The Washington herald., 1910-05-03
General Counsel Goldsborough Con
cludes His Argument Before the
House Committee.

eTnment or the people pay you a reason
able rent or return upon its present value
irrespective Of its cost-but that you
cannot make them pay you any greater
price by mortgaging # for a part of its
value. for the whole OF its value. or for
more than its value. And that the Court
country big enough to take it away from
you, in whole or in part without due
process Of law and Just compensation
IF the Court knows itself" And what
IS true of you is true Of us. The fact
that we happen TO be a public utility
proposition and you a personal one. or
a political one. cuts no figure whatever
In the equation.
To proceed with Gibbons VS.. Mahon:-
page 56S) The admitted facts pre-
sent the following state Of things: The
accumulated earnings OF the company
were kept undivided. and actually added
20 the capital Of the corporation by in
vesting them from time 10 time in its
permanent works and plant. until the
value CT the works and plant amounted
20 a million dollars; no owner Of par
ueular shares, or Of any interest therein
had the right TO compel the company "a
divide or apportion those earnings; and
while they remained so undivided and in
vested. the capital stock of the COM
pany was increased % the same amount
by the act Of Congress OF May "a. iS66, "
&c.
Continuing. the Court %. 55S) says as
follows:
Whether the gains and profits Of a
corporation should be so invested and ap-
portioned as 10 increase the value Of each
share OF stock. for the benefit OF all per.
sons interested in It, either for a term OF
life or for years. or by way Of remainder
in fee; or should be distributed and paid
out as income. 10 the tenant for life or
for years. excluding the remaindermar
from any participation therein is a ques.
tion TO be determined by the action OF the
corporation itself. at such times and in
such manner as the fair and honest ad.
minisratiOn Of its whole property and
business may require or permit. and by a
rule applicable to all holders Of lik,
shares of its stock" &c
1t is thus apparent that the Supreme
Court considers. as do all other courts
apparently, the term earnings Of a com
pany" to include its gains and profits
from every legitimate source II Is TO be
noticed also that in this case the Supreme
Court used the words plants" or works
as equivalent 10 all Of the property Of the
company.
I refer you 10 yet another case. which
many Of you no doubt have reason to re
member-Chesapeake and Potomac Com
pany VS.. Manning. reported in 1S6 United
States Supreme Court Reports, page 23S
in which the Supreme Court took occasion
10 correct this very committee for as
suming 20 doubt the obligation Of Chi
cagO. Milwaukee and St Paul in a similar
matter. and I may add that the doctrin,
laid down in Chicago, Milwaukee and ST
Paul. Williams rs. Western Union anC
Gibbons VS.. Mahon. which We have Jus
recognized as good equity and sound Law
that I shall not consider It necessary e
cite you any further references other thar
those that incidentally touch II where al
lied questions are involved out OF tn,
abundance Of precaUtion. however. viii
before dismissing this point. with N,
Committees permission. submit TO IL thi
further observation in regard 10 the ap
plication OF the case in review 70 the cas-,
here under consideration.
II this resolution in effect denies 20 u.
what you have heretofore granted anC
do now freely accord 10 our competitor
and fellow public servants, apart from
the question OF fairness. it IS obviousl,
discriminatory legislation. and as such
a direct contravention Of the Constitution
OF the United States and ought not I,
receive Congressional sanction even 1
| there was or IS reason TO doubt-which
insist there IS not-the legality OF a par
Of the company's present capitalization.
But. Mr.. Chairman. there IS not and
can not be any legal question about III
bona fides OF the existing security capi
talization OF the Washington Gas Ligh
Company for the proof is overwhelmlnj
that II is in truth and fact the most un
dercapitalized public utility in this coun
try. If not on the face of the globe. i
the name, Mr.. Chairman, OF common
sense, Of all that is serious. Of good re
port, and worthy OF honest respect an
consideration. how can II be cOntende
that a company is Overcapitallzed whel
the testimony in the case not only tend
20 prove, but actually does prove that /
has beyond the possibility Of REASONABLY
doubt from three TO four dollars of asset
| in physical property for every dollar o
| r-..Ar
This fact once established makes I
wholly immaterial in so far as the publi
is concerned. as I have already shown
whether or not its bonds or certificate
were legally issued. If the company EN-
ploys the property in the conduct of tn.
business. I repeat It, that property is IT.
invested capital, and it is entitled {,
have a reasonable return upon ever,
dollar Of It, and 10 have every dollar o
it that has never been capitalized nov
capitalized in securities for an amour
equal to its actual value, whatever tha
may be.
| Mr. Chairman, the language employe,
in all these cases is so simple and direct
so plain and obvious; so full and. franl
that it looks like rejecting upon you
intelligence to try to further elucidat
them; with all due respect, it does seen
to me that only the willfully blind cal
fail to see the palpable application Of al
to the point at issue
! Before summarizing our legal postu
lstes. howeveE I feel that ought t,
more formally marshal the law Of tn
case and the evidence in II as I,
the value of our invested capital
First, in order of time. is the Humphrey
appraisement of 1898. which establishe,
the fact to the satisfaction of prospective
purchasers. that the company then ha,
assets of the value of 100000 Mex
comes the Humphreys & Glasgow an