The Washington times., 1910-03-14
REPORT BY SENATOR BROWN
GIVES DETAILS OF GAS BUSINESS
Continued from First Page.)

Continued from First Page.)
Third That the company availed it
ser or that portion Of section 3 tsince
repealed of the 1895 act authorizing Il
10 convert certificates Of Indebtedness in
the sum of $4,000 into capital stock
Fourth- That the certificates of in
debtedness were issued without any eX-
Press authority Of law; their validity
and so much of the capital stock as
they represent is therefore open 20 ser-
oUs question.
Fifth. II certificates OF Indebtedness
represent no actu-i Indebtedness due
from the company but. in fact, repre-
sent. earnings and profits. they operate
rs an unauthorized increase + capital
stock in violation Of law
Earnings of Company.
on the price OF gas the report says:
''fhe last annual report OF the COM.
pany made 70 Congress, February /. 1910,
pUrpcrting TO give a detailed statement
Of its business for the year ending De-
cewber 81 1909 shows the net earnings.
after deducung operating expenses to be
Sf46, ,5315h. This was l. per cent plus
on a capitalization Of $4,000, assum-
ing the certificates Of Indebtedness 20
be part Of the capitalization. II we
exclude tie certificates Of Indebtedness,
let earning Of - per cent plus on the
company.
II goes without argument that such
net income is excessive unless the
facts shall disclose that the actual val
lie OF the plant and the actual amount
invested Is far greater than its capital
stock
"On page OF the report, Il appears
that what is called "A regular dividend
Of S960,0oo had been paid the stoclhold-
ers. also. an extra dividend OF S260u9o
or. i'm all. % per cent paid in dividends
during the year. In addition 10 these
dividends, the company expended $685.
5-L95 IN extensions. constructions. etc,
and had left a surplus OF S13S.%10-0S
Keeping Dividends Down.
When this report of the company
for 1863 IS considered in connection with
its history since 1873 as shown on the
legislative journals Of Congress and as
shown by the various reports Of Con-
gressiOnal committees, it would seem TO
be the duty OF Congress To inquire fully
into the affairs of the company
From the hearings had Dy former
committees Of Congress and from their
reports il may ne learned that the divi-
dends kept pace with every increase IN
the capital stock Indeed. the company
appears 10 have been unable TO increase
ne capital stock fast enough 10 keep
lie dividends at a reasonable rate on
their face
The treasurer or the company in a
letter to the Hon Samuel J. Randall
in 1851. declared that for the thirty-one
and one-haf years, the average Of cas-.
and stock dividends had been 10 $40 per
cent. After 1881 the dividends seem 10
have averaged much higher, 10 per cent
IN 1882. 80 per cent iu JAZZ on SZ.H.,
capitalization. 10 per cent in 1881,
per cent i'm lSN5. although the company
earned III per cent, according To the
SpoOnc- report.
Regulation of Prices.
'-On February 3. 1895, the company, IN
answer 10 an inquiry. Informed Con-
gresham ]. w. Babcock that the crl.
pany had paid in the year 1880 dividend
in the sum OF S59"3 or more than .
per cent on its capital stock, and hs
remaining a sur-lus OF $S9922.3S Il
must be conceded that Congress has
the power to regulate the charge FOR
gas How can Congress exercise TINS
power with Justice 60 the company ana
The public ln the absence OF iutOrma-
tiou touching the facts sought TO be
ELECTED 10y this resolution.
The company Is entitled 70 a fair and
Ioa asOnahlo return oU IT'S investment. ihe
value of the investment In dollars must
Dee known iu order TO determine what
would he fair and reasonable return
This return mus; he paid by the public
From every s;andpoint, the inquiry
should he ordered
Again. the inquiry should be ordered
TO the end that a proper standard for
tho Capitalization Of all public service
corporations may he declared establish
ed by Congress Capitalization is the
lor. to- Governmental control and rcSula-
tiou oC an corporations subject 20 its
jurisdictions The company under dis
rus-iou au3 inquiry furnishes TO Con
-rrSS am immediate opportunity 90 de
clare "a wise and prudent public policy
iu respect tu capitalization of corpora
tfous generally. The opportunity should
Int ID" lost"