Montana labor news., 1944-12-28
TRUTH ABOUT THE
MONTANA POWER
co. WRITE-OFF

w. WMIL-UEE
on December 81, the Montana Rail
road and Public Service Commission
ordered the Montana Power Company to
write off about $29,OOO,OOO from their
alleged valuation According to the re-
ports the state commission complained
that the federal government was srans-
crossing state rights in its attempt to
get a correct valuation of the property
of the Montana Power Company. The
following article explains the position 6f
the federal government in relation to the
Montana Power Company and the valu-
alton of its property.
It will be noted that the federal COM
mission states that at least $47000O00
should be written off and not S29,000, 600.
The Montana Railroad and Public Sery-
ice Commission apparently does not
agree with the Federal Power Commis-
sion for some reason or other.
Charging that the Montana Power
company was nothing more than cor
porate device to carry out deal to sky
rocket its plant accounts, Reuben cold
berg, attorney for the Federal Power
Commission, argued before the commits
sion at the hearing room in Washington,
D. c.. November % that the companys
books contain $47O0OOOO of water"
which should be squeezed out. The ar
gllment was made at d Joint session Of
the Federal Power and Montana Railroad
and Public Service Commissions sitting
to hear oral arguments.
This was the closing act in struggle
that went on through seven weeks Of
hearings at Butte, Mont, from March
27 to May u, 1914. The case now awaits
the decisions of the two commissions.
Goldberg said the company's books at
December 81, 1886, reflected an amount
of $125 $1,000, of which the Federal
Power Commissions staff contends $47,-
600 1000 representing initiation or "wa-
ter" should be reclassified in Account
1O7, Electric Plant Adjustments, and Ac-
count 10817, Common Utility Plant Ad-
iustments, pending elimination from the
accounts; and $6,0OOO00 should be clas-
sified in Account 1905, Electric Plant
Acquisition Adjustments, and Account
1O8.l5, Common Utility Plant Acquisi-
ton Adjustments.
Arguments were made for the company
by j. E. Corette, Jr., OF Butte, vice pres
ident and counsel, and by John Hauck,
of Butte. Interests of the intervening
preferred stockholders were represented
by Arthur F. Lan1ey of Billings and Ed
Mund G. Toomey of Helena. A. G. J.
Priest of New York city argued for the
American Power and Light company,
which owns substantially all the COM
mon stock of the company and $lO,6OO,- |
900 of the debentures.
The company attorneys stated that
two tranactions account for most of the
SAT, 100000. One is the 1912 merger of
Butte Electric and its subsidiaries with
and into the Montana Power company,
in which the plant accounts of the latter
company were written up approximately
S19,600000 The other is the 1913 trans
action whereby ownership of the Great
Falls and Thompson Falls water power
sites was placed in the Montana Power
company and Ryan received $27,5O0,OOO
par value of securities to give him un-
disputed control in the latter trans
action, to offset the par value Of STOCK
issued to Ryan, plant account Of the
company was written up by an equiva-
aa al
insisted that the amounts recorded on
the books of the company as result
of these transactions was actual cost on
the theory that the transactions were
genuine Mr.. Corette objected TO Mr..
Goldberg's assertions that the minutes
of Montana Power company were win
dow dressing" to make the transactions
appear as genuine arms length trans
actions. He asserted the book figures
of the company represented "real value"
and that the power sites of the COM
pany were worth not much less than
SAT 500, 900 to $500oO,o00.
MIR. Goldberg said the 1912 transac-
ton was "the familiar story Of a parent
with its subsidiaries" in or
der to write up" the plant accounts and
he pointed out that Just such a transac-
tion was disapproved by the Second Cir
cult Court of Appeals in the Niagara
Falls case Niagara Falls Power co. VS..
F. p. c., 1877 F.. (2d) 1879
He explained that in 1912 Butte Elec-
trio g. Power company owned and con-
trolled the Madison River company. the
Billings company. and the United Mis-
souri, River company, and all four op-
Grated as one company.
Butte Electric decided that it was
time to consider the question of recapi-
and refinancing of the COM
panies," said Mr.. Goldberg "A commit
CONTINUED on Page Four