The sun. [volume] (New York [N.Y.]) 1833-1916, 1905-04-07
COST OF ELECTRIC LIGHTING
LESS THAN rs THE PRICE, IF
YOUR PLANT COSTS NOTHING.

dav in sufficient quantities TO keep their
minds in a whir for a week The regular
attendants at the sessions are wondering
why the various business schools OF the
CITY are not taking advantage Of this free
course in bookkeeping and high finance.
Under the questioning OF Schoolmaster
Hughes the entire system Of accounting
used by the Consolidated Gas Company
and the New York Edison Company is
gradually being worked into the record
and an emazinRly intricate system IL Is,
although Charles +. Mathewson. counsel
for the lighting combine, blandly informed
the committee yesterday that 1t Is so simple
that a baby could understand t. He
probably referred 10 infant prodigies.
Mr.. Hughes tackled the cost OF pro-
ducing and distributing electricity yester-
day afternoon with Henry NJ. Edwards,
the auditor Of the Edison company on
tho stand. First he attempted TO fix the
actual values Of all the properties en-
rloved in the business, II was developed
that 81. 500. 900 Of the Power company's
bonds were issued to acquire the eight
small companies in the electric light bust
ness in Manhattan, The Bronx and Yonkers
before the merger and $1,000 900 for the
Edison Illuminating Company, whose shares
we're paid for at the rate OF 220. This left
some {65COOOO Of the Power company's
CAPITAL 10 be accounted for and Mr. Hughes
wanted to know what this sum represented.
Why it represents the equities In the
properties which the power company took
over. replied Mr.. Edwards. For instance
the Illuminating company was earning,
10 per cent, but we bought It on a Lasis
Of $40 per cent.
Then you mean by equities in this case
the earning capacity Of property
III you wish to put it that way, yes
replied Mr.. Edwards tartly.
In other words you capitalized the monop-
olistic value Of the corpoIation1'
You can put it that way II you like.
What we did was TO capitalize the equities
Of these companies.
You mean by equities what you can get
out Of the public?"
NO flashed back tho witness; what
we can get out Of the business. We can
show. for instance, that we made money out
Of our expense account, Then there are
the economies that came from consolida-
ton
The witness said that the Illuminating
company had earned 10 per cent. in 1899,
10 $40 per cent. in 1900 and for the first four
months OF 1901 or Just pI ior to the consoh-
dation 10 B-iO per cent In the twenty
eighth months enum Grated II had also
rolled up surplus Of 81, 10000.
What were the Iates for electricity
before the merger?' asked Mr.. Hughes.
The retail price was 20 cents a kilowatt
hour, with certain discounts. IL has since
been reduced to is cents, which Is the pres
What was the cost to the company Of
production and distribution"
For 1900 il was 5.32 cents a kilowatt
hour and for the first four months Of 1901
It was 462 That was simply the operating
cost, no allowances being made for de-
probation, tad debts or interest on in
Vestment."
And you paid go a share for this stock
when the merger was formed?'
we did, and We had to pay 1881 share
for it afterward. You know lsrnilingl that
II is a very fine property
Yes, and a fine rate sheet II has, re-
torted Mr.. Hughes.
Yes, pretty. fine; only II is little too
low" said the witness
i see in your statement here an item for
cost Of water. Now. what water was thAt7"
asked Mr.. Hughes, innocently.
"Oh, that Is the water we buy from the
city" replied the witness
Mr.. Edwards said that in computing the
cost Of production and distribution two
calculations were made, one on the amount
OF current generated and the other on the
amount actually solo, he ktilu IDdL ID6
difference was 30 per cent In other words,
the company got paid for only 10 per cent.
Of the current produced az the stations,
The cost Of production in 1904, exclusive Of
depreciation, interest charges and the like,
was in Manhattan 500 cents for current
sold, in The Bronx 2es and in Yonkers
$40. The averagelcOst OF production for
current sold in the two boroughs was 500
cents, hlowatt hour, II may be eK-
planned here IL the equivalent in light 10
the product Of twenty sixteen candle power
lamps burning one hour
In digging into the value OF the plants
acquired by the Illuminating company pTlor
10 It's consolidation with the Power com
pany and the formation Of the New York
Edison company Mr.. Hughes brought
out that, although the plants Of the Man
haitian and Harlem Electric Light com
panies had been retired to the scrap heap,
their book values were carried along
among the assets Of the Illuminating com
pany The witness also admitted that
the assets Of the Illuminating company
had increased in book value about 1900 900
IN the twenty-eight months just prior 10
It's consolidation with the Power COM
pany, these being the two corporations out
Of which the New York Edison company
The gas men had their whirl at the fig
ures in the morning, Assistant Treasurer
Whitley being on the stand. Much old
ground was gone over again. Finally
Nr. Hughes and Mr. Mathewson got into
q wrangle over the cost Of production. Mr..
Mathewson wanted 20 cross-eXamine the
witness and he finally won his point. Then
he got on the records a statement OF the
cost Of operation for the last -four years.
He said that the actual value Of the COM
uany's property invested in the gas max
Ing business was Sis, 900 900, instead Of
100000, as Mr.. Hughes had figured IT,
Using this as a basis Mr.. Whitley testified
that the percentage Of profit for 1900 was
was 40; for 1901, Sc; for 1902, o.; for 1908.
1872 and for 1904. 90, During this time
the company was paying dividends Of
and 81 per cent, but Mr.. Whitley said
that a considerable Part Of the dividends
was paid from surplus.
We're not those dividends on the entire
carital stock Of the company, amounting
% $4,000 OCO?- asked Mr.. Hughes.
They were but we did not get all our
profits from the gas making business.
. The company owns a large amount of
securities which earn interest
The capital Ia really Se4 600 600, chimed
IN Mr.. Mathewson, for the ti4 900 900 re-
Cciycd for pUmiums on the sale Of stock
vac turned into the treasury and used for
the benefit Of the company. So in reality
our dividends were only at the rate OF 7
Per cent"
Well said Mr. Hughes, we haven't
vet received any explanation OF why ai2,-