon session OF the committee
was devoted to questioning Mr.. Haskins
and President Bryan upon the financial
statements heretofore submitted and pub
lished in The Star.