The people's voice. [volume] (Helena, Mont.) 1939-1969, 1944-09-22

sion staff charged when Butte Electrics properties
were transferred to the newly organized Montana
Power Said John ]. O'Neill, assistant chief ac-
countant in the FPC's division of original cost:
The stockholders who owned Butte Electric &
Power Company and its subsidiaries in the
ing were the same stockholders who owned the
Montana Power Company in the afternoon. In
stead of holding one share of Butte Electric G.
Power Company common stock with its par value
of 500, they held four shares of Montana Power
Company common stock each at 500 par value
The entire transaction can be summarized by stat
ing that the stockholders of Butte Electric &
Power Company wrote up their properties to the
extent of s19S33, 1888 and declared that self
created surplus in the form of a stock dividend
The plant and property there in the
afternoon there in the morning and the
same people owned it.
But, said C. F. Kelley a principal Company wit
ness by virtue of his long association with Ryan,
this not a write-up because obviously it rep
resented the difference between the of the prop
erty reflected upon the local books of the local
companies and the actual value in the opinion
of the people that were creating the consolidation
and the company the difference between
the original cost of the property and the value after
it had been developed"
FPC counsel declared such testimony of antici-
pated power development attempt to justify
by hindsght the initiation of the Company's capital
structure. Their objection sustained by the
Commission trial examiner, who ruled out of the
federal all evidence of value of Company prop
critics subsequent to the date of the Company's
ganization; such evidence he said was irrelevant
in an inquiry into the original cost of utiltys
facilities.
TT1IIIS ruling caused split between the FPC trial
i examiner and the Montana Public Service Com
mission which was joyously reported in the Com
pany-controlled press At the opening of the hear
ing, Company Counsel ]. e. Corette (since named
vice presdent) remarked that he believed this to be
the first joint hearing of this particular type and
therefore previously there had been Conflict be-
tween an order of state commission and an order
of the federal commission, and there has been no
question involved of whether, when such conflict
might exist the company would have to follow the
state commission the federal commission system
of accounts" All this he added, merely creates a
question which might arise if there should be a
conflict" The trial examiner asked, But there is
conflict here now?' mot now" Corette retorted
"but there could be-"
The lawyers prophetic gift was confirmed within
few days when Chairman Austin B. Middleton of
the Montana commission overruled the FPC coun
sells objection the value" testimony and ordered
that all such evidence be accepted for the Montana
board. AS result, the Montana Standard was able
to emphasize again, 'The Montana commission will
reach its decision" Later in the hearing, Mid
dleton, who during the course of the proceeding
nounced his candidacy for the Democratic guber
material nomination. took occasion to nod courteous
ly to the "interveners":
The Montana state commission wants the record
to clearly show that it recognizes that the inter-
Yeners' counsel representing thousands of Mon
tana people who have millions of dollars in savings
and investment in this company, have exactly the
standing before the commission as the COM
pany counsel or commission counsel.
These lawyers for the "nterveners" the Montana
Standard pointed out represented than $500
Montana holders of preferred stock, "and their ap-
pearance in the hearing disclosed that 1921 per cent
of all stockholders reside in Montana and hold 715
per cent of the company's preferred stock" This
Standard story, however, omitted any mention of
American Power & Light, whose counsel
was listed by the Butte newspaper only assist
ant to the chief counsel for the Montana Power Com
pany, and whose only participation in the hearing
was to present evidence that in 1928 and 1929 "In
completely arms length transactions" it paid $780,,
100000 dollars for the stock of the Montana
Power Company, NOW held by American Power &
Light Company"
The preferred stockholders Intervention was a
curious development 1t apparently was the first
line that owners of preferred securities had taken
part in such a proceeding as allies of a company
which chose to resist FPC reform of its capital
structure, and they have appeared some occa-
lions as parties with interests adverse to that of
he allegedy INFLATED" Company; it is the FPCs
contention that squeezing out the water in way
'educes the Company's actual assets. 1t precludes
payment of dividends to common stockholders on
he basis of water" in the accounts, but says the
FPC, it benefits of preferred because it per-
nits reduction of fixed charges which must be met
before income is available for distribution to these
tockholders. This, it is contended, would be
brought about by improved financial condition
nabng the Company to obtain lower interest rates
m its bonds.
T1HE allegation that Montana Powers capital struc-
l. ture is unhealthy edematous is not however
he most serious threat to this twins peace mind
Another was touched upon briefly the close of
he Butte hearing after the Company had offered in
violence New Jersey legal opinion that it was a
lew corporation under the laws of that state and
therefore, that its creation not, the FPC staff
sserted, merely a subterfuge to cloak a capital
7rite-up. To this the federal bureau counsel re-
orted by injecting the issue of federal permits for
Sc Of the public domain-permits obtained in the
ames of Montana Powers predecessor companies
nd legally nontransferable, but taken out by
Iontana Power.
These permits for occupancy of land under reser-
oirs transmission lines, issued by the De-
artment of the Interior the Department of Agri-
llture. The Company must choose, said FPC
1mse:
whether it will claim to be a new corporation
md renounce its claims to rights under federal
permits licenses issued to it's predecessors, on
he one hand; whether it will, the other
land, renounce its claim to be corporation
Instinct from its predecessors and will adhere to
is claim to be entitled to use lands of the United
States under permits and licenses granted to the
nj d;efi,