The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1910-04-30
THE GAS CONPANY'S CERTIFI-
GATES OF DEBT.

GATES OF DEBT.
Our amiable and versatile friend, Mr.
Richard H GoIdsborough, general corm-
sci of the Washington Gas Light Com
pany, has been explaining TO the House
Committee the theory on which
It Is possible TO initiate capitalization
without initiating it Mr. GoldsbOrougt
Is one Of our leading hUmorists, albeit
he has preserved a most effective dis
guise for long time.
In 1908 the gas company issued a 100
per cent dividend in certificates Of IN
debtedness, without any consideration
whatever. Mr.. GoldsborOugh placed OF
the stand Mr.. Sanford Whitweu, an
officer Of the company The subse-
queut explanation OF the status of the
Is given thus in Mr.. Colds
bmUugh's report OF the proceedings, as
published in the gas eomPany's adver-
tisements in the newspapers.
Mr.. GoldsbOrOugh asked the Wit
ness whether that dividend made the
stockholders any richer AIr- Whit
well replied that each got an extra
dividend Of so per share In an eEl-
denCe Of debt due practically By him
self TO himself
M G0IdsborOuEh-Can a man
make himself richer by issuing notes
70 himself or selling his OVID notes
secured upon his own property 10
somebody or anybody else at par or
BY CashiuE his own notes.
M WhiLweil-I think not
Mr. GOIds5Or0uEh-A man who
owned one-tenth OF the stock E0t
certificates for S-50,910. but his stock
was practically morrEaEe1 for that
amount, was Il not so that ne was
not substantially any better of than
before. was he2
Az VhityveII-So. sir He simply
had an evidence Of the appreciation
Of his Investment and that's about
all there was to t.
Which Is Just as plain as aHythin.
possibly could be- isn't it2 There was n,
rime OF reason In issuing those certif
Gates they made no stakeholder richie
or poorer. The stakeholder in substance
issued a mortgage against his equity
and put the mortgage in his pocket.
The stakeholder would be no bette
off BY that transaction but for the fac
that the company thereafter paid The
same old rate of dividend on the stock
and in addition paid 8 per cent on IN.
certificates. To say that the issue o
the certificates made the stock wortl
less by the amount of the ceTtifica 5es j
not correct, because the stock ha.
VIGOROUSLY been getting more an,
more valuable ever since, as indicate,
by its quotation on the Washington
Stock Exchange
However, for the purposes Of In
present argument. we are willing Z,
take Mr.. GOldsborough at his word
He insists that the stockholders coaI5
gain nothing by mortgaging thel
property TO themselves
8I right. That is Just what tn,
Coudrey resolution designs to prevent
Mr. Goldsboroueh says there Is nothin.
ia 1t for the stockholders; we say
there Is nothing in 1t for the people.
everybody seems agreed We respect
fully suggest to the COMMITTEES that
with the gas company's lawyer thu.
committed to the exact policy Of tn,
resolution. there Is no possible reason
against its passage
You viii observe that the cases ar
exactly parallel The Coudrey reso
luton prohibits issue of bonds excep
20 raise money actually needed IN Jht
business; that Is, 1t prohibits any dis
tribution of surplus through issue o
bonds or certificates CJr- GoldsboTougI
brings out that such a distribution i
worth nothing TO the stakeholder
merely mortgages his own property Il
favor Of himself. Consequently Their
can be no possible reason for It.
Let Us examine the curious argu
mentative hole into which Mr. Colds
borough has crawled- In 1908 the ga
company issued 100 per cent Of Ger
tificates OF debt and distributed then
TO its stockholders, pro rata In I9I
the gas company wants to repeat tina
performance. Mr. GoIdsborough say
the distribution of 1908 didn't help tn
stockholders, wasn't worth a dollar Z
them. added nothing to and took moth
ing from the value Of their property
All right, Mr.. GoIdsbOrough- II tina
100 per cent dividend IN 1903 WASH
worth anything TO anybody. concerned
why should the gas company be s
anxious to pull of another like 1t now
On your own argument, Mr. Colds
borough, there Is no excuse for you L
oppose the Coudrey resolution
We trust that tae District Committe
vii recognize the justice Of this view
Mr- GoldsborOugh says a S2s6005OO