Omaha daily bee., 1908-11-23
MODERN MUNICIPAL FRANCHISE
Unusual Provisions Embedded In the
Charter of the Indianapolis
Gas Company.

The city of Indianapolis has a new gas
company which proposes to furnish artif-
cial gas at so cents a thousand cubic feet,
in the charter of which are some unusual
provisions which have, however. stood the
test of time and use either in this country
or in England. The franchise is described
in Municipal Engineering, and its principal
provisions are as follows; The capital stock
of 81 100000 can be increased at any time
by submitting the additional shares to
sale at public auction on thirty days
published notice, any premium to go into
surplus, and not to bear dividends. 1t Is
provided that IL extensions of mains are
desired, and they cannot be obtained under
other paragraphs in the contract, the petit
TONERS for extensions may subscribe for
stock sufficient to lay the mains and sign
contracts for gas sufficient to pay the in
terest on the cost. but even then the stock
must be put up at auction and must be
purchased at par by the petitioners in case
it is not sold at a premium at the auction.
These provisions insure that the stock
shall always bring it's par value into the
treasury. and that the dividends paid shall
be on this par value, no more and no less.
The necessary extensions are also pro-
vided for without over-burdening the COM
pany, while at the same time giving the
property owners large interest on the
money invested in the extensions and ulti-
mate return Of the principal as we'll.
The capital stock, by the terms of the
subscription is placed in the control of a
board of five trustees, stockholders, and
must be voted as a whole. This board of
trustees was named in the articles of in
corporation and the board fills all vacan-
cies. except one member was nominated
by the mayor of the city, and a vacancy in
this particular office is filled by another
nomination by the mayor.
This provision keeps the company in the
control of the trusted, even II the stock is
ali bought up by a competing company.
The original board is one in which the
people have fullest confidence.
Any member of the board of trustees can
be removed by the circuit court on showing
that he is an employee or a holder of stock
or other securities OF any company deliver
ing or purposing to deliver gas in the city.
or for corrupt practice. or misconduct detri-
mental to the company's interest.
The board of nine directors Is elected each
year by the board of trustees, to manage
the business and prudential concerns of the
company. This relieves the board of trus-
tees of all duties. except that of securing
competent directors independent of any in
fluence detrimental to the company, and
makes 1t possible to enlist as trustees men
of the highest class and possessing the full
est confidence of the citizens and stockhold-
ers, without the opportunity to refuse on
account of pressure of business or tenn
porary condition of health.
The company expects to pay cumulative
annual dividends of 10 per cent, payable
semi-annually. The company's earnings are
devoted first to the payment of matured
debts and operating expenses; second, to
the payment of the dividends semi-annually
and unpaid accrued divldends; third, to the
extensions and betterments ordered by the
Board of Public Works. and, fourth, to re-
payments of stock subscriptions, thus re-
ducing the capital upon which 10 per cent
dividends must be paid. When the stock
holders have been repaid their entire sub
scriptions with 10 per cent interest the stock
is cancelled and ownership by the company
ceases, and it is wound up. The ultimate
ownership question is settled by transfer
ring the property to the city when the
stockholders are fully. paid.
The state charter fixes the life of the
company at fifty years. and the contract
with the city Is for twenty-five years. II
the stockholders are not all repaid in
twenty-five years the Board of Public
Works may require the company. to bond
itself at 8 per cent for the amounts due
the stockholders, pay them off and then
transfer the property to the city. subject
to all indebtedness. including these bonds,
or may pay the amount due the stockhold-
ers Itself and thus secure the property. In
case the company becomes insolvent the
city can acquire the property by paying or
assuming the company's debts, including
that due to stockholders for stu unpaid
subscriptions,
The company is required to make semi
annual detailed statements of It's affairs,
including assets and liabilities, disburse-
ments and receipts, and publish them in
two newspapers. The city controller can
investigate the books to check the reports
or otherwise and the city engineer can
examine the plant at any time.
] The gas furnished must have at least eco
British thermal units per cubic foot and
l the price must not exceed 90 cents per 1000
cubic feet.
There are the usual provisions during
construction, giving rights of way. insuring
compliance with the terms of the fran
, chise. etc.
The certainty OF no water in the stock
) and the publicity Of accounts, as we'll as
the supervisory power of the city officers.
, Insure reasonable fixed charges and mini
mize the dangers Of political manipulation.
useless employees. misapplication Of funds,
{ so that the low price fixed for gas may
: be predicted in advance with reasonable
certainty and protected from unfair attack,
{ The public interest in the company makes
friends for II. The high character Of trus-
tees and directors promises the best OF
management. based on the highest prin-
4 ciples and for the public benefit. The
permanence OF these boards and the con-
n t~inuanee OF their high character. as dem
onstrated by experience. gives this plau