The labor world. [volume] (Duluth, Minn.) 1896-current, 1914-12-05
0SSSH0WS-:UP
DULUTH-ED|S0N
Points Out Evident Juggling of
Figures On Part of Com
Il pany Auditor
DAILY PAPERS HOLD UP
CORPORATIONS HANDS
Asks Council To Call on Hartman
To Submit Books For Ex-
animation.

Saturday, Finance Commissioner F.
j.. Voss issued his analysis of the let
ter from the Duluth Edison Electric
company to the city council uphold
ing his contention for &c rate.
Glaring misstatements on the part
of the Electric company were pointed
out by Commissioner Voss and asked
that the council request the company
to submit their books to a certified
accountant for examination, stating
that II it Is proved he is wrong he
will gladly change his opinion.
Emphasis was placed upon the
matter Of honesty on the part of the
company. There should be no OBJ
lection to the request of Voss If the
company is sincere in their conten-
tions, according to the Finance Com
missioner.
Commissioners Statement.
His complete reply follows:
Duluth, Nov. %, 1914.
To the City Council: AS requested.
I hand you herewith an analysis Of
the statement Of President A. w.
Hartman Of the Duluth Edison COM
pany, not including the auditors
tables reported on already. The
statement among other things says:
THE company has already pointed
out in its answer to the city's proposal
to purchase that the valuation is who'll
ly inadequate, etc., and will not repeat
1t here" In answer to this 1t is to be
remembered the company has only in
a general way made this statement,
and that the company has wholly
failed to point out to the city in any
manner and in any detail, wherein
such valuation is wrong or made
ouate, though it has been requested to
do so, and originally agreed to.
The statement says of 1855 5000
bonds issued, the sinking fund has
purchased $227,000. This leaves the
actual bonds against the property
$1,126,000. AS $4,000 sinking fund
and $4,000 interest addition has been
paid in 1914, the amount outstanding
must be now about $1,o91, 900, or less
thanr:the ac1ty.s offer for the >plant,@se
it Is plain the bondholders will not
lose by the proposed purchase His
statement says s51,771 in addition t.
maintenance. sinking fund, and de-
probation. was put into extension:
and additions in 1913, and this h<
wished to add TO operating expenses
According to correct bookkeeping
extensions and additions should b,
added to capital account, and onl,
depreciation be deducted from earn
ings by being added to operating ex
penses. Extensions increase earn
ings and are due to Increased bust
ness, become part of capital accoun
until gradually wiped out by furthe
depreciation account. Therefore, thi
should not be added to expenses O.
deducted from gross earnings.
Tells of Sinking Fund.
He says Rittenhouse and Piilsbur,
approved per cent allowance 70
depreciation and he adds $4,000
more for sinking fund direct an,
$4,000 interest paid into sinking
fund, or $4,000 in all, and deduct
it with depreciation. Rittenhouse an,
Pillsbury allowed per cent for de
probation on the theory that thi
left the value of the plant unim
paired. sinking fund amounts t
the same thing If there is no indebt
edness. Where there is indebtedness
as in this case (for more than tn
value Of the plant) the sinking fun
pays the debt. If both items are pu
In the debt is paid and the compan
is left with its plant unimpaired an
worth It's present value plus exten
sions, without costing the company
cent. A gift from the consumers
but one Of these items should be de
Quoted, not both. This Mr.. Hartma
must know. In other words, he de
stres to get in the equivalent of
sinking fund twice and own tn
plant unimpaired and without deb
He says from the gross earning
of .$519,795 for 1913, $10,369 shoul
u. Continued on Page 6.