The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1911-10-22
Water Works Situation Thoroughly Reviewed
Bv Who Has Made Exhaustive Study the Question Thorough
PLANTATION of 1t Methods Which Richmond
Should n Solving he Question.
$4,000 by four, you have $3O,120. 90
just a difference of $2783.

$7,53O.0O by four, you have 100000
just a difference of $27.83.
In the event of anyone saying, that
, possibly is coincidence, l will read
you the language of the expert &C.
countants, Edward A. Pratt & Co., OF
Peoria, Ill, who says: I'VE discover.
ed that one item which would material
ly reduce the net profit has been
omitted in the Water Works record
We refer to depreciation of plant and
equipment, which, in an investment OF
this kind will reach a considerable
sum each year."
A proper charge for depreciation for
the last years was determined by
Mr.. Dabney H. Maury.
Therein, gentlemen, lays the at
tempt to steal from the city $2O6, O79 .O6
in the event of the city buying the
plant, and the earning thereon, if the
city does not buy, which would
amount to
II of 10 Replacement funds 1880. 39
20 Depreciation .......... 2.06O.79
SO Dividend ............. 12,364.74
$15,455.92
or 20 cents year from every man.
woman and child in the city of Rich.
mond.
Apart from these facts, the r. c. w
w. issued to themselves, $125,OOO. 90
of watered stock in 1908 and $4,000 90
in 1910. Why? Prior to 1908 the
stock held by the R. c. w. W.,
was NEUTRALITY-SUSPICIOUS.. $3.50 100000
Amount Realized from
bOndS ............... 25O, 900 O
Stock Dividend of 1908 -. 125,000.OO
$4,000. 90
So the issue of $2OO,OOO.OO of stock
dividends became necessary to bal
ance the liabilities of the company
with the inflated assets representing
the so-called tangible value Of the
plant
Objection No. I've deny the right
of the r. c. w. w. to add $11O,825. SO
as going value.
Any man. or body of men, holding a
license to do business for given
period of time, would not have the
right to ask any sum in considera-
ton of the good will" of the business
after the period expires for which the
license was granted.
A franchise is a license, revocable
any time the city may see fit to refuse
further contract to it's holder Thus
the objection.
Objection No. 3-We decline to &C
quiesce in the condition stipulated on
page IA THAT the city recognize the
plant as going concern as it car
ries with it automatically a pledge to
pay the $11O,S25.69 as referred to in
Objection No. g"
Objection No. Ave object to the
proposed rates to the consumer of wa
ter based as they are upon the neces-
sary earning of an inflated valuation
1t can readily be seen gentlement,
that the fixed charges, plus SO to
the stockholders on the actual valua-
ton can be met and water can be sup
piled to the consumer at one-half the
present cost, unless all profits in ex-
cess of SO goes to the city in return
for the franchise value.
We contend the city has the right
to demand certain compensation, or
license fee, for the franchise rights
granted.
Objection No. 5-We object to it on
the ground that the plan of purchase is
impracticable.
What is the plan of franchise?
The first condition is, that one-half
of one per cent be taken from the
gross earnings to be applied to re-
placement fund which would amount
TO ................$ 3,575.OO
10 for Depreciation .. 7,15O.OO
SO on $465, 100000 . 27,9OO 90
$50 on $25O,OOO.0O Bonds =. 12,5OO.OO
$51, 90
The sum of s51,125.OO represents
fixed charges, the cost of operation
being in addition thereto Now the
net earnings of the plant for the past
6 years has amounted to $45,S19O4, so
that there would necessarily have to
be an increase in the earnings of S.
3O5.96 to pay the stockholders SO on
the valuation as represented by the
stock. To pay the stockholders 10 so
the city might acquire one-half on one
per cent Tor $3,575.OO) there must be
an increase in earnings of $12,455. SO,
which. on the basis of possible in
fo1 h1y