Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-06
CHARGES S17,412,29|)
STOCK "WR|TE-UP'
Federal Trade Commission
Accountant TeStifies in
Power Firm Quiz.
~ the Associated Press.

by the Associated Press.
A Federal Trade Commission ac-
countant testified at public utilitie;
UP" Of $l7,4l2,290 at the time the New
England Power Association acquired
the assets of its predecessor, the New
England Co., in 1925.
The witness, r. E. Barnes, said the
increase came to new valuations Of
common stock of the New England Co
He added that these stocks were re-
corded ON the books of the company
at $14,554, 800 and that on the books
of the association they we're written
up" to $3l $4,000.
Barnes testified that later the ledger
value of the common was increased 70
$33,593,6
Officer Gives Explanation.
Frank d. Cumerford, president of the
New England Power Association, later
issued a statement which he SAID eX-
planned the "so-called write-up. He
said the stakeholder of the old New Eng
land company. which held properties OF
other companies, sold them to new
group, including New York interests,
for a price in excess of the value car
ried on the books of the old company.
"The additional value placed on these
assets by the new owners" he SAID
represented largely natural enhance
ment, but partly reflected earnings LETT
in the company over long period OF
wears and not declared out in DIVIDENDS.
The books of the old company largely
represented values determined Is or 20
years ago. The new owners, after care
full reorganization by engineers and
other experts, invested $20.500,000 cash
in the new company, which was used
for expansion purposes"
Barnes said if the book value of the
New England company investments, as
shown by the books of subsidiaries, was
used instead of the ledger value OF in
vestments, on the New England COM
pany books, the excess valuation would
amount to $l9,285,2 28.
Proposal of Association.
The association was organized, Barnes
said, to provide means of expansion for
a public utilities group, including the
ACQUISITION of a market for hydro-elec-
trio power through retail distribution.
He reiterated testimony by other wit
nesses that control of the association
rested in the hands of the International
Paper & Power Co. At the time of the
formation of the association, he said.
international interests held only 25.8 per
cent of the common stock, but that
later this was increased to approx
mately IS per cent.
Kenneth A. Miller, commission ac-
countant, today ended testimony in
which he traced developments of COM
panies which grew finally into the asso-
citation. He was questioned by Robert
E. Healy, commission counsel, about a
contract between the New England Co.
and the Deerfield Construction Co.,
by which the latter agreed to develop
four waterpower sites. Miller said in
the series of financial transactions be-
tween them the Deerfield Construction
Co, in return for bonds having a par
value of s750,000, received securities
from the New England Power Co. of
Maine, New England CO. subsidiary,
valued at $5,000,000, a difference Of
$4.250, 600.
Miller, however, did not testify that
this was a "write-up" and said it was
partly accounted for by other trans
actions.
Association officials have contended
since the hearing began that all appar-
ent "write-ups" are explained by a
natural increase in value owe. period
of years, or by other transactions be-
tween related companies. Comerford
and other association officials are ex-
pected to testify before the investiga-
tons into financing phases Of the aSso-
citation are concluded.