The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1916-06-16
DEPREC|ATIONFOND
INSISTED upon by
UTILITIES BOARD.
Gas Company Notified That It
Must Keep Cash On Hand
For Emergency
BOOKKEEPING, METHODS
DlSAPPR0VED At HEARING
Inspection ct Plant By Commits.
siOners May Be Delayed
For Some Time -

The public utilities commission held
long session yesterday afternoon, de-
voted TO the consideration Of the affairs
of the Honolulu Gas Company. Chair
man G. r. Forbes and A. J. Gignoux
we're the members present. The gas
company was represented by acting
manager, Frank @. Cannon and George
Wiley, bookkeeper, with H. Douglas
Young, of the audit company, present
to answer any questions that might
be put concerning an elaborate state
ment Of the gas company's affairs,
since its organization, which had been
prepared by him.
II was apparent from the discussions
that the forthcoming report Of the util'
tiles commission will be one requiring
the gas company to create and main
tain depreciation fund. Most of the
questioning by Superintendent Forbes
and Gignoux had to do with matters
of Bookkeeping, and disapproval of
some of the methods of carrying ac-
counts was expressed, but as the dis
approval dealt with times ante-dating
the passage of the utilities act, there
will be nothing done about this matter.
Depreciation Fund Problem
Forbes brought out the fact that the
company carried q depreciation fund
on its books, but that the cash is not
on hand. It was used from time to
time, for improvement and other pur
poses. This use Of the depreciation
fund was strongly disapproved, by For
bes, who had Secretary Henry P.
O'Sullivan of the commission read ex-
tracts from recent law reports on the
subject, from which he drew the con-
clusion that the public might get the
worst of it, if the company continued
to do anything with its depreciation
fund except preserve IL for the sole
purposes for which il Is intended.
"In the event of a catastrophe of
any sort" he said, "the company hav-
ing used its so-called depreciation fund
in the ordinary conduct OF the business,
would be without means of restoring
its service except by an issue of new
stock, or bonds, And this would mean
that the public would have to suffer
higher rates for gas, in order to make
up the amount"
$4,000 had been carried on the books
alton account, since 1912, but that the
money had been used in the general
business Of the company. To this For
hes, with the apparent approval of Gig
noux, objected.
The statements Of Acting Manager
Cannon and Messrs. Young and Wiley
were that the present stock Of the gas
company is $450,000. The highest di-
vidend ever paid, said Mr.. Cannon, was
per cent, last year. The record OF
the successive issues of common and
preferred stock, by, which the capital
stock which was originally 100000,
was increased to its present figure, was
gone over, and Mr.. Forbes inquired for
details as to the company's bond issues
and how they had been handled.
In answer to a question as to why
no interest had been paid on the com
pany's bonds, as appeared from the
record. he was told that the reason
probably was that the bondholders were
interested in the company.
1.-THE company should absolutely set
aside its depreciation fund.-" said For
hes, when in the long reading of the
financial statement of the auditor, the
depreciation item was reached again.
ut should be taken out of the earn
ings, and kept as a depreciation fund
alone, even at the expense of lessening
dividends. -
Mr.. Cannon suggested that the stock
holders had preferred to use their mo-
ney in repairs and extensions, and it
was admitted that they had right TO
do so. Forbes minated quite strong
Iy that under the law as it now stands,
the company would be required to carry
a definite depreciation fund, and keep
on hand the cash for such fund so
that it would be available at any time
At the close of the hearing Chairman
Forbes said that the figures presented
would call for good deal of study,
and that it might be some time before
the commission could report. An in.
speetion of the gas company's plant
will be made first, he said, and as he
might have to leave for Hilo on Satur-
day, he could not set date for the
L