The Washington times., 1907-08-04
Hearing Before Auditor
Expected to Determine
Meaning of Law of
1896.
Opposing Attorneys
Have Diametric Opin-
ions on the Subject.

1~N~NAVAA Va AtANAN AAldll pdS6luK lHlNAtSAf
and one that is bound 10 arise at the
final disposition Of the petition by JUS
ice Gould, is involved. This is the ques-
ton Of the real meaning of the section
of the Law II 1896 under which the peti-
ton has been made. and known as sec
tion g.
The lawyers representing the gas COM
pany and those representing the citizens
of the District and the Government have
taken ts"1etrically opposite views as to
its meaning. That It is difficult Of in
depreciation is illustrated by the asser-
ton yesterday by a prominent lawyer,
who is takirg s a keen interest in the
case. that the law is absolutely anom-
alous, there being nothing similar with
which IT may be compared.
Interpretation of Law.
This law. as construed by the attor-
neys for the gas company. enables either
Of the gas companies in the District to
come into the Supreme Court in an
equity proceeding. ask the court TO de-
termine the actual cash value of the
plant and then to authorize increased
issues Of STOCK VI 20 the value of the
plant as thus Gscertained There need
be shown no reason for so increasing the
capitaliZau ~, beyond the fact that the
value of the plant is greater than the
capitalization at the time of application.
Inc necessity for showing that the ad-
ditonal capital stock issue is to be made
for the purpose OF providing extensions
or enlargements is denied.
On the other hand, the opposite view
Is that some such use for the additional
capital must be shown In order TO
Justify the authorization OF the increase
by the court As a public service cor
poration. making It's profits from the
money paid by the people of the Dis
trict, the gas company should not be
allowed to bring up its capital stock TO
the fun value of the plant the in
creased value Of which mas been Great
ed by virtue Of profits accruing from a
presumably high price of gas An ad-
ditional issue of stock may be justified
only on the ground that the proceeds
are TO De used for some specific pur-
pose other than allotting it as dividends
to stockholders who are already re-
ceiving liberal returns on their holdings.
Fight Likely to Be Renewed.
The act of 1896. which Includes this
peculiar section, was the last one passed
by Congress in regulation of the gas
companies with the exception Of the
recent legislation taxing them and re-
curing detailed reports. In order TO
gain a clearer view of the meaning of
the section recourse to the circum-
stances under which II was Incorporated
In the act of 1896 Is necessary, and is
very interesting at this time. for the
reason that the fight in Congress over
the price of gas 10 be charged in the
District which was waged at that time,
,r-srr
next session, and at that time the reg
ord of the hearing OF the present pc
tition will furnish much information 10
Congress.
AS originally introduced the meaning
of the section was clear enough, being
in part as follows:
Sec. 3. That neither the Washington
Gas Light Company nor the George
town Gas Light Company shall here
after issue any greater number OF
shares of stock than shall be equal TO
the actual and necessary cost of con-
structicn OF future enlargement of plant,
which cost shall first be ascertained and
authorized upon petition therefor to the
Supreme Court, etc.
Provided, That the amount of stock
and bonds so issued shall not exceed the
actual cost Of such extension or en-
largement OF plant"
In conference, almost at the close of
the session, when the advocates of a
reduction in the price of gas were
9 pressing to secure the passage of the
bill, which, by the way, was the result
OF ten years of effort to secure a re-
.duction, the section was changed so as
p TO read IL part follows:
New Reading of Law.
SEC. s. That neither the washington
Gas Light Company nor the Georgetown
Gas Light Company shall hereafter
issue any greater number of shares Of
stock than shall be equal to the actual
cash value of said plants and neces-
sary cost Of construction of future ex-
tensions or future enlargement of
plants. which cash value and cost Of
, extensions shall first be ascertained,
etc
Provided. That the amount of stock
and bonds issued shall not exceed the
actual cash value OF said plants and the
cost of such extensions or enlargement
of plant"
Had the section been adopted as
first introduced, there could have been
no question as to it's meaning. but the
changes made gave rise to the diff
Guilty in Interpretation.
When the conferees reported to the
House. the section as amended was
included. Representative Hepburn of
Iowa Immediately objected to includ-
ing the section ip the bill. stating that
it would give the companies authority
to increase their capital stock at any
time they thought proper or desirable.
and that additions to the plants of the
companies paid for out Of their earn
ings might from time to time be capi-
talized and interest paid on such stock,
and that If the provision were then
taken advantage OF the stock OF the
washington company would be about
IS per cent water"
He was told by Mr.. Babcock, how
ever. that it was then too late to make
any changes in the bill. and that If
the House did not agree TO the thing
as il stood the legislation would fail
and the people OF the District would