Evening star., 1933-04-29
PUBLIC AID SOUGHT:
IN GAS MERGER
Keech, in Letter, Insists Com
pany Waive Claim to &C.,
ing Concern"

The consuming public as we'll as the
gas companies should be assured def
mite benefits from merger Of the
Washington and Georgetown Gas Light
Cos, If Congress IS to approve
the proposed consolidation, Richmond
B. Keech, peoples counsel, stated In
a letter sent last night to Representa-
tive Loring Black of New York
At the request of Black, chairman
of the House District Subcommittee
which is considering the legislation, Mr.
Keech outlined in detail his reasons
Tor insisting that the company waive
its claim to going concern" value in
its capitalization, If the merger plan
Is to be approved.
No direct benefits will flow to the
public from the merger unless this
amendment is included in the merger
legislation, he declared.
Reiterates Stand.
Mr.. Keech reiterated his declaration
made at recent hearing before the
House Subcommittee that If the gas
companies wish to obtain the expected
financial benefits of a merger, including
the right to issue additional stock
they should be willing to pass benefits
to the public by waving the claim
to the Intangible going concern valu-
alton element
In this position Mr. Keech Is at
issue with members Of the Public Util-
tiles Commission, which asked that
congress enact the gas merger bill with
out amendments.
In support of his contention, Mr.
keech points to the progress made by
the gas company over a period of years
and the amount of dividends paid to its
stockholders. He said:
THE Financial history of the princi-
pal company Washington Gas Light
Coz since its organization has been ex-
traordinarily enviable. The company
has an authorized capital Of $4,000, 900
OF which amount 81 ,500,0 900 was paid in
cash and the remaining $1,100,000 paid
In stock dividends of $500,000 and
100000.
THE average annual rate Of dividend
on stock paid for in cash has been
26.9 per cent.
During the company's existence, it
has paid dividends of more than $25,-
100000.
Notwithstanding these dividends,
the surplus of the Washington COM
panles amounts to more than $8,000,-
900.
1T is because of the extraordinary
financial history of the company and
the further fact that a saving of $780,
900 in operating expenses, with the
right to issue additional stock inures
to the company under the bill, that
the amendment eliminating going
concern value, is justified"
Questions Sperry Arguments.
Mr.. Keech then questioned some
arguments for enactment of the merger
bill made by Marcy Sperry, president
of the Washington company. He pointed
out that Mr.. Sperry argued that the
financial structure of the company now
is not desirable. that the proportion of
the bonded Indebtedness to the amount
of stock issued is out of balance
To this. Mr. Keech replied that for
rate-making purposes this is Of no i'm
portance." In replying to the claim of
the gas company that the merger is
essential to further development, Mr.
Keech declared no additional stock had
been issued or authorized since 1896.
During that period, the company
progressed rapidly and according to gas
company officials themselves, expendi-
lures running between $1,000 900 and
S2,000,000 have been made annually,
Mr. Keech declared.
The gas company president had told
the committee that upon approval Of
the merger bill, the company would be
in position to make improvements in
the coming year costing between 81 ,000,-
600 and Sl.750,000. To this Mr.. Keech
replied: 80 far as the local situation
is concerned, it Is doubtful whether
much of this work would innure to
the benefit of local personnel for the
reason that the engineering staff of
the company has been practically re-
moved and the company makes use in
lieu thereof the engineering firm of
Stone g. Webster"