The Washington times., 1908-04-08

9
saying that a oompany's capital was
price OF It's product, and that in IN
stances where the Company's capital
was in the main constituted from pref
It's taken from the consumers. II was
manifestly inconsistent to give gas
company the right TO capitalize and
earn Increased dividends on capital the
consumer had supplied. This was the
situation presented in Washington, he
said.
Two Theories.
There were two theories IN this con-
nection: One being that the company
for while might be permitted TO earn
more than they were allowed 10 dis
tribute in dividends. the idea being that
the excess might be put into the plant.
but not given &c the stock holders. After
the company had reached the point
where these excess earnings constituted
a large per cent of the capital, then
tire excess earnings must stop and the
consumer began to reap the benefit in
the decreased price in gas This theory,
Prof. Benlis said, was strongly favored
by the MassaC husetts Gas Commission
which had fixed a sliding scale for gas
The other theory, in vogue in Great
Britain ana Europe, provides that COM
panies are not allowed 10 earn more
than a certain dividend. and the con-
sumner begins Immediately to get re-
suits. through cheaper gas. for tho
amount he virtually had invested in the
company.
Sliding Scale.
Asked by Mr.. Campbell If he favored
the sliding scale now in use in Boston,
Prof. Bemis said the principal objection
TO 1t was that It had tendencies 10 tie
Up cities in long contracts. Il regard It
rs an Improvement" he said. 'but con-
siderinK the awakening which is now
going on througout the country on this
subject and the rapidly growing senti-
ment for gas regulation. I would not
advise the fixing of a base for a sliding
scale today which might not be suit
able ten years from now"
Your law here. however, continued
Prof. Bemis, has the benefits of neither
of these two plans l have suggested.
Your law As IL now stands. unless YOU
repeal this section >, provides that not
only may the companies keep these
profits contributed Dy the consumers.
but that 1t may capitalize them. IL has
a tendency 10 absorb fOTeveE without
beneht 10 the consumer, all profits made
In the company business.
Inc law allows the community TO
20 10 sleep and the community fails to
realize its full significance. For instance.
ttake the Washington Gas Light Com
pany'S own report
That il has spent for construction
and extensions during the past year
Sl30d2.5i. and that besides this fl has
added surplus OF $139, 29O.S2- Total near
" S27O. 600.
This is more than 10 per cent. in it.
self. on the capital stock Of s. 10000.
In addition TO this the company paws
a dividend Of 10 per cent. and pays in
terest amounting 10 about $1,000 at
per cent, on its certificates OF indebted
ness Therefore, the total earnings were
36 per cent. But the people do not realize
this. And these certificates OF indebted
ness seem 10 be nothing more or less
than stock dividends issued 10 stOckhOId-
ers without going 10 the courts.
Enormous Dividend.
Under your present laws. perhaps.
the company might legally declare a
dividend Of. this kinds per cent-but
the people II they knew of IL would not
long endure such a thing But this law
allows it without the people becoming
acquainted with its true Interpretation.
which makes Il very grave in its
viciousness."
Prof Bemis criticised the manner I'm
which this law had been interpreted by
the auditor in the Georgetown gas who
included IL the value Of the PLAN the
franchises. good will, and extensions
made possible through the money Of the
consumers rather than any actual in
vestment OF stockholders He also
spoke OF the plea for depreciation" IN
values referred TO in the report.
1T IS a most amusing thing said
Prof. Bemis. that depreciation always
begins about the time of a gas hearing
and we never hear anything about al
lOWanCes that must be made for de-
probation until a reduction in price
IS under consideration
q Il understand that the courts would
not permit the testimony OF any save
inc gas company s representatives in
this hearing" interrupted Representa-
tive Campbell. WAS this fair2'
T have never heard OF such 4 thing
before" said Prof. Bemis.
rs It right to allow the capitalization