Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1917-01-17

| First TO laugh, then to become in
d1gnant" is the way the Public IT'LL
tiles Commission characterized a claim
that a real attempt had been made to
get a good trade for a corporation
where majority of its directors had
organized another company for the
sole purpose of getting a profit from
the sale by making it cost the buyer
more than the market price of the ar
ticle purchased.
To permit the directors Of a corpor-
alton to make a private profit at the
expense of the corporation by organ
izing purchasing company to buy in
the market and sell at an advanced
price to the corporation which they
represent, water power which the cor
poration could have bought direct at
the market price would very natur-
, ally injure the confidence of the public
IN the administration of the law and
p lead il to conclude that there had been
no elimination of the practices which
formerly brought corporation manage
ment into disrepute." Those who con-
troll the purchases for a public utility
corporation should not be permitted
by organizing themselves into a pur-
chasing company, TO get a profit
through indirect methods"
These are principles laid down by the
Public Utilities Commission in its de-
csion on petition of the Berwick &
Salmon Falls Electric Co. for the ap-
proval of issue of securities; which
/ deals at length with situation not
previously before the Commission.
The Berwick & Salmon Falls Elec-
! trlc co. had need of additional power.
A partially developed water power was
available for $4,000 A. H. Bickmore
and John F. Reilly, both of III Broad
way, New York. We're two Of its di-
rectors, there being but three in all.
instead of buying the power direct
ana developing it at cost, the South
Berwick Realty Corporation was or
ganized under the laws of New York.
OF It's capital stock and John +. Reilly
"A. ri. Bickmore & Company holding all
being its treasurer This corporation
then bought the water power for s25.
600. expended $1,000 for miscellaneous
charges connected with it's purchase
mortgaged II to Mccoy & COMPANY
another New York concern, for $50 900
to secure the above Sl2 600 and arc
now constructing dam to cost STA
1880. This will make the entire cost
to the Realty Corporation. including
the $4,000 bonus in the mortgage $50
4325O
They have contracted to sell it to
the Electric Company for $50. 1872 so,
payable in stock, bonds and cash. and
ask the approval of the Public IT'LL
tiles Commission.
After showing that the Electric
Company is now earning IA per cent
on its entire capitalization, stock and
bonds. the opinion says that the stock
appears to be worth not less than par.
and that mo justification now exists
for allowing promotion profits or com
pensation for extraordinary risks"
/ 1.-THE price fixed by the parties TO the
proposed transaction" reads the decis-
ion, throws no light upon the value of
the property, because the case shows
clearly that the interests Of the pur-
chaser have from the beginning been
subordinate to those OF some Of its
officials"
1T was decided to acquire this prop
erty for the Electric Company. 1t
could be bought, as it then stood, for
$4,000. Instead of buying it direct
A. H. Bickmore & Company, styled by
Mr.. Hughes (attorney for the petit
tioner) an investment house in New
York organized the South Berwick
Realty Corporation under New York
, laws. Bickmore & Company own all
Of the outstanding stock, John F.
! Reilly is treasurer and Peter ]. Nc
Coy. Jr., is secretary. Obviously, all
, Of the profits made on any specula
ton by the Realty Corporation would
be controlled by its stock. Bickrnore
& Company owned all of the stock:
Reilly was treasurer and Bickmore
and Reilly were thirds Of the di-
rectorate of the Electric Company.
which was intended ultimately to buy
and pay for the property"
i 1T was stated in opening for the
petitioner that. They (the promoters
of the South Berwick Realty Corpor-
atom had an idea that utility develop
ment in Maine might probably bring
- fair market for it (this property