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The Washington herald. [volume] (Washington, D.C.) 1906-1939, May 03, 1910, Image 12

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12 THE WASHINGTON HERALD TUESDAY MAT 3 3 1910 1910M 1910RIGHTS
RiGHTs RIGHTS O OF M RTHE THE PUT WAsfi WASHINGTON WAoJrllJNCjIUJN A7 A QTJTTVTr GT TVVM NOGAS GAS COMPANIES COMPANIES fftT2 A TVTTT7O 1
i
General Counsel Goldsborough Con Concludes CdnJ CdnJeludes Concrudes ¬
eludes His Argument Before the theHouse theI theHouse
I House Committee
<
Opposition to Pending Resolution ResolutionBased ResolutionBaSed resolutionBased
Based Upon Court Decision DecisionHELD DecisionHELD DecisionHELD
HELD TO BE UNCONSTITUTIONAL
THE COMMITTEE ON TH THfJ 3 J DISTRICT DISTRICTOF DISTRICTOF DISTRICTOF
OF COLUMBIA COLUMBIAHOUSE COLU1lmIABOUSE
HOUSE OF REPRESENTATIVES REPRESENTATIVESMonday REPRR5ETATIVESloAday REPRISENTATIVBSMonday
Monday May 2 2 1110 1110The 110The 1810The
The Committee mot M8Yf2 it t S p m Hon Honorable Honora Honort ¬
orable ort aIe le Samuel W Smith S Ilh th Chairman Chairmanpresiding ChJrnanpretddlng
presiding pretddlngThe presidingThe
The ChairmanMr Goldsborough you youwant youwant OU OUant
want ant a half an hour this owning ovonlngMr oonlngIr owninga1r
Mr Ir GoWsboroushr1 think probably I Iwill Iwilt Iwill
will bo able to got through In that thattime tbattime
time I shall try to toTh toThe
Th The Chairman ChallJnanYou You surprise mo moMr moMr maMr
Mr Goldsborough GoldsboroughIs Is that so I shouldllko should shouldliko shouldlIko
liko vary much to have 0 tho author of the theresolution thereacKuUon
resolution Mr Coudrey Coudre hor horTho hero horeTho
Tho ChairmanOf courso CGurll wo 0 08B1RUUC8 have no noassurance noassurance
assurance that he will bevnero bevneroSTATEMENT be 11618 11618STATKi1ENT erev erevSTAT3MLNT
STATEMENT OF RICHARD GOLDS GOLDSBOROUGH GOLDSBOROUGH GOLDSBOROUGH
BOROUGH ESQ COUNSEL FOR FORTHE FORTHE FORTHE
THE WASHINGTON w GASLIGHT GASLIGHTCOMPANY GASLIGHTCOlIPANY
COMPANY COMPANYContinued COMPANYContinuedMr Continued ContinuedMr Con tlnued
Mr 11 Goldsborough Goklsboroulh4Ir Mr Chairman and andgentlemen andg andgentlemen
g gentlemen nUeDtfm of the Committee when I Ileft Ileft
left off at the lat meeting I had about aboutconcluded aboutconcluded aboutconcluded
concluded the review reySe and analysis that thatI
I had the honor to submit to the Commit Committee CommIttee ¬
tee of the leading cases on this subject subjectAlthough subjoctAlthough
Although the great case ca e of the Chicago ChicagoMilwaukee ChicagoMilwaukee ChicagoMilwaukee
Milwaukee and St Paul Railroad Com Company Company ¬
pany against Minnesota lnnetlOta was not techpicaIly tech technically technlcany ¬
nically deckled by a united court for forJustice fotJu forJustice
Justice Ju Uee Bradley delivered a dissenting dissentingopinion dtaenUngopinion dtaeenttngopinion
opinion in It It nevertheless practically practicallyrepresented practIcAllyreprtod practicallyrepresented
represented a united court as to the thefundamental tbeunc1amental thefundamental
fundamental principles that are applica applicable applleble ¬
ble to the case hero at issue issueMr luueMr IssueMr
Mr Coudrey may m I present you with witha witha
a copy ef my brief briefMr brioMr briefMr >
Mr Coudrey CoudreyI I thank you youMr youMr
Mr 11 Goldsborough GoldaboroughYou You You will find that thatI
I resume the argument af the th bottom of ofpage ofpage ofpage
page 28 x There is a copjr copy here halM also for forMr forIr forMr
Mr Ir HasJeton HasJetonMr BasItonMr HazletonMr
Mr Hazletcn HadetcnI I thank you very much muchMr muchMr muchMr
Mr GoWsborougn GOkItIborougbADCI And there are copies copiesf cOpiMfflr
f fflr < > r all the members of the committee comfbltteeMr
Mr Coudrey Cou4reYJ Is this a copy COP of br the thehearing thehearing thehearing
hearing on April 2K which was published publishedin pubU hed hedIn
in the papers papersof pentoC of course a paid ad adMr adMr i
I
Mr Goldsboroufh OoldsboronghYee Yes sir of my ar argument alume argutAellt ¬ I
gument gutAelltMr gumentMr ume t tllr
Mr Coudrey CoudreyWhlle AVhile we have no right rightto rightto righ righto t I
to criticise anything anytbbt that the gas com company company cornpang ¬
pany wants to spend money for still this thisis thl8I tb tbIs
is I net zeta A fuN copy eo T of the hearing On that thatdata thatdAt8 tha thadata t
dataMr data dataMr dAt84lr I
Mr Goldsborough Gold GoldsboroughIt borOUChIt It was Impossible to tomake tomako t tmake
make a full report reportMr roportllr
Mr Coudrey Couc1reYilr Mr Whltwell hltwe1t presented pre cntod a astatement astatement astatement
statement that went into the details detal of ofthe o othe othe t
the finances Rn nCN of the company that wa wanot was wasnot wasnot s
not included In that published statement statementand statementand statemenand L
and it is l not included In this statement statementMr statemontIr statementMr
Mr Mr Ir Goldsboroufh Gok1 GoklaboroughNo boroushNo No sir Ir but it is in included Indudl ineluded ¬
eluded in th the proceedings of o the hearin hearinwhich hearing hearingwhich hearingwhich
which are to be printed if not already alreadyprinted alread alreadprinted alreadyprinted
printed and I think they have been beenprinted beenprinted bee n
printed by the Government Printing Of Office Office Otflee ¬
fice Obviously it would have been Impossible im impossible Impoatble ¬
possible to have published all of that thathearing thathearing thathearing
hearing in one edition of the newspapers newspapersMr nepapersMr newspapersitr
Mr Coudrey CoudreyA As long as we 0 are ar going goingInto goingInto gotn gotninto
Into the matter I think it is very ve es essential oHnUal essentlal ¬
sential that we should have a full and andcomplete ondcomplete a acompiote
complete statement especially the state statement stAtement statecomplied ¬
ment compiled by b the assistant secretary secretaryof secretar secretarof socrotarof
of the companr comllanltMr companrMr COmDnir
Mr r Goldsborough Gol GoldsboroughYou sooroughYou You have therefull there a afull afutl
full and complete statement of the as assistant assi assistant ¬
sistant si tant secretary of the company all his histestimony histe8t1mon h htestimony
testimony te8t1mon and also the statement cov covering co coerlng covering ¬
ering tho period of twentyfour years yearsunder year yearunder eus eusunder s
under review 1olo I should have been glad gladto gladto gla glato d
to have published the whole thing In n tho thopress thopre th thpress °
press had there been time timeMr timeIr timeMr
Mr Ir Coudrey CoudreYOr Of course course we have no noright noright n nright o
right to say anything about how you youspend yo yospend ou ouspend °
spend money mone when it is not our money moneyor monetor mono monoor
or tho governments money but it was wasmy wasm wa wamy s
my m Idea as long as you wero publishenit publishing publishingIt g
It the report should be complete < in ord ordto order orderto ordcto
to snow show exactly what the statement o othe of ofthe ottho f
the company comp n was wasMr wasllr wasMr
Mr Goldsborough GoldsborpughIt It was too lato latewas It Itwas ItWAR
was 1100 oclock boforo we got through throughI througI h
I tried to condense what scorned to me to tobe tobe t tbe °
be the essential points in tho tostimon tostimonof testimony testimonyof Y
of Mr Whitwell so that tho argument argumentin argume argumein rat
in tho matter nu tt r would Ould be intelligible that tJhatbftlng thatbAing th thbeing at
being practically 1 tho official statement statementthe of oftho otthe ° f
the company as its case As I remarked remarkedbefore remarkedbefore remarkebefore d
before I should havo been glad to have havepublished havepubtJshed hay haypublished o
published all of tho testimony as hereto heretofore heretoforo beretforo ° ¬
foro but that was simply Impossible In Infact Infact I Ifact n
fact tho last galley gaUo only wont into th thforms the theforms thefonns °
forms a few minutes before 3 oclock as asit asIt s sIt
it was wasNow wasNow wasNow
Now to continue my argument after afterthe atterthe aft aftthe er
the revlow of tho case of tho Chicago ChicagoMilwaukee ChicagoMilwaukee Chlca ChlcaMilwaukee fie
Milwaukee and St 5t Paul Railroad Com Company Compnn Co Copuny m ¬
puny pnn on page 25 at the bottom of the thepage thepagc t tpnge he
page pageAs pagc pagcAs pngeAs
As further evidence of the fact th ththis that thatthis thatthis at
this reasoning Is within tho law as laid laiddown laltIdown la ladown id
down in tho ho leading cases on this subject subjectI subjecI t
I beg to refer you to a case that has been beenmore beonmore be bemore en
more honored by the Supremo Cow Cowthan Court Courtthan Courtthan rt
than possibly any other State decision decisionthe In Inthe Inthe
the books I refer to Williams vs Wesern West Western Western t ¬
ern Union 93 N Y 182 which has never neverboon neverblon nev nevbeen er
boon questioned anywhere from tho day dayIt da daIt d dIt a3
It was delivered to the present 1 hour h hourthis ur In Inthis Intbls
this case tho court by b a unanimous de decision de decIsion d dcision e ¬
cision says Indeed so far as the sol solvency solvency so sovency 1 ¬
vency and responsibility of a corporaei corporaeiIs corporation corporationIs o n
Is concerned they thO are Increased by bystock a astock astock
stock dividend where it has a surplus surplusproperty of ofproperty otroporty
property to correspond to tho amount amountshares of ofshares orshares
shares issued l In such case the surpi surplus surplusproperty surplusropcrty is isproperty
property Is secured and impounded for forthe torthe f fthe or
the benefit of the creditors of the cor corporation cororollon co coporatlon ¬
poration orollon and for tho public so that there thereafter thcrentter ther therafter c ¬
after it can never bo legally divided dividedwithdrawn dlvldodwithdrawn dividewithdrawn d
withdrawn or dissipated dlssll ted In any an way wa waylong So Solong 50long
long as ovqry dollar of stock Issued Iss ed by bycorporation a acorporation acorporation
corporation is represented by a dollar dollarproperty of ofproperty otpropert
property no harm can result to indi individuals Indlvlduals mn di dividuals ¬
viduals or the public from distrlbutl distrlbutltho distributing distributingtho rag
tho stock to tho stockholders
Finally FInaU as conoleslvo Q0I101 oonoluCivo lvo of controversy controveu I Ibeg IbeG Ibeg
beg leave to alto th the woes which lob wont up upfrom upfrom upom
from fr om this District Involving a stock div dlvIdend dlll dlllIdend divIdettd +
Idend declared by b the Washington Gas GasLight OasLIght GasLight
Light Company Corrip n tho defendant practically practicallyundor practlcaUundor
undor suspicion of intent to commit ae a alike alike
like lik e offense in the case at bar Thturt Tho Thocourt Thocourt +
court co urt says sas in in Gibbons vs Mahon 136 U US It ItS US
S 5 WI WITherefore
Therefore when t distribution of ofearnings otearnlnga ofearnings
earnings Is mad ma made l by a corporation among amongIts amon amonIta amongIts
Its stockholders the he q QesUon > < estion whether whethersuch whetherliuch whetherch
such su ch distribution i q nn apportionment ofditional of ofadditional otnddlUonal
additional ad ditional stock representing capital or ora ora ora
a division of profits pra ts and Income depends dependsupon dependsupon dependsupon
upon the substance substa and intent of the ac action action acn ¬
tion tio n of the corporation as manifested byveto by byits byIta
its vote ote or resolution re and ordinarily a div dividend eU eUIt diridond ¬
idend It end declared In stock or bonds is to be bedoomed bedoomed bedoomed
doomed capital and a dividend in money moneyIff mono moneyiR
Iff to be no deemed income of o each share shareA shareA shareA
A stock dividend really takes tak nothing nothingfrom nothlnsfrom nothingfrom
from the property of the th corporation corporationand corporationand corporationand
and adds add nothing to tho interests InterO tJ of the theshareholders thoIIhRrebold theareholders
IIhRrebold sh shareholders areholders rs Its It property is not dimin diminished dlmlnlahed ¬
ished and tholr Interests aro not In Increased Incream 1ncreased ¬
creased After Att r such a dividend as before beforethe betoretbe
the corporation has the title in all the thecorporate thec therporate
corporate c co porate property the aggregate inter interests Interests Interseta ¬
ests therein of all the shareholders are arerepresented arerepr arerepresented
represented repr sented by b the whole number of ofshares orehar05 ofares
shares sh ares and the proportional interest of ofeach oteach ofch
each ea ch shareholder remains the same The Theonly Theonly Theonly
only change is I in tho evidence which whichrepresents whlehrepce
represents repce re presents ents that Interest the new shares sharesand abaresand sharesand
and the original shares shar together repre repreilenUJg j jsentlag
sentlag the same proportional interest interestthat t tthat
that the original shares snares represented 5he 5hetore be before before
fore the Issue of the new ones onesNow onesNow onesTow
Now let us seo If we we w cannot provenclusivelyso prove proveconclusively prooconclu
conclusively conclu co nclusivelyso t1H so conclusively that he hewho hewho hewho
who runs may m read and the wayfaring wayfaringman watRrln watRrlnman wayfaringman
man though a fool may not err therein thereinthat thereintbat thereinthat
that the reasoning In Williams VlIIIA UI vs s West Western Veatn teatern ¬
ern n Union of Judge Roger and Mr r Jus Justice Ju JuUce Justice ¬
tice Gray Gra in this case is true and con consequently consefluontJ conaequontly ¬
sequently the logic of my m learned ad adversary ader advetyary ¬
versary er Jfr Hazleton and his disciples disciplesaa dl ctplesa
aa a to this matter > is s false He said said in inhis 1nhis
his opening that I l Inflated myself with withdreams withdreamdroam withreamsdreams
I
dreamdroam d dreams dream of riches almost t beyond beyondthe bondthe
the hope of o avarice Avar avaricethat ethat that we were to toenjoy tolonjoy toenjoy
enjoy when we got that 140 per cent centdividend centi can canividend t
dividend d Let us see what actually hap happened haposed ¬
pened p osed the next no t morning mornln after we e all allpulled s1 s1pulled t
pulled ourselves by b our bootstraps into intothis
this Empyrean of prosperity Why Whytho Whythothat Whythestock tho thostock
stock that was worth ro the ti day dll before beforethe boforethe beforethe
the dividend was declared promptly promptlydropped promptlydro
dropped dro droppedtilcGinty dlIcGlnty McGinty fashion fMihkmto to lit the day dayafter dayI dayafter
after the dividend camo off So we lost loston l06tIon oe t
Ion on the stock what we made m de on on n the divi dividend dh1dend ddvidead ¬
dend Verily Vorn what fools fool we mortals mortalsbe mortalsbo s
be b e For the stock plus the dividend dividendwas dlldendwas
was worth the day da after it t was declared declaredexactly doclaredexactly d
exactly what the stock tock alon wag worth worththe worththe
the day da before beforeWhy b beforehy rore roreh
Why h hy then did we issue those certifi certificates cezUncatCli cectlAcatca ¬
cates It their issuance IHua ee added no value to towhat tohat t twhat o
what hat the property was w previously pre oualy worth worthto worthto wort h
to what impartial appraisers said Id it w woe woeworth WQ6worthand vat vatworthvend
worth worthand and to what Uncle Sams assessor assessorruthlessly 8ssessorruthIOMIa
ruthlessly r assesses it t for forTho forThe forThe
The answer ought ou ht to be plain enough enoughto enoug enougto h
to those who have followed my m argu argument argument ergomoat ¬
ment We Ye honestly honeaU wanted then as now nowto nowto nowto
to escape from the false charge of deGlaring de declaring declaring ¬
claring 29 s per cent dividends wo have haveto haveto hav havto °
to do that to distribute 6 per cent per perannum PCIannum pa paannum r
annum upon the value 111uo of o our Investment Investmentwhen Investmontwhon Investmentwhen
when in fact at that nominal rateper rate 20 20per 10por 0
per cent cent we are only realizing legal legalInterest logalInterest 1
Interest on our actually invested capital capitalSuch capitalSuch capitalSuch
Such a charge Is I partisanship pure and andsimple andsimpleParthIAn an ansimpleParthan d
simpleParthIAn simple Parthian partisanship at that thatshooting thatshooting thatshooting
shooting poisoned arrows in retreat from fromuntenable fromuntenablo fro frountenable m
untenable ground It does not rise t to totho totho o
tho dignity of casuistry but It does vin vindicate vlndlcate ¬
dicate my m criticism that the only pur purpose purpole pu pupose r ¬
pose that can be promoted by b denying to totho totho t tthe a
tho Company hero capitalization equal to totho tothe t tthe o
the actual value of the property is to togive toSlvo t tgive o
give verisimilitude to a statement that is 1 s
20 per cent true and SO per cent false A Athing Athing
thing that Is letter otter true and spirit false falsecannot falsocannot fats o
cannot bo either politically economically economicallyor economlcall y yor
or morally profitable pro tnble Tho truth Is s this thiskind thislind th s
kind of hybrid falsehood Is at best de defensible dcenslblo ticfeasible ¬
feasible only on the theory that good goodfruit goodfruit goo d
fruit may be produced from bad trc trees treesby treesbr es
by the unlimited use of o manure But this thistreatment thistreatment th thtreatment Is
treatment having repeatedly failed I Isubmit Isubmit
submit it would be profitable now to fo fol follow 1 ¬
low the Good Book Bookand and cut these barren barrentrees barrentreos n
trees down downTo downTo
To make our position perfectly plain I Isolemnly Isolemnly
solemnly protest that the actual truth Is Isas IsM I
as the proof shows that the Washington WashingtonGasLight WashingtonGasLlght Washingt WashingtGas o n
GasLight Gas Light Company Com pan has not distributed on oncapital oncapital a
capital account in any one year stn stn1904the since since1JXM since1904tho ce
1JXM 1904tho the year 08r of therertlflcate dividend dividenda
a total of o exceeding 5 per I er cent upon t tactual the theactual theactual ha
actual value alue of the property used In t the theconduct thoconduct he
conduct of Its business And has never neverearned ncvcroarned rev r
earned In any an year since that year an anamount anamount
amount exceeding 7 per cent upon the theactual theactual t ho
actual cash value alue of Its present invest investment Investment tnvesmont t ¬
ment as determined by b the Humphreys Humphreysappraisement HumphreysappraIsement Humphre Is
appraisement or as may mo be determin determined determinedby ad
by a capitalization of the taxes paid by b bIt
it t to the collector of taxes tn es at the rate rateof rateot ra to
of ono dollar per hundred hundreda a rate that Is Islargely Islargely
largely in n excess of the average rate rateassessed rateassesscd ra to
assessed upon private property in the theDistrict theDlstrl t he
District Dlstrl of o Columbia ColumbiaTo ColumbiaTo
To prove our good faith In this defon defense defenseI se
I beg the Committee to consult corpora corporation corporation a ¬
tion counsel counselor or the Department of Jus Justico Justlco Ju a
taco to see It our contention hero Is not notrecognized notrocognlzod n of
recognized there as undeniably true trueTo truoTo
To come back to the argument Now Nowhonor Nowhonor
honor bright Mr Chairman ChalrlnanIt if you OU had hada h ad
a house and lot that cost you ou 2000 forty fortyyears fortyears for ty
years ears ago or say thirty years ago and andits andItSt a ao nd
its value aluo o had naturally increased to three threetimes threotimes thr co
tl times times es its original cost until it wag wa now nowactually nowotuaUy n nactually ow
actually actually worth at least 5000 5000 according accordingto nccardi rag
to the market standards of value aluo un until untilthe untilUte tll
the taxes in fact had been raised upon uponIt uponIt up n
It from 20 to 5Onow 50 now honoslbIn honestly In such sucha au ch
a case casoIt If the government or the people peoplewanted peoplewanted p o plc
wanted that property would you ou feel that thatyou thatOU th thyou at
you OU were exacting an extortionate profit profitif profitIt pro fit
if you ou priced It at its present actual actualvalue actualvaluo act actvalue u al
value
f
Well I have ha 0 shown you ou and I am amgoing amgoing
going to further show you ou that tho Su Supreme Suprome Supromo ¬
promo Court says you ou have a perfect perfectlegal perfectIogal
legal and an and moral right to mako the gov government govornment govornment ¬
ornment or the people pay you a reason reasonable reasonable reasonable ¬
able rent or return upon its It I present value valueirrespective valueIrrospectlvc valueirrespective
irrespective of Its cost costbut but that you youcannot youcannot ou oucannot
cannot make them pay you ou any greater greaterprice sroatOlprJoe greaterprice
price by mortgaging mortgaging It for a part of Its Itsvalue Itsyalue
value for the whole of its value or for formore tormoro formore
more than Its value And that the Court Courtfurther Courtfurther
further soy 80 thero Is nobody nobod In thiscountry this thiscountry thIsoountry
country big enough to take tal < o It away fromyou from fromyou fromou
you ou In whole or In part without due dueprocess dueprocoss duoprocess
process of law and just compensation compensationIf
If f the Court knows Itself And what whatis whfttIs
is true of you ou is true of us The fact factthat facttbat factthat
that we happen to be a public utility utilityproposltlon utilityoposition j jproposition
proposition pr oposition and you OU a personal one ora or ora ora
a political one cuts no figure whatever whateverIn
In the equation equationTo equationTo equationTo
To proceed with Gibbons vs Mahon MahonPago lIahonPage MahonPage
Page 80 668 Tho admitted facts pre present prelent pront ¬
sent Se nt tho following state of things The Theaccumulated Theaeeumulated Theaccumulated
accumulated earning of the company companywero CCmpanrwero companywere
wero kept undivided and actually added addedto I Itcf
to tcf t the capital capital of the corporation by b in investing InvDiting insting ¬
vesting ve sting them from time to time in itspermanent its itspermanent Itapermanent
permanent works and plant I lan1 until the thovalue thealue thevalue
value of the works and plant amounted amountedto
to a million dollars no owner own r of particular par particular parUcuJ ¬
ticular UcuJ shares or of any anllnterDit interest therein thereinhad I
had tho right to compel tho company todivide to todivide I Idlvlcle
divide or apportion those earnings and andwhile andwhile andwhile
while they remained so undivided and in invested Inyetltcd Inverted ¬
vested the capital stock of the com company compAny crompany ¬
pany was increased to the same amount amountby Amountb amountby
by b the act of Congress of May Ma 24 IBS IBSc IBSContinuing 1Ji5c 1Ji5Continuing 1S 1S8c
c c
Continuing tho Court p MS lIS 56 say says as asfollows UfoUoS esfollows
follows followsWhether foUoSWhether followsWhether
Whether tho gains and profits pro liI of ofcorporation a acorporation acorporation
corporation should be so invested In8 ted and ap apportioned apportioned aprtioned ¬
portioned po rtioned RS to tn Sncreasectbe Increase reetbe ahe value of each eachshare eaehlhare
share of stock for the benefit of all per persons porIOns ¬
sons so ns interested in it either for a term of oflife otUfe o t
life or for years or by way wa of remainder remainderin remalnd remalndIn
in fee or should be b distributed and paid paidout paidout pal palout d
out as income to the tenant for life lifefor or orfor orfOr
for years ean excluding e c1udln the remainderman remaindermanfrom remaindermanfrom remaladermafrom n
from any an participation p therein is a lose question quetllUon ¬
lion to be determined by b the action of th thorporation the theorporatlon theeorporatlon °
eorporatlon c orporatlon Itself ltaelfat at such > uch times and in ins Ins1ch n
s ditch ich manner as the fair and honest ad administration admInistration ¬
ministration m of its whole hole property and andbusiness aMbuslMM
business b may mtl require or permit and by byrule a arule Arule
rule applicable to all holders of like likeshares likeehnres Ilk Ilkshares °
shares of its stock 8loekIt c cIt cIt
It is thus apparent that the Supreme SupremeCourt Supc SuprpmCourt e eCourt
Court considers as do all other courts courtsapparently courtsapPfUonU courtsapparently
apparently tho term earnings of a company comPAny com cornpang i
pany to include its gains and prafl praflfrom profits profitsfrom profttsfrom is
from every legitimate source It is to be benoticed benoticed hi hinoticed
noticed also that in this case the Supreme SupremeCourt SupremeCourt SupremCourt
Court used the words plants or works worksas worksas
as equivalent to all of o the property of the thecompany thecompany tb tbcompany
company companyI
I refer you ou to yet another case which whichmany whit whitmany hlch hlchman h
many man of you OU no doubt have reason to re remember rememberCho reemberChesapeake ¬
memberCho m member emberChesapeake Chesapeake plce and Potomac Com Company Compan Cornpony ¬
pony pan vs Manning 1Iannln reported in 186 Unit United UnitedStates UnitedStates od
States Supremo Court Reports page pagein 23S 23Sin So SoIn
in which the Supreme S preme Court took occasion occasionto n
to correct this thl very committee for as assuming a aaumlnb aauming ¬
suming to doubt the obligation obll Uon of Chi Chicago ChiCagO Chlcage
cago Milwaukee and St St Paul in a similar similarmatter slmUirmatter a1m11 a1m11matter
matter and I may ma add that the doctrinlaid doctrine doctrinelaid doctrinelaid e
laid down in Chicago Milwaukee MUwaukeand and St StPaul StPaul S SPaul C
Paul Williams vs Western extern tetn Union and andGibbons andI an anibbons a
I Gibbons Glbbor G ibbons s vs S Mahon which hl h we have j Just Justbeen us U8t U8tbeon t
been considering con ldrlns fe now so universally universallyrecognized unlv6rsaUyrecognlzod unlveraail usy y
recognized r as good equity and sound law lawthat awthat 1a 1athat w
that I shall not consider it necessary necos necessary arJ to tocite tocite t °
cite you any an further furt or references other than thanthose thanthosc tha thathose
those that incidentally touch it t where al allied Allied a alied 1 ¬
lied questions are involved InOlv Out of the theabundance theabundane th °
thIL
abundance of precaution however I will willbefore wt 111 111before IL
before dismissing this point with t the theCommittees theCommittees he
Committees permission submit to it this thisfurther thisfurther thi thifurther Is
further observation In regard to the th ap application a apllcatlon apltcatlon ¬
plication of o the case in review to the case casehere caHhere ca cahere
here undor consideration considerationIf
It this resolution in n effect denies to towhat us uswhat uswhat
what you ou have heretofore granted and anddo anddo a ado
do now freely accord to our competitors competitorsand competitorsand competltoand rs
and fellow public servants apart from fromtho tromthe fro frothe m
the question of fairness fa I rne86 it is obviously obviouslydiscriminatory obviouslydiscriminatory obvious ly
discriminatory legislation logl laUon and as such sucha sac saca N
onN
a direct contravention of the Constitution Constitutionof Con Cotietltutl tltutlon tltutlonot on
of tho United States and ought not to toreceive torecohc
receive Congressional Consro slonal sanction even eventhere if ifthere 1Cthere
there was or Is reason to doubt doubtwHich which I IInsist IIn
Insist In l8t there Is not notthe the legality of a part partof partot pa paof rt
of the companys present capitalization capitalizationBut
But Mr Chairman there is not and andcan andcan a nd
can not be any uJ legal question about the thebona thebona t U Ubona
bona fides of the existing security capi capitalization capitalization car l ¬
talization of o tho Washington Gas LSg Light LightCompany LIghtCom ht
Company Com pan for the proof is overwhelming overwhelmingthat ovorraholml rag ragn
that It is in truth and fact the moat u un undercapitalized undercapitalized n ¬
dercapitalized public utility utlUt in this coun country countr coo n ¬
try tr If i not on the face of the globe In Inthe Inthe
the name Mr Chairman of common commonsense commonsense comm on
sense of or all that is serious of good r rport re report report ° ¬
port and worthy worth of honest respect and andconsideration andconsideration a nd
consideration how can it be contended contendedthat contondedthat contend contendthat
that a company is overcapitalized when whenthe whenthe wh en
the testimony tesUmon in the case not only tends tendsto tenlsto ton us
to prove Ijut tt yt actually does prove prove that It Ithas Ithas
has beyond the possibility 1 of a reasonable reasonabledoubt reasonabledoubt troasona b1e
doubt from three to four dollars of assets assetsin assetsIn ass ass
in physical ph slcnlproport property for every ever dollar of ofsecurities ofsecurIties
securities that are outstanding against againstThis it itThis ItThis
This fact once established makes It Itwholly ItwhoUy
wholly immaterial in so far as tho public publicis pub puba le
is a concerned as I have already shown shownwhether slrownwhether show n
whether or not Its bonds or certificates certificateswore cortlficateswore cortlficat es
wore legally issued If the company cm cmploys employs or
ploys the property in the conduct of tho thobusiness thobusiness ti tibusiness e
business I repeat it that property Is s its itsinvested ItsImested
invested capital and it is entitled to tohave tohao
have a reasonable return upon every everydollar ever1dollar eve r
dollar of o It t and to have every dollar of ofit ofIt ofow
it that has never been capitalized now nowcapitalized nowcapitalized n ow
capitalized in securities for an amount amountequal amountequal amou rat
equal aqua to Its acttfal aet1 l value whatever that thatmay thatma th thmay at
may ma be beMr beIr
Mr Ir Chairman the language employed employedin employ ed
in all these cases Is so simple and direct directso dire ct
so plain and obvious so full un and frank frankthat fro rankthat nk
that It looks like reflecting upon upon your yourIntelligence yo our ourInt011lgenco ur
Intelligence to try to further olucld elucidate elucidatethem elucldfttethom ate
them with all duo respect it does seem seemto s se seto cm cmto c m
to mo that only onl the willfully blind can canfail canfait ccan
fail to see the palpable application of o all allto aUto
to the point at issue issueBefore IssueBerore
Before summarizing our legal postu postulates post postIates post u ¬
isles hoovI howevo ho eto I feel that I oughtmore ought to tomore tomore
more formally marshal the law of ofcase the thecase thecase
case and the evidence in It as to tothe tothe
the value of o our Invested capital capitalFirst capitalFirst capl t tel teleye
First in order of time is the Humphreys Humphreysappraisement Humphreysappraisement Humplu eye
appraisement of 1S9S which established establishedthe establish ad
the fact to the satisfaction of prospective prospectivepurchasers prosJfectivepurohasers prospect re
purchasers that the company then h had hadassets l1adnssots ad
assets of o the value of 9000000 OOO O Next Nextcomes Nextcomes N eat
comes the Humphreys S Glasgow
ap appraisement appraisement ¬
praisement of 130S 30S ten years later rais raising raisIng ¬
ing the total valuation to 13000000 of ofwhich otwhich
which practically 10000000 covered the thephysical thephslcal
physical plant Then we have in the thecase thecase
case the sworn sworn statements of the other otherpublic otherpublic 0th er
public service corporations here in Wash W Wington ash ¬
ington from which it appears to be un In ¬
I
deniably true that we are grossly so to tospeak tospeak tospeak
speak undercapitalized relative to them themno themno themno
no matter from what point of view comparisons com comparisons ¬
parisons may be made whdthor for instance In Instance Instanco ¬
stance as to the volume of business done doneor donoor
or the value of the property employed or oras ornil oras
as to tho assessment values respectively respectivelyas rospccth l las
as shown by b the amount of taxes paid In Ineach IneaCh ineach
each case As I said In my In statement statementwhen statementwhon statementwhen
when last before the committee the com comparison comp comparison ¬
parison p Is all the more advantageous advantageousto
to the gas gas companies because becuu e the thereturns thereturns thereturns
returns of the other public utilities utilitiesaro utilitiesIlrO utilitiesare
are believed to be reasonable when whencompared whencOmPflrod whencompared
compared with those received for like likeservices Ukeorvlcos likervices
services Se rvices under like Ike conditions In n the theprincipal theprincipal theprincipal
principal cities of o the country countr if Indeed Indeedthere Indeedthere
there th ere are any cities In the country ao soefficiently aootIlclonUy aooAlclontly
efficiently and satisfactorily sut fnctorUy served Per Perhaps Perhap Par ParNapa ¬
haps hap I Iought ought also to say before passing passingthis pulngthis passingthis
this branch of the subject Gentlemen Gentlemenof
of the Committee that if I thought that thattho thatI thatthe
I tho publication which I have made of the theprosperity theI theosperity
I prosperity pr osperity of my neighbors would tend tendto tendI tendto
I to produce insensibility Inon lblllty of their merits meritsto merits meritsI
to make the public oblivious to the fact factthat fACtthat tactthat
I that their success is due mainly malnl to care careful caretul careful ¬
ful and able management by b which the thecommunity thoI thecommunity
community has directly and largely prof profited profIted ¬
I ited it ed I Ishould should not have ha e felt myself Justi Justified jusUnoo just justd ¬
fied tie d in using their names names at all in thisconnection this thisconnection
I
connection Tho truth Is I should not nothave nothave
have done so under any circumstances circumstanceshad circumstanceshad
had I not been firmly firml persuaded that thattheir thattheir thattheir
their reports when correctly correctS interpreted interpretedwill Interprotedm Interpretedwill
will m servo to bring homo to your minds mindsan mindsan mindsan
an economic fact that Mr Ir Justice Moody Moodyhas Moodyhas Ioodyhas
has so ably emphasized towit That Thatlarge Thatlarge Thatlarge
large capitalization capltaUzation and generous profits profitsthereon proft profitsthereon
thereon are not necessarily nerlb hostile htle to the thopublic tbopubl1c
public p ublic Interests Interets nor Incompatible Incompthle with withefficient withemcient 1th 1thetIlclent
efficient service serviceThe serviceThe serviceThe
The corroborative corrobratve testimony t6Umo y as to val values valuo valuas ¬
ues uo also shows sows that tho actual aetul value oC oCjthe oGthe oCthe
jthe the property as shown sOn by b the average averagemarket averagemarket
Aege Aegemrket
market mrket value luo of Its It securities souritle is I betweenwelve between betweentwelve btwe
twelve t and thirteen thirten million miin dollars dollarsFinally dolar dolarF
Finally na as to all the
F 1 elements elemet of ofvalue ofvaluo
value I confidently conOenty submit that the thequestion t thequestion
question of o the value YU of the Invested Investedcapital InvNte investedcapital
capital cptal of the Company Compny which whih is tho thopoint thopint thepoint
point pint around arun which this th case cB revolves rel reloroJoo is faforeclosed isforeclosed
foreclosed oroJoo by the te operation opratin of two well wellknown wel wellnown
known k nown rules rule of law applicable applcable to such suchcases suchcease h hca
ca cases The first 1rt law is 1 that tht corporate corporatevalues cprate cpratevlu corporatevalues
values vlu an re property uoprty and taxes thereon thereonare tben tbenare
are taxes t e on property Plety within wthin the t consti constitutional CMU CMUtuUonal cottrtitntlonal ¬
tutional provision IovJ as a to taxation tUon of o prop property pop proprty ¬
erty e rty at value vlue As iJ illustrations JuUon of o this thisproposition thl thlropUon thisroposition
proposition p ropUon I beg b to refer you yo to Adams AdamsExpress Ad
Express Epes E xpress Company Cpny vs V Ohio Ol 1 II 116 United UnitedStates Uuted UutedSW0 UnitedStates
States SW0 pigs p Q MS 1 alt whore whoe it is held hel that it itis I
is a cardinal crinl rule rul that tt whatever whte8 property prot protI
is I worth ort for purposes of income Incme to sell sellit Mi
it t is I a also worth orth for the
of
ab to purposes prO taxa uxalea taxation txa txaton ¬
lea ton f the converse cvon of which whl < h proposition propositionmust prlUof propositionmust
must also all be b true te and In Gulf etc vs vsHughes 8 8Hugh
Hughes Hugh H ughes o 13 1 United Unted States StAt Reports Rept page e eIi
177 Ii 1 77 It t was S held that corporate
I hel tht crprt pM privileges privilegesare Iv vlkgea vlkgeaes
are a re property popt1 and An taxes thereon are u taxes taxeson t tax es
on property pperty within the constitutional enUtuUoal pro provision pr prvision er ¬
vision as a to t taxation taxaton of property propety at at value valueit Iue IueIt
it t was W held also al In Railroad Rairod etc et vs vsBoard vsnr vaBoard
Board nr of Equalizers Equlze Sth Sh Federal Feeral Re Reports Reprt ¬
ports prt page pge JOe J 316 31 also in Spring Sprng Vail VailWater Valley Yal er y
Water Works Yoks vs s San Francisco Frnla 151 1 Fed Federal Fe ¬
eral eal Reports Reprt page c S74 that the valua valuation vau valnation ¬
tion ton of the franchise for fr the purpose PUIM o oAxing of offixing orxlnl t
fixing xlnl rates 1te should not tt be b lest le than tn i ivalnatfota its itsvaluation It tB
valuation alatlon for the purpose prp of taxation taxationIt tatk
It I is 1 true this U method metho although altbog com competent comptet ¬
patent ptet is 1 not nt conclusive cDUlve but on o ongeneral the thegeneral t
general seea doctrine ttrl laid li down cn in People Pepl vs vsComrs vsComrs
Comrs 71 i 7 N I Y S q and in many mny other othercases otr otrethat oche ochecasesthat r rt
cases ethat casesthat that In matters mters of o taxation taxatl i it itis I t
is a sacred MeM duty dtl to impose Imp the burdens burdensequally bu buequally t dens
equally euly duty dutytuU fully recognised reDe by b ib the theFederal te teFe e
Federal Fe 8 1 Constitution ConsttutinIt Constitutionit It must mut be ob obthat obvious obviousthat rhos
that tba this t1 method meto of appraisal apltl te I antic anticto entitled entitledto enttl led
to a high degree degee of respect rept and aD coed confidence ef ¬
dance But there is another 1
anthr legal It meth method methodof od
of computation < ptUon that completely vet verl verifies verifiesthe t
the tl correctness cret of the Humphreys Humprey val valuation 1 1uUon ¬
uation uUon both bt of the te tangible tangbe and a intan intangible ID ¬
globe asset uet of the Company Compya a method methodthat mt math cKi
that has n been ben legally legly defined d no as a follows followsFrom followsFront o
From Fro the te average market maket value vaue of its itssecurities It f fsecurities
securities securities ocwIto which the th t Courts say sy If J taken takenfor tken tkenfor take n
for a period poro long enough en h to cover cYr ordi ordinary oi oinary ord ordnary i ¬
nary fluctuations fiuetuaUos is competent comptet evidence evidenceto evlde evldeto °
to be b accepted acepte a aa the basic bec factor fator in an anequation Anequaton a n
equation equaton to determine what wht is J the actual actualvalue acul aculvalue acts actsvalue sal
value or taxation purposes prp of the Fran Franchise Franchis Frt Frtchlse n ¬
chise chis viz vz From Frm the total toal actual actul value valueof vlue vlueof vela velaof e
of the securities aurt Cnt not face or par Pr value valuetake vat vattake Alue Aluete
take te the total totl value alue of o all the te known knownassets knownaMl know n
assets aMl other o1t than tn franchises CranhlM and ad the theremainder thereminder th thremainder e
remainder reminder is a the value vlue of the franchises franchisesState fNnh fNnhStte
State Stte Railway Rflway Tax Cases Cue 92 9 ± U S 575 575GOJ o oGO i
GOJ 6 GO 007 O1 23 3 663 C 06l tS Oil 6 Spring Spng Valley Valleyvs Valey Valle r
vs 8 Schottor 68 6 Cal Cat 08117 61 Burke v vs vsBadlam 5 5Datlam
Badlam Datlam 57 5 Cal Cal MM i San Jose JOO vs 8 Janu January Jan Janar u ¬
ary ar 57 Cal Cat 614 614Now 614Now 1
Now If I the market mket value alue as here in indicated Indite f n ¬
dicated dite is an acceptable balls bl for com computing compuUng co m mt ¬
puting p pSt franchise franchise value alue it follows that thatIt the t tIt
It must also furnish frnish as a least lest a satis satisfactory sts stsfactor sell s ¬
factory factor check oeck upon an appraisal appall of tot total totalvalue totalaluo nl
value valueIn valueIn aluo aluoIn
In this particular prtculr case the avers average averagevalue aciago aciagoaluo go
value aluo of the stock stok is i Sid 71 1 per share sharewho which whichfor
for 190000 130 shares sharo amounts amount to 1340000 3o 310000 310000not Is Isnot Isnot
not this thi a a practically prctcally cohtpl complete cmplte te confirm confirmlion confirma confirmation confirmaton a ¬
lion ton of the Humphreys s valuation vl tlon S9 9360 9360OCO 93 3t0
OCO OO of our physical assets Mtmt and of the theFranchises theFanchlcs t h ho e
Franchises Fanchlcs also als at 3750000 7 O Let us u seo seoAdd se seAdd se o
Add to b0 9360000 30 360000 our funded debt of
3200000 20 which at average averge market maket value vat u ual e
112 12 equals cQuns 3554000 t60 and we have a total totalof totalor tot totof al
of U29sOwhlch 5129310IX1which 129 1000 which closely corresponds correspondswith correponds correpondswIth corrospon Is
with the Humphreys appraisal appraisl of the theproperty theproport t tproperty ho
property as a going concern at 613000 13000000 13000000Now 13 < O 000
Now the plain and unmistakable unmisakable point pointIn pointIn pot rat
In all this Is that if this Company Companypays ComYpa Com pony
pays pa s to the Collector Colector of Taxes for tho thoDistrict thoDistrIct ti o
District of Columbia an amount am unt In taxes taxeswhich taXSwhich tax as
which capitalized upon the taxation ta ftton rat rates ratesestablished rtes rtesestablshed es
established establshed by b law in n this Jurisdiction Jurisdictionequals juridicton juridictonqunls jurisdtcti on
equals qunls an assessment asse9mcnt valuation of 513 31 1 3
000000 00 then tho Company Com pan is entitled ntted to tobe tobe
be appraised at 13000000 1300 for tho pur purpose purpose pu pupeso r ¬
pose of fixing fix Ins a reasonable rate for i Its Itsservices Is Isserlccs is
services serlccs A little ltle reflection Mr Chair Chairman Chairman Chad r ¬
man will wi be b sufficient sufclcnt to satisfy your yourmind yo our ourmind u uee r
mind and the minds of of tho Comthltt Committee Committeethat Committeethat ee
that It this proposition propositon 1 18 not truelair true In Inlaw Inlaw n
law It should fhould be so because beaus Incontro Incontrovortlbly Incontrovortlbly o
vortlbly it is true in n equity equlr For it must mustbe mustbe mu at
be b evident that the Government that re receives receives ¬
ceives annually from us an amount th thother that thatother Umtother at
other people would have to pay p upon up on
b13 13000000 300 + ought to be boeuiabtr equitably estopped estoppedfrom cstoppcatram stopp ed
from denying d lng that tlm wo 0 have proper property propertyenough pro pert pertenough ty
enough under legally legaly established etablshe taxati taxation taxationrates taxaton taxatonratos on
rates In this District to produce pouce that thatamount thatamount th at
amount The evidence shows that last lastyear lastoar In st
sws
year oar we w paid over to the Collector Colector of ofTaxes o oTaxes
Taxes for the District of Columbia 513 131 1
000 0 In n cash over Ocrand and above boe other forms formsof Cormsot for forof s
of taxation such SUCh as water rents etc otc arid aridtho addtho a std
tho fact Is that tikow111 we wo1 will pay pa this year an anamount anamoJnt
amount amoJnt approximating approxImatng 5150000 150000 150 for taxes taxesupon txcs txcsupon tax el
upon our real and personal persnal property propertyand propertyand proper ty
and I submit apart from tho rule of law lawwJiIch lawwleh 1 1which a w
akc
which I have had the honor to twee Invoke Invokethat Invokethat kc
that that fact alone ought to carry car home hometo hometo ho e
to the minds of the Committee Commitee the con conviction conlcUon c o n ¬
viction that tho Company has Invested Investedcapftal Inv9ted Inv9tedptal invest ed
capftal ttptal ptal of an amount approximately at atleast atleat
least leat equal eual to 13000000 1300 of which tthe the thevaluation thevaluaton t he
valuation valuaton that has been put upon the thephysical thephslcal
physical property of 10000000 1000 In round roundnumbers roundnumbers you nd
numbers must be substantially substantaly correct correctA4 correctA1 corre ct
A4 A1 A least so close cosc to being correct t that thatthe tbattho hat
the authorization authorizaton of securities securites to repre represent represent ep re ¬
sent that value alue 10000000 1000 can not work workinjuriously workInjurously w ork
injuriously Injurously to the public publc which as mn mnters mnt mntter m mtern r
tern ter stand Is chargeable for reaso reasoroble reaoble ble
I
returns upon at least 3000090 00 more than thanthat thanthat thanthat
that sum If I this be true I think I have havedemonstrated havedemonstmte havedemonstrated
I demonstmte demonstrated Mr Chairman Chairma that anisesthe unless unlesstho unleS
the Washington aShlnton Gas Light Company Cmpan con contemplates contemplq0 ¬
templates templq0 the to Issuance with or without withoutCongressional withoutCongesional withoutngressional
Congressional Congesional Co sanction ncUon of securities securitiesjvvhlch sourlte securitiesOvlrlch
jvvhlch together with wih those thse now out outstanding outstanding outnding ¬
sta standing nding wi will exceed ecee 10106009 1010 there can canbo cn cnbe
bo no occasion ocsion for lo apprehension on tho thopart thopart
part of anybody anybd of its exceeding wceolng Its Is it coh constitutional cohstutonal cohatitutional ¬
stitutional stutonal common cmmon law and common commonsense commonscnse commonse
sense sen se rights right in the promises premlsO premisesIt j
It I was wa my Intention Intenton Mr Chairman Chairmanto Chirman Chirmanto
to discuss dllul at some Ime lengths another anotherbranch anothebranch anotherbranch
branch of tho case eala to wit v1t The charge chargethat chrbe chrbetht chargethat
that tht the price of gas gal here as a comparedwith compared comparedwith compre
with prices prCM elsewhere under fairly like likeconditions lke lkeconditons
conditions conditons co nditions Is II excessive excMIe e which chargo I Isubmit Isubmit Isubmit
submit Is shown to be by the testimony testimonywhich tosUmon tosUmonwhich testimonywhich
which has has been ben put into the case by byDr byDr byDr
Dr Humphreys Humphre Humphreyswitch which whlh by bY the way is the theonly te teonly theonly
only testimony tMtmony in it upon upn this thi point pintIs pintIsshown pointJs pointJsshown Is Isshown
shown to be b Just jut as A unfounded unfounde as is thecharge the thecharge thechre
charge chre that its It prices prce are excessive exctv8 as ascompared ascmpare ascompared
compared cmpare with wih going long prices pre for the other othernecessities otherneOUe othercessities
necessities neOUe ne cessities of life lifeHaving lte lteHavlne lifeHaving
Having thus disposed dlsp of the facts faet and andtho andte andh
the te l law lore w in n relation relaton to this t iispoint h iscrnclal crucial crucialpoint cdal cdalpint
point pint I shall sh81 now endeavor endevO to briefly br y re review roview rew ¬
view vie w the propositions proptO of law generally geenily ap tpDllcaWo applicable applcabo ¬
plicable plcabo to it f the to legal lel postulates Itulte which whichI whih whihI
I had the honor honr to t submit for your con consideration considerton coneration ¬
sideration siderton sid eration in the earlier orler part prt of my myargument mya myargument
argument a umet that you might Mght the bettor bto un understand undentand understand ¬
derstand the atopeoP scope spe 0f it It Before pro proceeding proceing proceeding ¬
ceeding ceing to discuss dlu these tH more or less lesstechnical les lestenkl lesstechnical
technical tenkl propositions PJltn it may my however howeverbe hwever hweverb howeverbe
be b profitable pftAbe for us to Oe briefly recapitulate recapitulatethe reptulte reptultetbe
the charges chr5 to which I have hve addressed addressedmysolf
myself mysoC and ftn the disposition dlpUof I have hv en endeavored enavored n ndevore ¬
deavored devore de avored to make of them t The first firstcharge flt fltcharg
charge charg assigned gne as A a a reason rel to Justify Justifythe juUfy juUfythe justifythe
the passage pce of this thl Bill Bi was was u as A has been beenseen beenHe beenaeon
seen He that tt our ou predecessors preee in n office om and andtitle ad adttl andtitle
title ttl were guilty pU of destroying dtrbl the te books booksof booksof
of the to Company Compy something JetK like lik a gen generation gen generation e ¬
oton eration ago al and that tt therefore teror it I was wasimpossible WQ ruespassible
impossible Im passible for to us to t prove prve with wth any anymaterial AnTmteil
material mteil m aterial proof pf that tt our o investment Inveet was wasever wasever
ever ee actually Atuly paid pd into the Company Copny by byits byIt bytie
its It stockholders R This Ti charge cb5e does d not nottouch notto notteach
touch to the case e at a all al and an I submit nbl thatthere that tt ttthe j jthere
there the is not nt left lf a shred sbe of it I t that tht can canproperly cn cnpopr canProperly
popr properly be b taken into Int account acut when hen hencom you youcome yroacones
come com to make mke up your judgment jugt upon uponthe upn upnth
the th merits mnt of the t Bill BUlT i iThe
The T second J charge ce was w that t the t profits profitsof prot profitso
of o the te Company Coy are ae and a have hv been bn out outproportion of ofproportion
proportion pprti to t the t actual atu value vlu of th thproperty the theproperty thepprty e
property pprty and an are ae therefore teeto teetocve grossly ex excessive oxand ¬
cve cessive I think tbk I have by shown ow you you youf youthere and andit
it t there t be any aA doubt dubt in I the le minds mln of any anyof an anof y yot
of you as to to the te correctness C t of my myopinion m mopinn mypinion
opinion opinn o in J that tt regard re I am a ready rey here hereand bee beead hereand
and ad now no to t show how you yu that tt the te profits profitsof pot profitsof is
of the t Company Cop ay nave b e never nre at any uy time timeexceeded Ue Ueexcee tin e
exceeded excee I 1S 1 per cent cet upon the value valueof
J t t vue vueof
of Its ll property Jrt It I Is J true t they t have havefrequently hve hvefreuentT bar barrequently e
freuentT f frequently exceeded I per cent and In Infact InCut i n
oe p cet aD
fact two or three tl times Um that tt amount amountupon amnt amntupon amens amensCompanys t
upon the te face c value vu of o the t Companyapital Companys Companyscapital Cpnys Cpnyscpital
capital cpital c stock atk but but I have b vo talked tlk to t little littlepurpose ltl littlepurpose
purpose purp if my argument aqmet has ba not Dt made madeit md mdIt man manclay e
it clear clr to t an a whom wh it may m concern cr that thatthe tt ttte
the te face value vlu of the te stock st has h hasearthly no noearthly
earthly tly relation rlt to the reasonabiea reasonabieaof reasonableness reasonablenessof tea
of its It charges the sole criterion or ormeasure
ch te J ctron
measure mure measure of value vale known lw to the t law lawbeing 1
being hn the te actual tal value vau of of the th property propertyemployed prty prtyepOe y
employed epOe Irrespective trwptv of o whether wbetr the theCompany te teC d ii iiCompany e
Company C has h security rtty capitalisation cpltaUztoa or ornot orDOt o r
not notAs DOt
As to the t third ti charge e that tht oar or rates ratesaro rat rata ratare es
are a exorbitantly tbtntb high I whether whher measured measuredby measnr ed
I by actual aetut cost Ct or o by inherent value vu or by byprices b bI r
prices pN obtaining Mlnl elsewhere ebee I flatter fttr my myself myHt ¬
I self Ht that th the te evidence eva m m the th case CI which whichCommittee
I hve hate h had be hr honor to aolc analyze t to tbe tbeCommite tb t
Committee Commite lb effectually eetuJy disposes dispes of this thisproposition tis tispoPtl tbl tblroposition s
proposition poPtl p also alsoTho al
Tho fourth count that the Washington WashingtonGas Wa n
tt to lgon lgonGu
Gas Light Lt Company Copny Is 1 already ary over overcapitalised overepUaUze overcapitaUsed ¬
epUaUze capitalised certainly certlnl will wl receive reeve fur further furtier ur urtr ¬
tier tr answer alwe if f the te Committee Cmitt should shouldthink shoo W
think tink it I t necessary neery when whe I come c to t sum sumup sumup sn snrap m
up the law la of th t the case ce and ad the same sameobservation gam gamobservation me meoMnation e
observation oMnation may my be b properly ppl made m if ifthe I I f
the Committee Comte will vlt permit pmt me m of o the thefifth tho1Uth th o
fifth charge chage also aJ to wit wt that tht it I is is1leved be believed b ¬
lieved lee to be b immoral Imorl and an Inequitable Inequitablefrom nequii aloe
from frm a a public pbic point pnt of view Icw for public publicservice publ le
service Mrvle corporations corprUo to invest Ivt or rein reinvest remet ye ¬
vest et profits pft into betterments bUermentJI or o to predi predicate pel peleate 1 ¬
cafe rates rate upon upn their tl value vlu when wln thus thusin ttUC ttUCIn th thin ua
in effect
eftct capitalized capitalizedAs cpltlbe
As to the sixth axth and aD to the hut lt charge chargebecause e
because be It is I more mre or less 1 seriously seriouslyclaimed sruy sruyclaime serlousl serlouslclaimed y
claimed claime by the proponents ppnnt of this thi prop propositlon propOItontt pro prooaltionthat p pno
ositlon OItontt oaltionthat that even physical pysicl assets 8G cannot cannotI cnot cnotb can ix no t
I be b b capitalized cplaJe either othe directly dtet or fwd indirectly Indfrot i ¬
rectly rot by b a public pbli service sce corporation corporationwithout corton cortonlhut corpac ati atiwithout on
without lhut an invasion Jnn1 of public pub1 rights rightsThe rbhtThe rightThe s
The gravamen gnmn of this tbl charge chrge is I that thatcapitalization tht thtcapltJztion the t
capitalization capltJztion whether wbethel true or 01 false talo so sonecessarily
necessarily neerUy involves the public pbic equities equitiesas equitl Is
as to rates rate that its It enlargement enlar emet is isagainst Isasln
against asln public pubic policy plcy and should soul shouldlegally be belegally
legally legJy prohibited ohlbUed Therefore that in inI Inthis n
I this particular prtcul case cse the Company Capan should suld suldb shoe shoebe ld
1 be b enjoined enjone therefrom theefrom Irrespective IrrepUve of its itsright Is Isright 1 is
right to tho equal eual protection proteton of the laws lawsIf Is Isl law lawIf s
If l as a to this thl last art charge char1e tho declslo decisions decisionsof deiions deiionsot ns
of the Supreme SUlreme Court Curt which whi I have h e dis discussed dlscu dl s ¬
cussed cu so s much at length lenlt in reviewing reviewingthe rc1ewlngthe retierri rag
the leading ledng cases ese on the to subject subjet the theChicago theChfg t he
Chicago Chfg d Milwaukee Railroad RaUrod Company Companyetc tompan tompanetc ompan
etc vs Manning Iannlg etc et is not nt sufficient sufficientI 8u suAfct cet cetI ou t
I think I shall ShAl bo able to dispose disPM of ofto it itIn it itin
in a 0 very few minutes mnutes by further cita citations cia ciatons cit a ¬
done tons to tho same sIe effect etect in all al the other otherleading otherledlng nth or
leading ledlng cases cse involving Involvlng nvolvfng the same 8t qu ques questions qUe es ¬
flows which hatef have como before be re tho Court Courtfor Courttor Co art
have
for a third of a century centuryGentlemen centur centurGentemen
Gentlemen Gentemen of the Committee Commitee the legal legalpropositions leg al
propositions propsitons which with wih all due respect respectit repet repetIt rasp act
it is submitted submltod define defno our rights rght and a d the therights therights ti e
rights of the public and limit your yourpowers yo our ourpowers ur
powers In the premises premies may ba briefly brieflysummarized brie ray y ysummrIzed
summarized summrIzed as follows talows
1 An A established rate can cn not be con considered consldored co n ¬
sidered excessive e cessh unless unle it can cn be rho shown shownthat shownthat wn
that n lower rate rr will wl yield leJd a reasonable reasonablereturn reaS reasot abte abterotum a b le
return upon upn the actual acuAl value of tho thoproperty thoproperty t ho
property used for the convenience cnvonfenco of the thepublic thepUblic t he
public publicIn pUblic
In addition to the authorities authorite already alreadycited alredy alredycited alrea dy
cited I beg to refer the Committee CommItee to totho totho
tho celebrated dictum of the learned learnedJustice learn ad adJustice
a
Justice Justce Brewer in Ames Ame vs Railway Raiway RaiwayFederal 64 64Federal
Federal Reports page pse 176 176Tho li
Tho foundation of reasonableness reasnftblness Is Isjustice Isjustice
justice justiceIn justiceIn
In Smyth vs s Ames 130 10 U S m tho thoSupreme thoSupremo f ho
Supreme Court says ss pago W6 W6The iS iSTho
The corporation corporaton may ma not be required reuire to touse toSO
use SO Its property propert for the benefit beneft of tho thopublic thopublo
public publo without wihout receiving just compensa compensation cmpens compen aa ¬
ton lion for the services serIC0 rendered renderedAnd redered rederedAnd
And again on page Ige S47 S47What i41What
What the company compny is entitled entted to ask askis askIs
is s a fair return retur upon the value of t that thatwhich thatwhich hat
which It employs for the public publc c con convenience convenlonce o n ¬
venience venienceAnd venlonce
And again agnn In San Diego etc x vs s Na National Natonal a ¬
tional tonal City Ct 174 1 U S page pgo 739 7 Mr 11 Jus Justice Justce J us ¬
flee tce Harlan Hlrlm delivering delvering the unanimous unanimousopinion unanimousopinion unanlm ous
opinion of o the Court says saysWhat Sjs SjsWhftt
What the company compmy is entitled entted tomend to de demand demanlT ¬
mend in n ordef ordei orde that it may ma have j just justcompensation List Listcompensation st stcompensaton
compensation compensaton is 8 a fair fall return upon a areasonable aeasona
reasonable easona le value aluo of the property AT ATTHE ATTHE
THE TIME IT IS BEING BEI G USED FOR FORTHE FORTHE Fl R
THE PUBLIC PUBLICAnd PUBLICAneln
An And Aneln in the case cao of Stanislnws Stlnlslas vs vs San SanJOSKISW SanJ
JOSKISW J Jara 192 U S 5 page 201 21 Mr Justice Justiceopinion JusUceI Just Ice
I Jckham delvering delivering the unanimous opln oplnopinion o pltt
opinion of the te Court Cout saysc says ays aysI ayst
I
t
I
In San Sn Diego vs 5 National Natonal City Ciy It was washeld wuhed
held hed following follwlns Sntyth vs 1 Ames A that Huttwhat thatwhat tht thtwbat
what the company oompny was entitled eUUe to t de demand de demaU do domend ¬
mend maU in order that thAtJt it might m t have hv 1t 1tcomIllaUon foot t tcompensation
compensation comIllaUon co wa WAi was a n fair return retun upon up a areasonable a arMsnablo areasonable
reasonable rMsnablo value oua of the property pco1rt at a the thetime thetme
time tme it I tt is S being beng used O for the Ue public publicAgain pbl publicAgain
Again in n Southern Suthern Pacific Padf vs Railway RailwayCommissioners Raiwy RaiwyCmlsslonor Railwaymmissioners
3CM2 3CM2It Cmlsslonor Co Commissioners M 7 78 Federal Poeal Reports Reprt pages pages3CM2 pGe
It I is now well wel settled Htte that tht legislation legislationprescribing 1 legislationpreecrlbingtrafAc tIUon tIUonprerlblns
prerlblns preecrlbingtrafAc prescribing traffic trafc rates rat gas g charges chr e and andwater I andwater
water waer rates rat9 must mut be b reasonable reaf as re regards regrds regards ¬
gards grds both bot the Ue company compny and the t pb publicand public publicand
and whether the te legislation 1essao is reason reasonable r rable ¬
able or not nt is 1 eminently eminenty a question qUO fordicial for forjudicial to
judicial judial ju dicial investigation investigationAgain InetgUon InetgUonArln investigationAgain
Again Arln in n Louisville Lule etc et vs V Brown
133 13 Federal Feerl Reports Reprt it I was heldThat held heldThat h
That Tat a a railroad rirod company cmpny is s entitled entitlodto entitledto Ute
to earn ern at least the legal rate rte of interest interestupon interestupon
upon upn the actual atul value lue of o its IU property propertyAnd popty poptynd propertyAnd
And nd finally 1nUy as to this point pointIf pint pintI pointIf
If I it I be not nt true tre that tt actual actul value valuethe vlue vluethe valuethe
the value of the property prpty and a not nt nom nominal D nomftrat ¬
inal lnl value vlue the m face te value vlu of the t stock stockis Ik IkIII stockfR
is the this thing thinsthe the true te measure met8 of o rea reasonablenesswhy rea reasonableness re resnloehy ¬
sonableness snloehy sonablenesswhy why did di the t legislature legtare of ofMaryland otary1nd
Maryland ary1nd a few weeks wee ago a pass p an a act actproviding ac actproviding
providing prvding for such valuations vutlM in I every everysuch eve
such su case c And An coming cming nearer ne home homewhy he hewT homewhy
why wT did di the House HOU of Representative Rep ntIf on onFriday 0 0Friy ouFriday
Friday Friy last Jt by a two thirds thin vote v pass passan passan
an amendment Ammt requiring reuirng the t Interstate InterstateCommerce rJtetate rJtetateComme IbterstateCommerce
Commerce Comme Commission Comln to t make mke exhaus exhaustive e etIn + ctaaaa ctaaaative ¬
tive appraisements apaSntJI of the te property pt of ofevery oraer ofevery
every aer railroad riro doing dl interstate Intest business businessIf bn
If I the th pW Pr value vlu of the stock stk Is not n the thetrue te tetn theue
true tn tr ue measure mr In overcapitalized ovecpl overcapli ltsed b eases ceseahow C easeshow
how can e it honestly U be said I to t h D be BO 1 In Inundercapitalized InuneepU1z Inndercapitalized
undercapitalized uneepU1z u cases c Is not It sauce saucefor
for the th goose gO still stn sauce aae for fo the te gander ganderIf pno
If I you yo cannot Cnn go behind H the te returns r so soto J Jt soto
to t speak ipkto speakto to show Iw real 11 value vue in li one onecase euscasehow
case ew casehow how can cn you yo do d so f to shores want wantof wantof l
of value in the otherIn other otherIn
vu t ot
In Regan Ren vs V Farmers P Loan r Tractompany Trust TrustCompany Trl
Company Compy C ompany 154 1 U L S s it wa w was held hl that thatThe tt ttrl thatThe
The rate rl to t be b obnoxious obx to the te Con Constitution C Gasstitatioa ¬
stitution aUtltt must mu permit prt a reasonable reasonableprofit reba rebapot
profit on O the companys property
pot t cpnys py pyAl
2 All Al pb public service lme corporations cprU have havea Da havea v va
a right rbt to to make nke and a distribute cbe earnings earningsupon earningsupon na
upon un the to actual atul valve valu of the t property propertyemployed ppty pptyempye
in the conduct of their bind business
employed empye e tb ct ter b ¬
ness DM n oes irrespective Irnte of its It ownership Opa Ownershipend Ownershipendof and andof
of course cun irrespective iNte of the th face value valueor ve veor
or par p value vlu of the t securities t outstand outstanding outt ¬
lag I against al8ut iuor It of their t ownership ownershipIt owobp
It I is S a a wellknown weUJwn fact t that tt a great greatnumber lt ltDubr grea greaumber t
number Dubr n approximating apxm at least It one onehundred e
hundred hure gas 5 companies ep throughout tt the thecountry t theby
country coutry are all operated ote under Udr lease I leaseeither by byeither
either eihr the t United CnUe Gas Improvement Imyet Com Company C ¬
pony pny of Pennsylvania Peyu or o by some 4 of o the theseveral t
business bn several aet se veral other ohr companies cpl doing dr a abn stAti stAtibnness similar similarbusiness
1 I The Te Companys CopTS franchises rc are a prop property 1 > ¬
erty ety and AD as such auh are ae assets a upon u which whichit w wt blCk I
it I t is entitled entN to t predicate pt earnings earningsThe er
The T third thl proposition ppt is J sustained tn by b byIwtg a alone
lone lcf Iwtg Hoe of unanimous ual decisions dl a arm nnmbai numb
hoc b of which whlk have hve already Ady been b cited ce endlag end endIng e
lag InS In the test Jt case c in I the t Supreme Se Coi Coidelivered Coat Court
delivered divee by b the t late le Justice uc Pecknam Pecknamspeaking
speaking t for to unanimous u Court Cou In I n t the theNew
New N ew York Yo Consolidated Colhe Gas Case Canewhich C m mwhich I IT
which whh h h he says sy without witt qualification qu1Atl I It Itcannot t
cannot cnnt be b disputed dt that tt franchises frcb of ofthis
this t nature utute are ae property py and ad can cn canhe not notbe
be b taken tke or o used u by others o without wthut com compensation C CpUon COOlpenakifoa ¬
pensation pensationIn pUon pUonIn
In support of this declaration dl he b cites citesthe oil es
sp o t et ette
the te leading case c of o the U Kooongahela XCel kaaottetibelaiSttited vs vsUnited
United Ulte States St8 148 14 U S S Reports Re page pageU2 p peg I Iitit
U2 1 People Pe vs W OBrien OBe in New Ne York Yorkand Yo Yorkand
and aD ether et cases c In the te Monongahela Monongahelacaso bottaagahe opl la
case ca retted rele upon up by Justice Juie Pecknam PecknamJudge Pack ham
Judge Juge Brewer Brwer delivering dlve the thepinion unanimous unanimousopinion > t > sAi
opinion opl o of the Court Ct held hl that t even eve m ma I n
a case C in which beb Congress Con en had b aciuall aciuallforbade actually actuallyforbade actul actulfor r
forbade for the te valuation valutin of a franchise franchiseSTILL frchl franc francSTILL plea
STILL SILL THAT WAS W A AN A ESSENTIAL ESSENTIALPART EL ESSEiT TIAL TIALPART IAL
PART OF THE TH PROPERTY PROPET of the th com company c
pany pny of which blch It could culd not D be b constitu constitutionally cnsUtu cnsUtuU1y u ¬
U1y tionally deprived dprlv0 either eltb r by b act at of Con Congress Co Coe C ¬
gross e or otherwise otere The Te other ot case C re relied reU ¬
U lied upon upn the t very e celebrated cte case C of ofPeople oCPl
People Pl vs Y OBrien OBI by a unanimous unanimousCourt Ulls UllsCurt ones tnoua
Court Curt has h long l stood so preeminent peet on onaccount
account acnt of the tI signal n ability abit of Chi ChiJustice Chief ChiefJustke
Juke Justice Roger Rasr who delivered dvee the 1 opinion opinionand
and the eminence emie of counsel ca who wh a ap appeared appre A ¬
peered pre in it t conspicuous Cp among ag amongbeing whom whombeing
being blDg Jr r E1 Ellis Root Ro the te Junior jn Senator Senatorfrom Senat a
from tro New York The T opinion ol to exhaus exhaustive e eeJss na ¬
dye tie of the te law on o the Uo subject sbJt V1 tip p to todate the thedate
date of its It rendition r tl Among Am toe th signifi significant sl slcant sigaf A ¬
cant declarations declmtl in it are the te follow following folw folwInt fol lora ¬
ins Int
It I has hs been b earnestly wqeh oac gaily contended ct for forthe forthe 1 or
the State Ste that s suen su a a 8 franchise fraDI is a amere amere
mere license lln and an privilege pvlle and enjoyable enjoyableduring etajo ab le
during the t life lfo of the grantee srnte only olT onlyrevokable and andrevokabte
revokabte reokabl at the will wU of o the th State We Webelieve Webieve
believe bieve this tbl proposition propt to be D not nt only onlyrepugnant onlTrepugant on ly
repugnant repugant to justice juk8 and reason re but butcontrary butontrar h rat
contrary ontrar to the uniform untorm course crse ef author authority authr authrIt t ¬
ity It ty in this thi country countryThe cunty cuntyThe
The whole whe decision deiso in this tIs case Q rests restsbroadly yes is
broadly brodl on the proposition popUon that Ut fran franchises tral fr aft ¬
chisel chls are property ppry and can cn not n be b re repealed ¬
pealed pJ by the t State Stte without wtout Just jt com compensation comJtln cor m ¬
pensation Jtln and an that any other ohe doctrine doctrinewould doe trlrae
would woul be b destructive detutve of an a incalculable incalculableamount incalcula incalculaamount ble
amount amunt of ot property proprty and a of corporate cpt life lifeand nCean II fe
and an business buslnos generally genrly in this tbl country entrj
4 That Tht public publc utilities utlte do d not have he to tobe tobe
be Incorporated Inorprte Their Thr rights rlgb relative reltve relativethose to tothose totho
those tho of the public pbic as to rates rte belng belngmutual lieu ag
mutual mutul one OD and inseparable Insprbl and a wholly whollyIndependent who bUT bUTIndepnent Ily
Independent Indepnent of paper pap capitalization capitalizationThe captaUzt
The charter chartO of thl thi life Company Comp is i s S sat fli fliclont
clont proof prof of the fact that Incorporation Incorporationis Ino incorporati aton atonIs on
is unnecessary unneCOr Every amendment amenmnt th that thatCongress thatConges at
Congress Conges has made mad thereto during the thelost theInt
lost Int SO i years years e r has hs specifically splfoal provided prove that thatit thatIt t hat
it shall apply equally euaU to every eOf person personcopartnership pr pe pecopartnership rson
copartnership copartneship association asslaton or or r corpora corporation crpr corpo ra ¬
lion ton In the District Dstrict of Columbia Columba inaki making makingand mkin mkinand n 8
and selling selng gas ga Obviously the te rate ratewould raewQula C
would be b the same sro if the business bsne were werecarried werecarried w ere
carried on by b a natural naturl person prn Instead Insteadof Ilt taste ad d dot
of an artificial arUncl1 person pr8n person a l corporation crrattn corporationthis in inthis Intis
this tis case or o by b a AOptelp copartnership or o as association a aslalon ¬
sociation slalon of natural naural persons pr without 1tout any anypaper anypper a r
paper pper capitalization cpltHztion whatever
5 5 That Tht public pubic utilities uUte if capitalised ptalbed at atall
all al of should without wihout exception eupton be b ideally ideallycapitalized kely kelycpitalze Idea Ideacapitalized lir
capitalized cpitalze that tht is to say sy that t1t th there thereshould ere
should bo 0 a a true coincidence colncloe and ao corre correspondence correspondence con e espondenco ¬
spondence between btween the actual ttl cepltalt capitaliza capitalization cptalz za ¬
lion ton Inhcrent Inhcrenln inherento ln the value vlue of lift t invest investment Inet Inetment Inv Invmoat set ¬
ment and the par pr or o face tao value vlu of the thesecurities theaurltle
securities aurltle issued laue against againt it It to the 1 end endthat
that tht every ever dollar dlar in securities s rllM may m 1rep rep represent repr0et n ep ¬
resent r0et neither more moe nor nr less 1 than thanhundred one onehundred onehunre
hundred hunre cents cent worth worh of property propertyIn Popty PoptyIn propertyIn
In reference to t this l point pint it is hardly hardlytoo hrd har d1Y
too much to say that tht the tetrue true theory thlr of ofcapitalization o ocapltalzUon
capitalization capltalzUon so s called cale is as little ltte un understood undersO ¬
derstood dersO by b the public puNi generally generl as that thatof thatot t tof h at
of the fifth dimension Even among amog men menof
of affairs the popular ppular delusion deusln Js is wide widespread wIdesprCd wit de ¬
spread sprCd that tht a a share of stock sok is property propertyand propr proprand proper ty
and the holder hode of it I entitled entte to yea reason reasonable n nable ¬
able returns upon upn its It face value and not notmerely notmeel
merely meel upon the proportionate poprionte part prt partthe of oftho
tho actual acual property proprt it represents repeents From Fromwhence Fromhene Fr m
whence hene comes com s the fallacious CaUactu idea Ide that thatto ti
to raise the dollar legend upon it in increases Increse ¬
up
creases crese the equity oqult of the holderdiminishes holder hler and anddiminishes
diminishes dlmlnlshe that of tho public pblc in Chepremises
premises premisesIn
In general it may mny mf be b said skI that the te face facevalue f fvalue ace
value of a a sharo of stock stok has tho s same samerelation
relation relton to its Victual ctul value as the te con c n ¬
sideration sldeallon sldetafon named nme in a deed dee for an un undivided unlvl anided ¬
divided div lvl ided interest mte has b to t the l reel rl value vue of ofthe ottle ofthe
the tle property Jprty conveyed Y 1 In I it It 1 Bach aci car carries er sari sarivisa ¬
visa r a certain cei perfeatagd pea eatage g of o the u whole wholethingsbe Wte Wtetn wholengbe
tn thingsbe thi ngbe be that tt much a or nuie Jta littleand and that thatis Ut Utal thats
is > s all al there la te to t k kBetterments it itI I
I I Beet Betterments derived deve from fo legally lea es established e estabMshed ¬
tl tablished rates rat batons bg to t the U8 company CJuy CJuymk coptpaaystaking companymaking
mk making them the and an their U veins vme may my and andshould ad adahl andould
should ahl sh ould be b included Inl in I n the lb appraisal apatl ofthe o othe ot ottl
the tl property pty used u to I even eeo case c
7 It I te not n against a public pbi policy p as aadenned 1 1de 1defined
denned de by the t courts cut for public Pb service servicecorporations MIC6 MIC6cpt servicecorporations
corporations cpt to permanently prmnty invest Sav un undivided undlv usided ¬
divided dlv div ided profits pt earn earner r under ue statutory statutoryregulations statutoryregulations uo uor
regulations r 1 and aa rates r in extensions et bet betterments b8tteU bet betterments ¬
terments teU or o surplus r of any aly kind klD or for forany torll forsay
any ll purpose Pr As to this tl proposition poJ andthe and andthe andO
the O Jee preceding one OM in addition a4t to the te ceasecited cases casescited c
cited cit I respectfully retul7 again as refer re you YO to tothi tot totiff
t tiff thi Resolution Relutl Itself 11l It Is J s an absolute absoluteand abut8 abut8aqule absoluteand
and unqualified aqule subscription u p to t the te theorythat theory theorythat thry thrytt
that tt betterments bttD betterment are e subjects aubJ of O capi ptpltaltsatba capitalisation cp 1 1tUatln ¬
talisation tUatln in I that tt it provide pCII for their theircapitalization th8trc1plta1lzatlon theircapitalisation
capitalization by this Company in the thefuture thefuture thefuture
future If those that are to be installed installedduring InataDedduring installedduring
during the coming year may properly proper be becapitalized beeapitaUzed bepitalized
capitalized ca pitalized why not those AC last yearand year yearand yearaDd
and so from year to year y back to the thebeginning thet theginning
be beginning beginninggress ginning ginningS
S It t I is not within th the poster t Con Con Congress
gress 51 to paas dlscrimiaatory d feaws s thats that thatto
to s to say Y laws that to effect deny to one oneperson onepenon oneperson
person the protection granted to others othersall oUMn oUMnall otheralt
all persons pe whether natural or artificial artificialbeing atWldalbeIDS artificialbeing
being equally guaranteed by the Con Constitution ConItltutloft Constitutfon ¬
stitution in the full use and enjoyment enjoymentof
of their property and property rights rightsThe riPtaTbe rightsThe
The sixth seventh and eighth el proposi propositions PIOIJOSIUou propositloos ¬
tions as a above stated are amply covered coveredby conrMby eocerMy
by b y the cases I have already died notably notablythe IIOtabtythe I Ithe
the Chicago Milwaukee Jk St Sl Paul ease easethe cuetbe suethe
the case of Gibbons va Maeoo the ease easeof easeor easeof
of Williams ro Western Union ana and the thecase thacue thecase
case of o People vs OBrien OBrienFinally OBrIenJllna1b OBrienFinally
Finally as to the constitutional COft8 tuUomtI point pointinvolved pointtnvoled pointinvolved
involved I bag to call the attention attentionof
or of the Commute to the fact that thatthis thattJ1a thatthis
this resolution to not a general stat statutory statutory statory ¬
ut utory ory regulation r latlon governing gov the in internal IntetuJ In Internal ¬
ternal administration of the Company aa aato as e eto i
to eapttaltsHUton but a legal restriction restrictionand re restrbtknand rrteUonand
and limitation upon the use of Us prop property property proprty ¬
erty e rty that net only clouds i U 11 tills thereto theretoin ther4to ther4toeffect t tIn
in effect but by limiting the Company Companyspower Y a apower spower
power to meet t its obligations alters impairs im impairs impainJ ¬
pairs and pro tanto invalidates Its I ex extoting exi oxting
i toting Ia ting contracts In this connection I beg begto bego
I to t o note ftOte what I omitted OII tted to not notwhen notwben
when discussing ing Chicago Milwaukee Milwaukeeand XlIukeDel hfll > ankeE
and St St Paul vs Minnesota that thatMr thatXr thatMr
Mr Justice Bradley dissented in n that thatcase thateue thatcase
case the decision In which neverthe nevertheless nevertburYIY never the theleas ¬
less survives urYIY and will ever stand stand let us ushope ushope ushope
hope as Mr BhUchfords Blatcbtordsmonument monument Itb It Itto ItJII
to also true that Mr Lamar sympathized sympathizedwith aympathbedwith sympathizedwith
with Mr Bradley both beta being sensitive seMttivuabout HRIIIttT4iabout
about States Stat Rights R1 1ta and strict construe construction COMUUctJoa ¬
lion dogmas In fact Justice Bradley Bradleysays aclle aclleBaTS Bradleysera
says C page e 4tQ 416 toferentially mtermt1all that ha hawould h hwould
would have stood with th the Court had it iieen itbeen t tbeen
been b een a Federal case cue arising under the theSth the5th the5th
5th Amendment 1 t and not a State ease easearising easea easearWns
arising a under the 14th Amendment For Forsays Forhe Forsays
says he The 6th to probibt p ° t eo U tothe to tothe tothe
the Federal Government only and notupon not notupon notupon
upon State Governments In tills mat matter matterju8t ¬
ter terju8t t Just cMD compensation on for property PIOP t7 ta taken taken takeg ¬
ken for public use utbe the States make maketheir maketheir makeheir
their t own regulations ncuJaU by State ooosUtdons constitu constitutions COMtltOM ¬
dons or otherwise They are only oal re required required regnirod ¬
quired by the th Federal Constitution to toprovide toproYI
provide due process of law Due process pro process proee88 ¬
cess of law I may remark to the key keynote keyncKo keymote ¬
note of oar liberties to which all must musttune musttunfl musttape
tune their hearts bear heartswith with which the Fed Federal led4r1 ¬
end Constitution Cou tut1oa permits no State to get getInto t tInto r
Into discord bat but in matters within its Usown itsowa
own territory y every State has the right rightand rtghtDel
and this decision says 57 so to regulate r te by bygenesal byleDel
genesal laws the internal management managementof ent entot
of its own public service companies companieswhose companieswboee
whose charters are accepted subject to tosuch tosueh tosuch
such expressly reserved rights as are arethen arelhfon
then to force or may ma thereafter be beamended beamended beamended
amended or Imposed 1m ed by future utur general generallaws generallaws
laws 1 future constitutions or general generallegislation eral eralUon
legislation legislationBat Uon UonBut
Bat no State can undertake mdMt to do that thatsort thath thatsort
sort sort h of thing by private or special stat statutes statutes atateta ¬
eta utes nor can Congress do so by a pri private private ¬
vate act especially enacted to affect pri private prlate ¬
ate charters hrt without due regard and re respect reaped ¬
aped to the right ht of review reserved r in inand InADd
and by the 14th Amendment which is In Inas Infull
as full force vigor and effect e ect today as asit asIt
it t WM to 18S7 189 when this famous decision decisionwas dedsionwu
was rendered renderedIn renderedIn
In concluding conchJd I beg be to again direct directyour directOUr directyour
your attention to the able opinion of Mr MrJustice MrJuetlce
Justice Moody hereinbefore briefly re referred reterred ¬
furred to to speaking speak for a unanimous unanimouscourt uaantmouscourt
court In the KnoxVilld Kno vtllo water case ca de delivered delivered ¬
livered during chart the October term of last lastyear lastyear
year yearThe
The courts in clear cases ea ought not notto notto
to hesitate to arrest t the operation of ofconAecatory ofconftecatOt a
conAecatory law but they ought to re refrain re refrain ¬ a a arain
frain from 1ntJrfert interfering in cases of any anyother anyother
other kind Regulation R tiOil of public service servicecorporations 3ervlcecorporatloM
corporations which perform their duties dutiesunder dutiesundel
under conditions of necessary monopoly monopolywill monopolyfill
fill will occur with greater and greater fre frequency trtquency ¬
quency gt > ettcy as time goes on It Is a delicate delicateand delicateand
and dangerous dn eroas function and ought to be beexercised beexerclHd
exercised with a keen sense of justice justiceon jU8tl jU8tlon notice noticeon <
on the t part of the regulating body bod met metfrank nv mltby t tby
by a frank disclosure on the part of t thft thftcompany Utcom A
company com y to be regulated The courts courtsought courtJOUlht
ought not to bear the whole bole burden of oftving 0 r rviAl
saving viAl property from eonftscatioa though thoughthey tboug1they ttaougtthey
they will not be found wanting where wherathe wherGthe
the proof to clear The legislatures 1es latures and andsubordinate andlubordlnate
subordinate bodies to whom the legisla legislative 1eg1s1ath8 ¬
five power has been delegated ought to todo todo
do their part Our social system rests restslargely restsJl
largely Jl cly upon the sanctity of private privateproperty privatepropert
property and that State or community communitywhich communitywhich
which seeks to invade it will soon dis discover dlscoer ¬
cover the error in n the disaster dl8aat < which fol follows t0110s ¬ r
lows The sHght gain to the consumer consumerwhich CODlUm r rhkh
which hkh he would ould obtain from a redaction
in tho rates charged by public service servicecorporations vlco vlcocorporations
corporations is as nothing compared with withhis w1 th thl
his share in the ruin which would b bbrought b6 b6bro
brought bro bt about by denying to private privateproperty prtvateproperty privateproperty
property its Just reward thus unsettling unsettlingvalues uaettllngvalues
values and destroying confidence On Onthe Onthe
the other hand the companies to bo boregulated b breculatoo
regulated will w l and It to their lasting In Interest Intereet interest ¬
terest to furnish fur freely the information informationupon mtormaUoTlupon
upon which a just rat regulation can be bebased beb
based basedIt b < uled uledIt t
It is unnecessary u ece888ry and perhaps would wouldbe wouldbe
be out of place for me me to add a word to tothis totb
this tb magnificently ma BlftcenUy reasoned out admoni admonition Hmontlon ¬
lion to the legislative mind and to all allwhom allwhom allwhom
whom it may concern concernIt con em emIt
It gives sh mo m pleasure to acknowledge acknowledgebefore admowleclgebefore
before closing my remarks my obliga obligations ¬
I bona to many eminent counsel who havobeen haoI have
I been consulted a as to the legal points in involved Inotved ¬
volved in this case cue and especially Uy my myindebtedness myIncJebtec1nea
indebtedness to my associates Masers MessrsR
R Roes Perry t Son for assistance de derived de derived derived ¬
rived from the very able brief prepared preparedand preparedand
and filed by them to the Gas Cases be before 00 00Core ¬
fore the Supreme Court of th the District Districtof
of Columbia two years yea ago agoGentlemen qoGentlemen
Gentlemen of the Committee I beg begto begto
to thank you very much not only for foryour foryour
your kind attention but Indulgence In Inpostponing InpostOlll
postponing postOlll the final hearing for my com comfort comfort cornfort ¬
fort and convenience c and I leave our ourcase ourcase
case in your our keeping in abiding confi confidence confidence ¬
dence that you ou will give it t fair an anjust and andjust
just consideration ftdvt advG
adnI
I 1

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