Evening star. [volume] (Washington, D.C.) 1854-1972, 1910-04-05
GAS HEARING BEGUN BEFORE DISTRICT
DR.. Alexander Humphreys, President of Stevens In
stitute, Testifies as Manufacturer and Expert.

/
| ton, / have investigated all branches of
| their business; and am qualified to do so;
and have had charge of all branches of
| the business.
Mr. Coudrey-It is not a question of
qualification, but what I want to get at
| is this: This resolution calls for an IN
| vestigation of the gas company mere
and what we want to know is whether.
| in your opinion, you can say yes or no
| as to whether the gas company here is
| overca ptaliZed or not.
Mr.. Humphreys-At the present time?
| Mr.. Coudrey-Yes, sir.
! Mr.. Humphreys-It is decidedly under
| capitalized, and there is not the slightest
| question about it.
| Mr.. Coudrey-How about their profits?
| Mr.. Humphreys-They are not eXtrava-
CANT by any means; and, furthermore.
/ their statement underestimateS their eX-
| penses- In other words, their profits are
overstated, in my opinion.
| Mr.. Coudrey-Do you mean that their
| statement does not give true statement
of their expenses?
Mr.. Humphreys-True, so far as they
believe but, of course, l differ with them
as to certain additional items which go
| into expenses.
| Mr. Coudrey-What per cent did they
make on their capital last year?
| Mr.. Humphreys-I will have to figure
| that out If you will pardon me for a
J mcment. According to their statement?
Mr.. Coudrey-Yes. l want to see wheth-
1
| not.
Mr.. Goldsborough-Also, doctor, if you
| have the references convenient there, will
you please give the value of the prop
| erty?
| MIR Coudrey-Have you the printed
| statement there that they have issued?
Mr.. Humphreys-Yes.
| Mr. Hazelton-It is the report that they
| are bound to make by law.
, Mr.. Pearre-It has to be made under
| oath.
Mr.. Observation-Disclosures is no question
| about the accuracy of the figures
| MIR. Coudrey-Is there any way by
which we can get the original capital Of
! the gas company?
| Mr.. Goldsborough-I can tell you that
| 1t was originally $4,000.
Mr. Coudrey-How much more money
| have you put in?
| Mr.. Goldsborough-It would be hard to
| make a statement of JUST the amount
but the fact is undoubtedly true that d
| very large part of the capital that has
| gone into betterments was derived from
| profits.
Mr.. Coudrey-For instance, in addition
| to this $4,000 do you know how much
more actual money has gone into the
| plant?
| Mr. Goldsborough-I know that 100000
| went into it about four five years
| after the company was first started.
Mr.. Coudrey-Well, that is 100000 How
| much more?
| Mr.. Goldsborough-I could not tell you
| accurately how much more but as the
! representative OF the company / have no
| hesitancy in saying that large part of
| the capitalization was derived from earn
| ings that the company has been per-
mitted to make by law, under statutory
regulation.
| Mr.. Humphreys-The capitalization as
| stated here is $500, 600, paid up, with
dividends and certificates of Indebtedness
| of $2.6OO.OOO, and improvement bonds Of
$59S, 600, or practically 100000. So we
can state that the capitalization is So
100000. The net earnings were SCAT 900
/ should prefer to introduce correction
there. and reduce the earnings quite a
little. because l do not think that the
amount which is put in for the accruing
liability. on account of depreciation, is
large enough. But even taking it from
their statement. they earn on this cap
italization about II per cent, almost ex-
actly that
Mr.. Coudrey-How much of that CAPT.
talization is. you might say, water?
Mr. Humphreys-None at all. sir
Mr.. Coudrey-None at all?
Mr.. umphreyS-Absolutely none
Mr.. Coudrey-Suppose you make money,
then you increase your capital. as l I'M
derstand it. but the water
Mr.. Humphreys-You will have to de-
fine just what water is. Water, to my
mind. is capitalization which is not rep
resented by actual value. and especially
not represented by physical property.
Now, all Of this capitalization is far
more than represented by actual plant
by my firms appraisement, so. instead Of
there being water, this capitalization is
more than represented by actual live as
sets. There is no water but there is a
surplus, and that is where this surplus
comes in to which these men have re-
ferred. and which has been already in
vested in plant.
Mr.. Coudrey-Do you know how much
actual money has been put into the
Washington Gas Light Company? 1 do
not mean out Of the money earned, but
other moneys?
Mr.. Humphreys-That / don't know.
Mr. COudrey-Of course, they earn
| money every year, but If they are earn
| ing abnormal profit then we ought to
know it, that is all.
Mr. Humphreys-Of course, upon that
you would have to make an investigation
| for every year. Now, as to these alb
| normal profits, as to whether there is
| any, to my mind there is none unless
you can find some extreme case of great
! surplus earnings due to excessive prices.
l have in the past looked over the prices
| for the Washington gas compared
| with that Of other cities. and, of course,
have been familiar in a general way with
the Washington affairs as to the gas
business for the last thirty years. Wash
! ington has never had a reputation for
charging high price for gas.
| II a company should decide that 1t
Will not give out all its earnings in
| dividends but satisfy it's stock oldcrs
by a conservative dividend, and place
the balance in plant. that would be
what we Americans, in the past GER
tainly, have considered good manage
ment. and that is why Americans to
a great extent have been prosperous.
and that is what has built up the in
| dustries of the country. They have
not been improvident and paid out all
of the money earned, but have taken
some OF the earnings and placed them
| back in the plant and business, and
so in that way the surplus earnings
have been employed by this company.
| Under the present direction of affairs,
| especially by the governmental bodies,
1t is doubtful whether that is a gOoo
policy, because 1T raises a question as
i to whether the owners of the property
are entitled to what they own. / am
not lawyer but l venture to believe
| that il you go back into the past 20
determine whether earnings were eX
| cessive earnings or not, that those
| earnings have been earned, and the
! stockholders. having held them and
| put them into their pockets, but into
| much as il they had paid out cash.
| Mr.. Pearre-You consider those
| things in order that they may be a
| guide to you in the future; that is, you
] consider those things in mapping out
a policy for the future?
4 Mr.. Humphrey-Yes, sir; and that is
l just what / am coming to. Ny point is
this, that in an investigation like this.
and / have been In good many OF
them, in my own company, as well as
others