The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1914-03-26

In his brief filed with the state pub
lie service commission, which he made
today, City Attorney Bond presents
exhaustive arguments for the consid-
GRAFTON of the present value" of the
Richmond City Water Works COM
pany's plant, rather than "cost of re-
production" which the company in
sists upon, as a basis for rate max
ahg
Mr. Bond, in his brief, which con-
tains eighty-four typewriter pages.
contends that fair present valuation
of the plant is $667,67S.
In 'he introduction of his brief Mr..
Bond says:
The state in the exercise of it's SOW
ereIgn power has at last reached forth
her hand, which, seemingly through
decades that have come and gone,
hung palsied at her side, and laden
with justice, equity and the square
deal. has plucked unto herself the
peoples rights, many of which have
been trodden under foot by grasping
and grinding public service corpora
tions. And while the state will not
perpetuate any injustice against prop
erty, 1t likewise should not permit arfy
wrong or inequitable act to be per-
formed against the rights of a long
suffering public
Entitled to Net Return.
This utility is entitled to fair and
reasonable net return upon the fair
present value of that which it has
contributed for the public convent
ence. but it is not entitled to anything
more by whatever name or whatsoever
guise claim therefor may be made.
Mr.. Bond asserts that public util-
o aty ~is- pat ntit2ad- To- earn RETURN
upon any value greater than ft COR,
trihuted for public convenience.
When analyzed upon this basis,
aud we see the entire proposition as it
actually exists, stripped Of all unneces-
sary trimmings, it's solution becomes
easy, and what at first sight seemed
ar herculean task is now fully realiz-
ed as only mathematical problem
which can be readily and easily solved
for all the data are at our COM
mand."
One Of the interesting features Of
the brief deals with the capitalization
of the company. The brief reads
On March 6, 1909, the capital stock
was increased from surplus .s125. 900,
or 80 per cent, making it then 1915, ,OO0
and it remained at this amount until
=
$43,125 was paid as stock dividends,
Or yearly average of s24,O7042, which
is yearly average of 6.42 per cent.
Reviews Transactions.
"On December q. 1910, the capital
stock was increased again from sur
plus $4,000, making it then $45O,O00,
and it has remained at this amount
ever since. From December 81, 1910,
1913, stock dividends to the amount of
$112500 were paid, making the av-
erage each year of $45, 900, or exactly
an average of 10 per cent per annum.
Besides on June 80, 1913, there was a
surplus of S106, ,25719, as shown by the
book audit thereof in this case, and
this surplus, of course, is available for
dlvldends and counting this surplus as
dividend and adding it to the sum of
dividends actually paid, makes the
total of S434.3S2.19 for dividends act
Nally paid and available June 80, 1913.
Assuming that the net income will
amount to as much for the year end
ing June 30, 1914, as the preceding
year there would then be available
for dividends on the common stock
S141. 1866. or 31.19 per cent. These
percentages make a yearly average of
6.27 per cent which has been paid as
dividends heretofore. and that is now
available, on the basis of the full
amount of the common stock as is
sued.
Alleges Watered Stock.
But the common stock is watered
to the amount of more than 100000,
for it is increased more than this
amount in order to make it more near
1y correspond to the book value of
$12O.164.SS. which was added during
the night of June 80. 1909, when the
people were asleep. This was in fact,
capitalizing the going concern value
with vengeance with something else
added. And if this watered stock is
not taken into account in considering
and apply the above dividends, the
average yearly dividend since June 30,
1913, would amount to $38,181.25, or
1881 per cent, and Oh this basis the
plant has earned 205.5S per cent on
the capital stock. and an average for
each of the twenty-eight years of it's
existence of 735 per cent, and this
calculation does not take into con-
sideration the fact that the plant has
earned $296,'50, which actual amount
OF surplus was absorbed in making
increases to capital stock.
The increase on the capital from
surplus is 90.43 per cent of the amount
actually paid as dividends to June 80,
1918. not taking into consideration the
surplus Of June 80. 1913. amounting
TO $1O6.257.19, and this is an average
yearly earning OF 654 per cent on the
unvatered common stock of the whole
period Of the plants existence, and
by combining these two per centages
pf earnings-One charged to dividends