Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1904-04-28

steal plant, Mr.. Heath presented a
table showing that their value was
$25S.54S. This was their original value,
and upon various parts there has been
a total depreciation Of $27. ABS, leaving
the present value CT the physical plant
1T $o31 ,l12. This assumes that all parts
of the plant are owned by the company.
and Mr.. Heath went on to show at
considerable length that many parts OF
the system are not owned by the COM
pany. Among these parts are the build
ings which are clearly the property OF
the Edwards Company under the exist
ing lease; also parts OF the services
MIGRANTS, meters and pipe lines, which
takers have already paid for, and foi
which the company now asks cOmpen-
sation a second time. There is also
many rights of way to which the COM
pany cannot show a clear title, and
the value of this should not only be
deducted, but it should be deducted
twice, unless they constitute claims
which the district will be forced to
meet. The total Of these various parts
of the system, to which the title Of
ownership by the company is not clear
is $126e7. and this substracted from
s231 112 leaves net present value of
the physical plant, $216,9'7, which as
sumes that the water is pure, and that
the income is assured.
It is the earning power of the COM
pany, rot the cost of it's plant which
really measures the value. What is the
lawful gross income of the company at
present: The gross income which it
gives for the current year is placed
at $3S,4l1, and it's net income at $29, 43..
This is return of 1859 per cent on
the present value Of the plant, $216,31 I
as given above. Even when the going
concern value claimed by the company
is added for the sake OF argument, it
leaves a return of over 10 per cent. In
these times per cent is a good return
upon any investment, ana ali authori-
ties agree that property like this is the
safest kind of an investment. The de-
gree of the return should be common
surate with the risk of the investment,
and why should the water company
have a return out of proportion of the
risk involved? The court has expressly
forbidden the placing of values through
Tic IIc-Hou VI pasCu UP
on the income as done by the COM
pany's experts. since it leads to the
absurd conclusion that every reduction
of the physical value really increases
the award.
In the case of this company the
stockholders never risked a dollar.
They raised soS5,OOO in bonds and put
$4,000 into their pockets and put the
rest into the building Of the plant. Not
dollar of the earnings Of the plant
have ever gone into it, yet they say
the present value of the physical plant
is $275,000 by. figuring it as built in
1903. MIR. Heath paid his compliments
in very sarcastic terms to Mr.. Goodhue,
the Massachusetts water works expert,
who became suddenly deaf in cross-ex-
animation, when confronted with the
fact that he had sworn up the value Of
this plant at $37 600 beyond the figures
given by him at Waterville, based ex-
actly upon the same units. In closing
his argument for the forenoon. Mr..
Heath touched upon the 1908 typhoid
epidemic, and showed how the sneers.
sarcasm and superciliousness of the
company regarding the typhoid cpl
demic lessened in the face of the con-
vincing evidence Of the greatest array
of sanitary engineers ever seen upon 4
witness stand in Maine. He declared
that no money could measure the
deaths, the suffering and the loss
caused in this city by the wilful negli-
gence of the company in violating it's
solemn pledge to give the city pure
water. That is a matter for the COM
pany to settle with their cOnsciences
and their God.
MT. Heath devoted the first half of
the afternoon session to the matter If
a lawful income and operating expens,
as differing from the actual income
and expense of the company. He
showed that the eompany has never
had a lawful income sufficient to pay
the interest on the bonds which it bad
put out to such an excessive extent.
He claimed that Of it's net income for
1904. only S10.S4S is lawful, while
SIT, 2SG is unlawful. The company has
made individual takers pay excessive
rates to make up for the small sum it
has received for giving fire service.
The court has ruled that the going
concern value is to be based on the
lawful net income, and it depends upon
the efficiency of the system, the time
necessary to construct a new system
and the time necessary to develop such
new system. Mr.. Heath figured that
in its fourth year, under the condi-