The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1917-10-02

PVoVs VI Tue lnNeSugatlon. Tn TINS nc
spent many days over the books and
many sessions were given over 10 his
Irect and cross examinations before
tLc commission. ~ # r. #NNHf
Referring to the stock dividends tho
commission says that the HDeprecia.
tion Find, = Insurance Fun, ,nCpn,
strpction and Repairs ~, and similar
|ttfundsp were not .tfundsol IL the
sense of being specific amounts set
aside as, reserves TO meet certain con
hngencies, but we're book accounts
only. ~ 7 ~
insurance Fund Pays Dividends
The accounting practise of the In.
|ter-lsland Company said the findings,
has, been to make monthly charges. TO
the operation Of the steamers, steamer
and eon1pensation insurance, cunstriie.
tion and repairs, mooring repairs, etc.,
and creditiug these book accounts With
similar amounts the result being that
the book profits of the steamers were
correspondingly reduced by the amount
Of charges. Thus charges against OBJ
GRAFTON of steamers on account of in.
surance have been so in excess of the
actual cost to the company that since
january ], 1905, $649,264.77 has been
|withdrawn from the Insurance Fund
and used for declaring stock dividends,
an additional $4,000 was withdrawn
From the same fund for the purpose OF
paying the syndicate in the Wilder
purchase, and yet, after deductiDg
these two amounts Of $764,264.77 used
for purposes other than making good
marine losses, the company had left in
the HInsurance Fund" on December
81, 1916, $685., 4l5.39 Instead of GRAD
Tally reducing the amount of its insiIr.
lnce charge to its steamers or giving
the steamers the benefit of no further
charges, when the amount credited TO
the Insurance Fund.- had reached a
sum considered safe to meet all the
likely insurance risks, the steamship
company has continued making the
charges. That the officers Of the com
pany considered the sum which had
been charged against expenses of oper-
alton of steamers more than ample to
meet insurance risks, is clearly evi.
|lenced by the Withdrawals. The same
procedure was allowed in the case Of
other so,called funds.
Sig Dividends Received .H3.1
The financial history of the com
pany shows that the stockholders of
the company have contributed, initially
and by means, of the Wilder Steamship
Company purchase total of $1,3i4,-
1912 and that for the eleven yehrs
preceding August /, 1916, the stock.
holders have received cash dividends
of 1881 year, while from the period
I.l, a Al L..
tion of the public utilities commission,
20 August !, 1916, they have received
5esh dividends on such investment! of
1885 per cent in addition to which
ash dividends the stockholders have
received stock dividends since 1905 of
l2S.l9 per cent. .a>..'
While the testimony on which these
findings are based was being given by
H. Gooding Field, the accountant, there
we're constant objections made by the
company, as there was tn. the intro,
duction Of his aud other testimony irela.
tive to the non utility business of the
company. =
Non Utility Departments
Next are taken up the non-utihty
branches of the company business, coal
department., merchandising department
drydock and rigging loft All of these
ire controlled and operated by the gen,
|eral officers and employees; the funds
used and invested in these lines of ac
tivities are the funds Of the corpora
ton, the bills incurred are against the
corporation; the contracts are entered
into by the corporation, and in Other
words the Departments do not OK
ID 4, -.
No money, assets and liabilities, other
than the general funds, liabilities and
assets of the corporation have gone to
ward making up these department.
which have been initiated, built W
and developed from the general fund,
of the corporation and at no time ha,
any new money been invested in these
departments. In brief the development
of these departments has been entirely
from the general assets of the company
md from undistributed profits earned
by the. heretofore cxiEting department;
Of the company. rs -,
Exacted Profits From Vessels
1T has been contendcd by the rep
resentatives of the company that such
policy was perfectly proper so long az
he so-called steamship department was
not charged more than the company
charged third parties, for the same sup
plies or services the decision SAYS in
reference to the custom of charging re
pairs and other work on the steamers
md for supplies of coal and march
disc furnished. with such conten.
ion we do not agree. The charges
made against the steamers as items of
he cost of operation should and must
he no more than the articles or serv-
ices actually cost the company, inehd-
ng the cost of handling ~
Relative to. alleged overcharges to
the steamship department for the years
1914, 1915 and 1916 by the merchandise
department., the commission found: