Evening star. [volume] (Washington, D.C.) 1854-1972, 1910-04-06
GAS HEARING BEFORE
DISTRICT COMMITTEE OF THE HOUSE
GAS COMPANY HEARING ON
THE COUDREY BILL.
Committee on District OF Columbia,
House of Representatives,
April 4, 1910.

April 4, 1910.
Following is the conclusion of the tes
timony in the hearing on Monday befor'
the House of Representatives committee
on the District of Columbia on Repre-
sentative Coudrey's bill concerning th'
Washington Gaslight Company. the mrs
portion of which was made pubic yes
terday;
Now. In answer to your question, tha'
would not be a return of IS ID PEI 90,
uponEthe investment, but 80 per cenl ~
the selling price. This very report WIZ.
I have before me, the company Iepoi
also SHOWS that the value OF the piaa'
exclusive of working capital ana iran,
chisep is $S,60S, $500, that is eXciusNe -,
the working capital. ana the w VIZ n ~ " :
CAPITAL alone should be at least % OF ~
cents per thousand feet sold per year
The statement made by my firm showed
that December l. 1901 the conlpdli! ilou
almost exactly SSOO0,o0 in physicai as
sets-that is, plant. real estate ana So
forth That was without working cap1tal:
Up to June 80 1909, there were addltlohal
extensions made. going up to Si''oo,no; 81
that June 30, 1909, the actual appralse-
ment without any franchise rights, was
Sa273951 Therefore / say that the Sc
curties do not represent even the invest
ment And if We are going 10 tax aooul
returns we must talk about returns On
the investment, and not on the secaIi-
ties. The securities might not reach 81
OOn,OOa. but that would not aHect me
rate of return on the investment. FOR
instance. take the case OF one 'ol the
Massachusetts manufacturing companies
shoes and the like the book value OF
the plant. has been reduced by excessive
credits to plant account: that II the rate
of interest paid were calculated on tue
book value, of the plant II would oe
tremendous percentage. Here, II the
earnings are calculated on the securities.
of course. the rate of return seems hlsh,
because the amount of the securities goes
not represent. in par value hS"here
near the actual investment in the plant.
The Chairman-Whata as YOU make the
figures is the return which the Wash
ington Gas Light Company is getting on
its investment?
Mr.. Humphreys will make that cal
culation in a moment Taking the COM
pany's statement and making no addi-
tional allowance. which | think should
he made. for increase accruing cost OF
depreciaton-taking the actual value or
the property in round figures at So
GO000a, which is little above what II
on June 80. 1909. that would make
612 per cent. If. however, you took the
valuation. which l consider moderate
one. which we put upon the plant as a
whole in the middle of last year, the
value of the whole plant the property.
as going concern. at S13.GO,NO, that
would show in earnings last year per
cent. with half of the year running at
% cents and half Of the year at 81, or
averaging about 95 cents.
Mr.. Goldsborough-Ninety cents.
Mr.. Humphreys-Between 81 and 90
cents for the year. Now. upon that
they made, on my valuation, ) per cent
on their property value. and on value
of physical assets they only made about
61a per cent
Mr.. Goldsborough-Pardo me, doctor
hut the difference between your calcu-
lation of the rate per LOCO and that of
the company is simply this. that the
company in stating its profits overcharged
itself. or failed to credit itself, with the
depreciation account
Mr.. Humphreys-Thati is right. sir. as
l have tried to explain. This fails to
deduct from its receipts the full cost, as
Mr.. Goldsborough-All the actual state
ments and figures from which these de-
auctions were drawn were correctly re-
ported by the company, and this side
issue in regard to cost per LOCO cubic
feet was made by the secretary under
the apprehension that il was not proper
TO credit the company with the deprecia-
ton account
Mr.. HumphreyS-That is what I have
endeavored to explain.
Mr.. ELECTROMAGNETIC that is the diff
ference?
Mr.. Humphreys made my statement
upon that. and supplemented it by say
ing that larger allowance should be
made for depreciation.
Mr.. Cox-What are the actual physical
which can be representative of the outlay
in money?
Mr. Humphreys-The outlay in money?
Mr.. Goldsborough-Oh. no
Mr.. Cox-Exclusive of working capital.
Mr.. Goldsborough-The working capital
is n asset to be included of course.
Mr.. Cox-Is it your judgment, Mr.. Hum
phreys. that the physical assets would
make it about S3G01,G0O?
Mr.. HumphreyS-I want to correct my
self. OF course, the outlay covers a good
deal of expenditure for working UP of
business If YOU are going To value the
plant there are a great many things that
YOU cannot find for which money has
been spent in other words, a man never
lived and no company ever existed-not
this company-that established its bust
ness without loss, and the companies
should be allowed to capitalize such nee
essary losses under average quality of
mana gement
Mr. Cox-That would be a legitimate ex-
pense, of course. But my inquiry is d.
rected to the ascertainment Of the value
of the actual physical assets. Just give
them approximately. if you please.
Mr.. Humphreys-Up to July. 1909, l can
give III 10 you pretty accurately-nO, i
.annot give that with perfect accuracy,
for the reason that | just gave, because
the way it appears in the papers at hand
does not show the working capital sepa-
rately But can state il in this way. that
upon that date the physical assets. such
as the plant. buildings, real estate and
working capital (and if YOU want to diff
ferentiate, as some of the witnesses did
the other day. as to the meaning of
plant mean by plant a manufac-
turing plant and distributing plant. in
cluuing meters. then l would make il at
that da te 1918, $50.
Mr.. CoX-Then the only thing in the
$9.000,0O which should be excluded In
order ~ get at the actual cost of the
physical assets would be your working
capital?
Mr.. Humphreys-Yes sir.
Mr.. Cox-And you don't know how much
that is?
Mr.. Humphreys-No. but if l had lit
tie time ! could give it. | must have that
in some of my papers.
Mr.. Cox-1s IL your judgment that the
physical assets would make il about
S9.OoO,Ge0?
Mr.. Humphreys-About 81, 600 900; YES.
l should say fully So al this time
The chairman-Mr. Aiken asked you a
while ago to state the prices of gas in
some of the different cities and az I
remem ber il you got as far as New York
city and were then interrupted. | would
like TO have you complete the answer il
YOU will
Mr.. Humphreys-There has not been
very much change in the United States
during the last two years. The most
accurate statement, because il takesx in
all conditions, is carefully compiled
statement made by Mr. Glass vice pres
ident of the Milwaukee company which |
have in hand l can, however, give YOU
little more recent statement from the
Browns Gas Directory. but il does not
,~izt,