The Washington times., 1909-04-27


it win be easy to figure out the worth
at the present time. What would II
cost TO duplicate the plant is the plan
1T seems TO me that it would be
as great a mistake to permit the inn
Tnense capitalization of the two COM
panies mere as il was to permit in New
York the consolidation of the seven
companies there several years ago.
IF you remember those companies are
permitted TO earn a return on not only
the value Of the property. but on eight
million dollars franchise rights s well.
No Good Will in Monopoly.
Il believe said Representative Good,
more emphatically, that there can be,
I'm monopoly of this kind. TO good will.
a gas company is no more entitled to
good will valuation than is man svho
runs the only pawnshop in town-you
have got 10 go 70 the latter - borrow
money. or do without; you must go 70
the gas company for fuel. or burn
wood. II is idle talk 20 think for
minute that the gas companies are en-
titled to a single cent of return on what
they term good will.
II the two companies are permitted
10 capitalize their good will and the in
nocent purchaser is permitted to buy
the stock thus recognized as legal. il
is quite likely that in the future the
courts VIII say that not only is the
physical valuation to be considered, but
also the good Will that has been per-
United 10 be capitalized"
Cost Put at a. Cents.
An enlightening disclosure Of the gem
eral review Of the gas situation given
in the early part OF Mr.. Goods address
was the statement that about ten years
ago the Department OF Commerce and
Labor had investigated the gas supply
OF twelve cities and had received con-
fidential information that the cost or
manufacture and distribution at the
burner, including all expense, had been
A. cents.
we are all willing" said Mr. Good
TO give the stakeholder a fair return
on his money. but If the city govern
ment OF Chicago is willing that the
people Of that city should be held up
for S. cents a thousand for gas when
IL only costs something ike 50 per cent
OF that amount. that is no reason why
the people Of Washington should be
held up for 81.
Typical Case of Juggling.
Particularly appropriate 70 the local
situation was the Iowa Representative
conps1-ison Of gas company methods
as Illustrated by the tactics employed
by the Cedar Rapids Company a num-
Der o. years ago. CapitaIizing az $3.50
co. he said. none Of which wae ever
paid in. three promoters had issued
bonds from time 10 time TO pay for
the property. and had reaped immense
profits all the while without any stock
holder having TO pay one cent OF cash
for his holdings
From bonded value OF $4,000 the
plant increased TO 1890. 600 by these
Characteristic company methods, the
monopoly from time 10 time. 10 ease
the public demand. giving a slight re-
duction IN the price TO the consumer.
Members OF the committee we're not
slow 10 draw the parallel. inasmuch as
the Washington company has certifi-
Gates outstanding to the amount Of
81. COO 600
Figures Of Company.
Mr.. Good. reading from a February.
i90s. report OF the Washington Gas
light Company. showed that coal was
costing the company about $500 per
ton. He estimated that the company
should receive a return of s2S5 from the
sale n coke and coal tar. although the
sale of these valuable by-products are
not featured in the cOmpanys represen-
fations TO the public
The great difficulty in adjusting gas
rates continued Mr. Good, ais that
comparatively few people are qualified
10 speak with authority on the dues-
ton Of cost and plant valuation. and
these few are interested in holding up
the price. Gas engineers all swear bv
certain rules"
He recalled an instance in his ex-
perience where an engineer had testi-
fed that the depreciation IN a gas
holder was about 3 per cent. indicating
that its life was thirty-three years Yet
this same witness, the speaker said.
testified that a certain holder was
worth 5000, whereas il had cost but