The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1919-05-28
CAPITALIZATION
CONSULTATIONS
WEI|RDPR]|Q|'P|0SAL .| R j
Many Intangible Values That
II. Public Is Ignorant of Enter
Into Question
MANAHAN FOR BIG MERGER

That reforming need not necessar-
lily unfit one for the practice Of cor
poration law was proven most con-
vincingly Tuesday when former Con-
,gressman at Large James Manahan
of Minnesota, personal counsel for. A.
C. Townley, president OF the Nationa'
Nonpartisan league, and William c.
Lemke, Townley's chief lieutenant,
appeared as chief Of counsel for the
Dakota Heat, Light ! & Power Co., in
the railway commission hearing on its
application for permission to form a
.$3,0OO,O00 public utility combine in
North Dakota,
Mr. Manahan extracted from his
expert witnesses testimony to the ef,
feet that the United State, Steel
Corporation, once one of our greatest
trusts, is now. our most. efficient or.
.Eanisati ea3 that eeconOHlyrGnd 3eFSfee
are promoted by the very same com
binations once eschewed by all re.
formers, and that. capital ,charge Of
36.5 per cent for intangible vilues'
may be altogether proper in forming
such a combine as the Dakota Heat,
Light & Power Co. s.,, ~ f.g
How IT'S Done. ,l'1@ II s.,' :
The charge Of 365 per cent was ad-
mitted by Certified Public Accountant
Schmidt of Temple, Webb & Co., St.
Paul, to be the maximum generally
recognized as permissible Mr..
Schmidt did not 60 so far as to total
the various percentages of charges for
'intangible values which he declared
to be held legitimate by all yaluators.
He testified that the expense of pre-
liminary promotion should be capital
lied at actual cost, or, if such cost
were not obtainable, at anywhere
from one to 11s per cent. Technical
expenses, installing Of accounting and
bookkeeping systems and brokerage
costs were approved by the New
York public utilities commission, he
stated, at five percent The minimum
for promotion costs was five percent,
he stated, and the maximum 10 per
cent. With reference to legitimate
charge for discounts in sales of sc.
curities, he stated that securities SOLD
as low as 80 percent and as high as
par, the maximum in this instance
being 20 percent These various
charges total up 36.5 percent, for lin.
tangible values" generally recognized
Mr.. Schmidt stated, to be legitimate
and necessary capitalization items
And Furthermore
In addition, he testified under Mr.
Manahan's questioning, thele are i,g-
al expenses, costs of hearings, costs
for installing uniform systems Of &C.
counting such as may be required by
public utility commissions. railway
commission expenses, interests and
taxes during the period of incubation,
all of which are intangible values
which may be properly capitalized
He did not, however, furnish an :sti-
mate as to the percentage OF tie
whole capitalization which SHOULD be
apportioned for these charges
Items Not included.
These items, Attorney Manahan
brought out, were not included in the
Hagenow & Ericsson survey IF the dtii-
tiles which the Dakota Co. plans to
consolidate. This survey, made for
the state, does not altogether agree
with that made by tPillsbury of Mime
apolis for the Dakota Co: Among
other items not included in the Hage-
nav & Ericsson survey and noted IN
the Pillsbury report is 100000 for
working capital.
Mr.. Schmidt stated in addition that
valuable contracts held by going con-
Germs entering into consolidation
should be capitalized, altho such cap.
italization is not asked in this in
stance. -
The contention is, said Mr.. Mana.
han. that economy is served by con.
(Cnntinued ON Page TWOl