The labor world. [volume] (Duluth, Minn.) 1896-current, 1914-11-28

L. AA00I pay az y SINKING Iunu TO the
trustee $4,000 each year. This sink
Ing fund is invested by the trustee
In bonds of the company, and the in
terest upon the bonds held in the
sinking fund Is paid in to the trustee
and held by it as part of the sinking
fund. There are at present in this
sinking fund $4,000 in par value of
the bonds Of the company. The inter-
est earned by the bonds held in the
sinking fund for the year 1913 was
$10,309.26.
In the year 1913, as shown by it's
report on file in the city auditors
office, the company paid out Of it's
net earnings for extensions, additions
and improvements $51,771.61 in addi-
ton to its maintenance and operating
expenses. These extensions and i'm
provements were necessary to enable
us to render the efficient service we
gave to the entire public.
Report Cited.
In the report of Pillsbury and
Clausen to. the city of Duluth upon a
lighting plant, dated Oct. %, 1911,
they advocate depreciation or
amortization allowance Of per cent
per annum upon the value Of the
plant: In the report Of Pillsbury and
Rittenhouse made to the city of Du-
luth, dated July 80, 1914, they figure a
per cent depreciation upon the re-
production cost, including going valve.
Their valuation Of our plant, includ-
ing going value, is $1,1o7,e4o.54. =.
So that, taking their lowest depre-
citation rate and the valuation fixed
by them, Pillsbury and Claussen
would require an annual depreciation
fund set up by this company for the
year 1913 Of per cent of this :valu-
alton; or $44,s17:62. - $500.
The total, earning of the company
for the year: 1913 from all sources,
including the earnings of the sinking
fund.- which are retained in the sink
ing fund and not available, for the
uses of the company, were $51s;795.75.
:: Total Available $685., 48b.
!: This; amount, less the sinking fund
earnings, is $500, 4s5.4s, which was
the total amount of earnings of the
company available for expenses OF
every kind and nature, including in
terest upon all Of the bonds of the
company, sinking fund payment, de-
probation allowance, extensions and
improvements and dividends on stock
We: have had q careful estimate
made showing the probable loss in
the earnings Of this company for the
year ending Dec. 81, 1913, had the
rates proposed in the citys ordinance
been in effect. We have also had
do lilo 70 .,,,o1, oor,,
ings had the rates specified in ou1
proposition for a. contract been in ef-
feet. This estimate shows that the
reduction in rates specified In our
proposition to the city would have re-
duced the company's net earnings by
$79,697.32 in the one year and tina,
the reduction called for in the city's
ordinance would have meant a loss to
the company of $180,336.36 for the
year.
Condition Explained.
II the schedule proposed by the city
had been in force in 1913 the com
pany could not have paid out single
dollar by way of extension or i'm.
provement, nor as dividends upon its
stock, and could not have set up any
allowance for depreciation, and would
have lacked $45,3o7.98 of being able
to pay interest upon its bonds:
II Is had set up or put aside as
depreciation fund the amount fixed
by Pillsbury and Claussen in their re-
port, this deficiency would have been
increased by 344,s17.62, reaching q
total deficiency, with no provision for
extensions or new construction and no
dividends paid upon the preferred
stock, Of $S9,625.60, or 1t would have
defaulted entirely in its bond interest
and still had q deficiency in either Its
depreciation requirement or operating
expense Of $21,s75.e0.
Would Halt Betterments.
From the foregoing: it is readily
seen that any attempt on the part oil
the company to comply with the
schedule of rates specified in the
city's ordinance would mean an i'm.
mediate cessation of all additions and
improvements to the company's plant
the stoppage of all dividend payment.
upon the preferred stock, and the de-
fault by the company in the payment
Of interest upon it's bonds, which
would, OF course, mean foreclosur.
land bankruptcy. %;>>5 r.: u, :tG% i
] - In the foregoing analysis we laav.
taken our experiences as shown by gu,
books and made the. most -aceuratl
estimate possible as to- the effect O.
the proposed changes in; rate, w,
! 1lavei in determining. the depreciation
allowance that should be set UP, uset
the lowest figures suggested by Pills
bury and Rittenhouse. = i, Fl. ! szc
/ {. In the interview given by Commits
isioner Voss, as it appears In Eth,
Herald under date Of Nov, h 5,xsth,
statement is made that MT. Pillsbur,
and Mr., Rittenhouse made an ,astt
I mate that 6. new mod ern plant, 40
/ the city, capable st: epmpetin Tor Il