Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1908-12-12
Some Interesting News in the
Proceedings Of the Cedar
Rapids Case
ACCOUNTANTS REPORT
Beware of the Experts is tho Lesson
to BE Learned--cost Of Gas Was "a
Cents at Cedar Rapids and Much
LESS in Larger Piants--Probab'y
Same Here.

what is the cost. of manufacturing
and distributing gas?
For what price can 1t be sold and
still leave a reasonable profit upon the
capital invested in it's manufacture?
What will the books of the company
in Marshalltown show If they are ever
disclosed to the public?
These and sundry other questions are
annoying the members of the local city
council at this time. There is an ordi-
nance up for consideration which pro-
poses a, price Of $1.lo per M. cubic TT. for
xas this city. Is 1t reasonable or I'M
reasonable, too high or too low?
/ While discussing an illuminating
fluid let's be illuminated by the report
of Warwick, Mitchell & Co, of Chi
cago, expert chartered accountants who
examined the books of the Cedar Rap
4 ids company under direction of the
district court. This report was made af-
ter an exhaustive examination and led
off with preamble to the court stat
ing that:
1.-THE affidavit submitted on Aug.
9, 1907, by A. T. Averill, president OF
the plaintiff company. contains very
material errors and does not record the
correct answers to several nterrroga-
tories contained therein" Forty inter
rogatories propounded by the attorneys
for the city as to cost of IN anufactur-
ing gas. etc).
"2,-The books of the plaintiff COM
pany do not properly record its various
transactions"
Upon detailed reading of the report
1t appears that certain eras,lres on the
books had been discovered which I'M
derstated the amount of gas produced,
supposedly in order to make showing
OF high cost; that an excessive charge
for depreciation had been made each
year which also added unnecessarily to
the cost and that certain real estate
was owned by the company which was
not actually used in the gas business
but which had been listed rs part OF
the value of the gas property on which
to compute earnings.
Costs Only 81 Cents.
The accountants then reported. that
the average Ecosttof nlanufac turing and
distributing gas In Cedar Rapids Tor
five years had been 64.04 cents per
1000 cubic feet, They also reported
the send out in. 1902 to have been fifty
four million cubic feet with q cost of
81 cents per 1900 whereas the sendout
in Marshalltown today is about thirty
three million cubic feet. 1t seems from
the report that in 1906 when the send
out at Cedar Rapids had risen to 1O5
million cubic feet the cost rose to 6S
cents owing to the general rise OF ma
terials and labor, so that 1t must fol-
low that the cost Of manufs cturing gas
at fifty-four million sendout, today,
somewhere near Marshalltown's size,
is not very much more than, the cost
at Cedar Rapids, with LOS million
sendout. On the company's books at
Cedar Rapids 1T is not CROUCH more
by IL cents per 1000 cubic feet ito over
come the general rise In costs from the
years 1902 to 1906.
And even If it should be argued that
Marsha lltown's sendout was too small
for fair comparison, 1t appears from the
testimony of E. G. Cowdery, vice presi-
dent Of the Peoples Gas company of
Chicago, that the sendout in Milwau-
kee averaged 6, 500 cubic feet per cap
ita while it averaged only 5000 cubic
feet in Cedar Rapids and, figured in
Marshalltown at the same average on
$4,000 people should be 44.$00,000 cubic
feet. If it is not UP to that now 1t is
the fault OF the gas and not of the
town.
Nine Per Cent on Ninety Cent Gas.
After making corrections in the val
siation of the gas plant, property and
mains the accountants figured that 90
cent gas in Cedar Rapids would pay
five per cent interest on the company's
$4,000 of bonds and S.7S per cent divi-
dends on $269,S41, the net valuation, af-
ter charging off five cents per M. Gu. It.
for annual depreciation. This would
equal fifteen per cent on this COM
pany's capital stock of $150,000.
Probable Valuation.
The property at Cedar Rapids was
valued at $344.S41, which was
much too high as the sworn statement
of the president of the company to the
tax assessor was introduced in court
in which this officer had valued the
gas property at $4,000 ard the books
showed that the company lad borrowed
only $4,000 and issued capital stock of
$150,000.
In lMarshall.own. with forty per cent
of the population served at Cedar
Rapids the send out of gas is approx
mately thirty per cent, hence the val
ue of the gas plant portion of the
property here could not b. much more
than 100000, using the high valuation
at Cedar Rapids as a basis of estimate.
The companys sworn statement to the
tax assessor is now s150,O0O for it's
gas, electric and street railway proper
ty after fight with the city's attor-
ney.
So much for the cost of gas at Ce-
dar Rapids and the reasonableness of
a rate much lower than the $1.10 pro-
posed in MarshalltoWn. but how is it |
elsewhere?
Cost 20 Cents in Twelve Plants.
In 1889 the United States; Commission
of Labor reported upon the cost of
manufacturing and distributing gas in
twelve different plants tt be 90 cents
per NJ Gu. TT. without taxes, depreciation
or interest, while the books showed /
the cost at Cedar Rapids to be 1854
cents with the same items excluded
from their total cost of 64.04 cents
Regarding its report the United
States Commission says:
During the course OF the investiga-l