Montana labor news., 1944-04-20

to haunt the Montana POWer Company IN
its accounting case before the Federal
Power Commission examiner Ed Marsh
and the Montana Railroad Commission,
now in its fourth week, is evident.
Federal Power Commission attorneys
have offered in evidence as exhibit No.
145 extensive portions of the testimony
of John D. Ryan, given before the Inter
State Commerce Commission in 1926,
when that commission was conducting
its Investigation of the Chicago Milwau-
kee and st. Paul Railway Company.
In that proceeding Mr.. Ryan testified
that in 1918 he had purchased the
Thompson Falls and Missoula water pow
er sites from the Milwaukee railway (of
which he was a directory for a total
cost Of approximately s95O,0OO and Or
the next day had resold them to the
Montana Power Company Cof which he
was p~resident) for $4,000 shares of stock
of the Montana Power Company with a
par value of 500 per share, but he testi-
fled that the $4,000 shares had a value
Of only SIG per share. He testified at
considerable length at that time as to
why those sites did not have a value of
more than what he had paid the Mil
waukee Railway for them. But in the
current proceedings before Federal
Power Commission Examiner Marsh and
the Montana State Railroad Commission
the Montana Power now claims that
those sites cost it, not the S950,OO0 which
Ryan testified was the real value, but
5000, 900.
The expert accounting witness, John
H. Buckley, who has been specially re-
tanned by the power company to re-
classify the company's accounts, in de-
fiance of the Federal Power Commission
stats recommendations testified that
the cost was the full 5000, 900 on the
basis of a valuation made by the power
company's chief engineer, Mr.. H. H.
Coehrane. The Cochrane valuation was
made more than 80 years after the
transaction.
MI. Bickley's version of the Ryan deal
was that MI. Ryan had bought the
Thompson Falls and Missoula sites from
the Milwaukee Railway at a bargain
However, under cross examination by
Mr.. Goldberg he admitted he would have
come to the same conclusion, even if
Ryan had Immediately sold the $4,000
shares he had received from the Mon
tana Power company at a price Of not
more than 81, OOO, 600.
Attorneys for the Montana Power
Company and attorneys for the inter-
vening 5000 preferred stockholders made
every possible objection to the admission
in evidence in the present proceeding Of
the certified copy of the transcript of
the Ryan testimony before the Inter
state Commerce Commission, offered as
exhibit 145, by Federal Power Commits
sion Attorney Goldberg. Trial Examiner
Ed Marsh has reserved his ruling on the
admissibility of the exhibit and the state
commission has also reserved its ruling
(as it is doing with respect to all Of the
exhibits offered by the Federal Power
Commission staff)
one of the principal issues in the case
is whether the prices put on public util-
ity properties and water power sites in
the Ryan deals with the Montana Power
Company aiding the formation Of that
company, represented real COST to that
company. or whether the controlling in
terest which Ryan received in that COM
pany and the POWER and INFLUENCE,
as well as the stock interest, which he
previously had had in that company and
in its predecessor the Butte Electric and
Power Company so identified him with
the Montana Power company that the
costs to him must be regarded as the cost
the properties to the Montana Power
Company. At Tuesdays session the com
pany's accounting expert, Buckley, testl-
fled that the Ryan interest was the larg-
single bloak Of stock in the Butte
Electric and Power Company, as well as
the owner of a so per cent interest in
the Great Falls Power and Townsite
Company, and of a 100 per cent interest
in the Thompson Falls Power Company.
three companies were merged into
the Montana Power Company with
more than $40. OOO, 900 being added to
the books in the process, and securities
issued on the basis of that S4O,OOO,OOO
worth of water.
The course OF the Federal Power Com
staff's case indicates that they
will contend that Mr.. Ryan was sitting
on both sides of the table when those
write-ups we're put on the books which
the power company now claims represent
cost to the properties IN which it is
to earn profits by the rates it
charges consumers of electric energy.
Another interesting effort to keep
evidence out Of the record was made by
the attorneys for the Montana Power
Company and the attorneys for the in
%.ervening $500 preferred Stockholders,
when MI. Goldberg offered in evidence
as exhibit 24O a photostatic copy Of a
memorandum found in the files of
Service, Inc. Ebasco Service, Inc.
a Bond and Share subsidiary company
which performs accounting, financial
and engineering services Gor a price,
for utilities like the Montana Power
company in the huge bond and share
company system.
The memorandum which Mr.. Goldberg
offered, set forth four different proposals
for dressing up the Montana Power Com
pany's accounts in an effor to avoid