The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1910-05-09
WHERE WILL LOWER GAS
RATES CONE M

In his very illuminating argument be
fore the House District Committee, Mr.
Richard H Goldsborough builds up
most beautiful legal foundation for the
capitalization process which his cor
poration, the Washington Gas Light
Company. has been working under for
many years and under which it pro-
poses TO continue to operate IN the fu-
ture If public sentiment and Congress
permit
Ar GoIdsborough makes an excellent
case for the defense OF the practice Of
the gas company in eaPitalizing sur
plus, citing Supreme Court opinions IN
great number and laying down an elab-
crate array Of evidence to show that
the rule Of judicial action on the point
At issue Is favorable TO his people
Briefly. his contention Is that the gas
company Is entitled to earn a reason
able profit on the total value Of its
property. without regard to the amount
Of securities standing against It, with
actual investments OF outside moneys
in that property, and without regard to
the fact (which he frankly admitsi,
that much Of the total value Is repre-
sented by earnings which have been
turned back into the company for bet
terments and exten5ions, and by the
natural increase IN the value OF real
estate purchased in the past, but made
more valuable because Of the increa sing
prosperity OF the community.
Mr. GoIdsbOrOugh admits that divi-
dends Of from 10 to 25 per cent per
annum have been paid on capital stock,
but defends this fact by showing that
this has been but 4 OF OF 8 per cent On
the total value Of the property, which,
he SAYS, Is the basis upon which returns
should be computed IN any attempt 70
decide whether they are reasonable
It VIII be well for the House Dis
trict Committee to 90 q little further
than Mr. CSoIdsborough went IN his dis
cus5s7n Of the case For instance, Il he
Is right. and If the gas company Is per
mitted to continue its capitalization
scheme on his theory, where viii We
wind up In all the plausible aUgu-
ment Of Mr.. GoldsboTough. there ap-
pears no definite outline Of the system
BY which the company VIII ever reduce
Aits gas rates under the theory Of CAPT
Valuation and value proPounded by the
sarned attorney Under It's existing
ates II has been able TO meet the sx-
ense Of manufacture and distribution,
put enormous sums back into the prop
eTty. capitalize them, and pay dividends
upon them. Il has also been permitted
70 capitalize the increased value OF its
real estate and pay dividends upon that.
All, understand, on its existing, legal
rates Of charge
- Tze gas company wants TO continue
that system. Wherefore, Ee ask, when
nay Washington expect cheaper gas g?
Much OF the property which represents
the total value Of the company today
17Don which Mr.. Goldsborough SAYS the
stockholders are entitled 70 5 OF 6 per
eent-was purchased with money paid
into the company by consumers Of gas.
IF the company keeps right on adding to
the value with It's current receipts, and
then demands and gets the right to
issue stock representing that value, Il
viii always be IN position to resist re-
duction IN charges to consumers, on the
ground that II has the right 70 charge
enough to pay dividends on tins add
tionsl capitalization
The House District Committee should
not overlook the fact that the purpose
OF the Coudrey resolution Is to prevent
the issue of any more capitalization OF
this character without the express con
sent Of Congress, and that underlying
that. Is the theory that If such eapitali-
cation Is restricted It VIII be possible
for the company to reduce its rates OF
charge to the people Of the District Of
Columbia