The Hawaiian gazette., 1916-11-17
PUB[ICATTENT|ON
PAID TO REPORTS
Efforts To Suppress Figures Of
An Official Audit Only Add
n To the Publicity

/ commission on the ibanciaI afraits OF
the Iuter-Islald sstsoIn Navigation
Company, has received special attention
from the public through the Efforts
made TO delete portions of 81 The re.
port in its cntirety-three reports; in
fact-are now public property.
There are several points in. the re.
ports and in the discussion that, has
arisen through them that are Of direct
interest to the community, having more
or less bearing upon the question of
tho fixing of equitable rates, the qucs
! ton with which the commission is now
concerned. One is the connection be.
tween the public utility end of the cor.
! poration s business and the sO-called
non. utility end, the attorney for the
company having raised the point that
the auditor had no authority to 90 into
the latter. The auditor claims, inferen-
tally, that the two branches of the
Inter Island business are so interwJvnn
| that il is impossible to discuss the pure
ly utility end of the business by itself.
What The Report Shows
Stripped of its verbiage, the report
made by Auditor Field states, more or
less directly, that the non-util.ty bran
ches have been established at the ex.
pense of the utility branches and that
the profits of the former should 60 in.
| 10 the profit and loss account of the
latter, to be considered as part of the
| earnings of the utility branch. 1t has
been pointed out, but not in the official
| report, that the interstate commerce
commission in its dealings with the ter.
| ritorial railroads insists on all branches
OF n public utility corporations affairs
bcing included in its financial state
1 ments and regarded as n whole.
MIR. Fields report shows that the Gu.
| pital investment in the Inter.Island is
81, 100000. Stock dividends have in.
errHsef the capitaIizat ton TO $4,000, 900.
The inference from Mr.. Field 3 figures
and comments is that profits from the
utility end of the business directly and
| Indirectly, have been accumulated and
rciBvested to the amount Of Al 300 900,
but that these profits do not show in
the records as profits to be taken into
account in the. fixing of rates. The
earnings distributed in dividends have
been at nine per cent. The auditor
takes the ground that the rate actually
Is twenty-four per cont, inasmuch as the
dividends are being paid on a $4,000 900
capitalization while the amount origin
ally invested is 100000.
The report is not definite On
some points but il may be" gather
ed that the puditor believes Che
transfer Of earnings to have been
made by the accumulation Of vari-
Gus funds insurance, depreciation,
maintenance and repair an such
| which, nfter they have reached substan.
tial totals have been transferred back
TO surplus account and made available
for rcinVestment, with stock dividends
declared against the amounts so rein
vested.
How the Funds Are Gathered
1t appears to be the contention Of
the auditor that charges for insurance,
repairs, requirements and such have
been made against the individual
steamers, of the company and the
amounts taken from the earnings and
set aside into various funds. These
| charges so reduce the earnings of the
individual steamers as to Justify high
freight and passenger rates, as it can
be shown from the cOmpany's books
that the rates are necessary in order to
allow the steamers TO run at a profit.
The funds so set aside are not allowed
to reach that point where further ad-
d1tlons are unnecessary, nor are they
so invested as to be made quickly avail.
able If required and the interest on
their investment charged to profit and
loss, as is done in other public utility
corporations.
No Copy For the Press
The Advertiser has not been stumbled
with a copy of Mr. Field 3 report and
it is possible that some Of the dcduc.
tiOns here given are incorrect. No
press copies of the report were made
apparently, and no member of the com.
mission cared to loan his copy to the
press. A request upon the roprese MIA.
tive Of the Inter Island for a copy was
| not complied with, on the explanation
that inasmuch as the attorney for the
company pressed for doletion of
some of the report it would not be
quite the thing for him to be the one
to give complete copy to the press.
One most interesting feature of an.
other Field report is that it draws at
tention to seeming inaccuracies in a
former report Of the commi ssiot' on the
finances of the Inter. Island Tho
| former report failed to mention diyi-
dends paid out during two years, 1905
and 1906, tOtalling $236,250, stating
that in those years no dividends were
paid. Other inaccuracies in figures are
noted.
Since this investigation has warmed
up, 1t has been noted that recent shin
ping Legislation has removed the Inter,
Island from the jurisdiction of the ter.
ritorial public utilities commission and
placed it under the federal shipning
board. Whether the Inter,Tslrud
which knew this some time ago but
which, nevertheless, agreed to permit
the present investigation to proceed
will continue to be compliment ard ~
allow the commission to still further
inveEtigate remains to he seen.