The Washington times., 1912-08-24
HIGH GAS RATE
IN DISTRICT UNDER
ATTACK IN HOUSE
Chairman Lobeck, of Sub
committee, Makes Charges
in Report.
Continued from First Page)

Nohtihueu ITOfn f1TSt Page,)
mas as given It and has acted Hereunder.
itself of that portion of Section 4
lsince repealed) of the 1885 act,
authorizing 1t to convert certificates
in fntn tdebtedness aaDttsi td in the sum of 100000
Fourth. That the certificates of in
oeptedness were issued without any
express authority of law; their valid
ity and so much of the capital stock
as they represent is therefore omen
to serious question.
sF1fth, If certificates of Indebted
ness due from the COMPANY b,t in
TACT, represent earnings and profits.
tney operate as an unauthorized in.
crease of capital stock in violation
TT is obvious that Congress never
intended the company should have
gower TO issue any certificates of in
Income Is Excessive.
Discussing the earnings of the COM
pany, the report declares that the net
income Is obviously excessive.
fhe last annual report of the COM
pany, made to Congress February 1,
WV purporting to- give detailed
statement or Its business for the year
enoed December 81, 1909 shows the
net earnings, after deducting operat-
was IL per cent plus on a capitaliza-
tion of $5,20o,000, assuming the GER
tihcates of indebtedness to be a part
or the capitalization. II we exclude
the certificates of indebtedness, a net
earning of "a per cent plus on the
actual capital stock is reported by the
company: 1t goes without argument
tnat such net income Is excessive,
unless the facts shall disclose that the
n1o
tual amount invested Is far greater
than its capital stock.
,oWhen this report of the company for
iios iyos Is considered in connection with its
history since 1S4S, as shown on the iesis-
IsuVe Journals of Congress and as
shown by the various reports of Com
sresslonal committees, It would seem to
pc the duty Of Congress to inquire fully
into the affairs of the company. From
the hearings had by former committees
OF congress and from their reports 1t
nay nay pe learned that the dividends kept
pace with every increase in the capital
stock indeed, the company appears to
nave been unable to increase the capital
STOCK fast enough to keep the dividends,
treasurer of the company, in a letter to
the Hon. Samuel ]. Randall, in 1881, de-
clared that for the thirty-one and one
r.i,. naif years the average Of cash and
stock dlVloends had been 1853 per cent
Would Probe Affairs.
In concluding the report, Chairman
Lobeck, Of the subcommittee, urges the
further consideration in favor of an ex-
pert probe into the affairs of the COM
pany in order that Congress may estab-
iish standard for public service cor
porations.
Again the inquiry should be ordered
to the end that a proper standard for
the capitalization of all public service
corporations may be declared and estab-
Hshed by Congress. capitalization is the
key to Government control and regula-
ton Of all corporations subject to its
sion and inquiry furnishes to Congress |
an immediate opportunity to declare a |
wise and prudent public policy in re-
speet sen,a to capitalization Pba Of corporations
be lost" says the report.
Had the committee obtained better in |
formation II is believed that some rath- |
er astonishing recommendations would !
not quite feel sure of his ground and |
therefore held back some matters on |
which he has strong personal opinions. |
Value Is Overstated.
He believes that the value of the plant
has been grossly overstated His per-
sonal opinion Is said to be that, while
the company officials claim that the gas
plant is worth about s13, 100000, that the
whole structure could be rebuilt and
produce much better results for hardly
more than two-thirds of this sum.
The gas company itself Is making an
Investigation of the value of the plant.
This will not be completed for two or
three months. When 1t was begun it
wa. was hoped that some OF the figures
turned up by the company's experts
would be available for use by the House
committee, but delay prevented this
Congressman Lobeck, Prouty, and
Oldheld constituted the subcommittee to
which the Madden 75-cent gas bill and
other matters were referred. Congress-
men Oldfeld and Prouty took only a
small part in the hearings, however,
and most of the work devolved upon
Lobeck. who. with their consent, made
the report on his own findings and
practically took over the entire respon-
slbility for the acts OF the subcommit-