The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1921-12-28

| THIS agreement TO sell the bonds was
not actually fulfilled, we eliminate
this undeterminable value for sale
of bonds as having no bearing on
rates. In other words, because the
Baltimore Utilities company guar
| anteed and actually paid to the
sumter Gas and Power Company
| 81 IL for bonds which il SubSC-
uuently could not sell for 70, it rem
dered no value to the Sumter Gas
and Power Company; whereas. if
the bonds had been salabIe at 95.
when it would have made a profit,
then it would have created a value
entitled to consideration i'm rate
case The proposition is wholly
untenable. The bonds were not and
never could be sold to the gener-
al public at 81 1-2 in the Judgment
OF any sane person, as the bonds
were issued on a construction prop
osition. The Baltimore Utilities
Company expected that ultimately
the business of the Sumter Gas
and Power Company would de-
velop and be sufficiently profitable
TO enable it to dispose Of said bonds
at cost or at relatively negligible
loss, charging such loss as addi-
tional cost to it for the $40 shares
OF the Sumter Gas and Power Com
panys stock. The report is, there
fore. unfair to the Sumte
Gas and Power Companv
I'm that (bottom Of page y it saws
that las no actual cash was receiy-
ed by the Sumter Gas and Power
Company for its capital stock is
sued, we have eliminated the total
par Vaiue' ETC.. If we paid more
for the bonds than they were worth
which Is admitted, the excess price
paid is represented by stock. ON
the other hand, because the Ealti
more Utilities company paid an
excessive price for the bonds under
a guarantee to sell the same, which
1t could only perform under exist
ing conditions by becoming itself
the purchaser and thus actually
paying the guaranteed cash, should
II be penalized for an alleged
breach of contract when none in
fact occurred.
The statement that enginecring
and superintendence Of construc-
tion was paid for at the time the
service was rendered is true. if il
refers to the fact that the expenses
were assumed by the baltimore
Utilities company. 1t is absolute
ly untrue if it is intended TO mean
that 1t was paid for by the Sumter
'ias ana Power Company out of
moneys realized on its bonds and
notes. Further, the statement that
there were no stockholders actual
cash investments" (neXt to last par
asraph OF page 81, is contrary to
the 1acts. In connection with the
FRANCHISE and organization, the
stockholders paid out of their own
pockets for travelling expenses alone
several thousand dollars. Valuable
services engineering. superintend-
ence. organization, financing. etcD
were rendered which the stock
holders bought for cash. or for
which they still owe cash, and sim
ply because they accepted in pay
ment for such service. and reim-
bursements for actual cash eXpend-
ed Tor them, stock Of the Sumter
Company, instead Of bonds. notes
or cash. does not alter the fact
that their stock cost them real
money and constitutes a real ac-
tual cash investment by them in the
Sumter Gas and Power ComDanv
entitled to be considered in any
valuation case and particularly i'm q
rate case. If the Baltimore Utili-
ties Company had paid cash for
the sumter stock and the Sumter
Company haid paid cash for these
ana other services and expense the
same would have been added to
the rate base. Because such a cir
cultous procedure TO ACCOMPLISH
the same ultimate result was not
adopted. is it fair to eliminate the
STOCK as representing no value?
Carried TO its ultimate conclusion
the situation is this: had the stock
holders paid for the construction of
the plant and distribution system
out OF their own pockets the entire
cost thereof, and then had accent
ed in payment therefor stock of the
Sumter Gas and Power COMPANY.
you could still say there were no
stockholders actual cash invest
ment in the property. We admit
that we did not eXpend in cash
for actual travelling expenses and
services the full par value of the
stock, but we do say that the stock
holders paid for their stock the full
par value by reason Of the true
value of their services and cash cx-
penditures, the risk which they
TOOK and the guarantees which
they made to see the company es-
tablished as going concern.
Bottom OF page s, the error again
| appears, THAT the contract to sell
| the bonds at 81 1-2 was Gin reality)
never completed" 1t is difficult TO
understand how an expert account
ant OF the manifest ability and
thoroughness of Mr.. Respcss could
draw such Il conclusion, from the
simple fact that when the Balti-
more Utilities Company was unable
| to sell bonds to net the Sumter Gas
ana Power Company 81 l-2 of par
value. 1t, in performance of the con-
tract, purchased the bonds itself at
! the guaranteed Spllin.r prioo