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profit to themselves, they are "in Dutch," or "up Salt Creek," for a heavy loss at their own gambling game, especially when and if an honest, thoroughgoing valuation of the gas companies is made and rates are reduced to a point where no extortion, no usury or confis. cation will longer be practiced against the public, a condition which has been chronic, without redress, up to now.
I know of nothing more helpful now than for Congress to direct or resolve that all pending legislation should wait until valuations of all utilities are under way.
Both the gas company and the power company have earned 100 per cent surplus capital, replacing all of their original investment in the last 20 years in addition to paying 8 per cent a year.
I have no reflection on any gentleman here who is inclined to follow the trait in human nature that is almost universal, to take a chance and gamble, but innocent people do not know they are gambling and Congress has the crux of the utility-holding business all over the country in this proposed legislation.
If I may be permitted to characterize the present attempt of a holding corporation acting through individuals to violate existing law in regard to the ownership of the Washington Gas Light Co. and the methods pursued by all their allies and associates who are constantly levying taxes upon the public to a greater extent than the total annual tax levies of Congress, in order that these master jugglers of money may live in unlimited luxury of usurpers and satraps, and dominate all of mankind through their inordinate greed, in language somewhat more incriminating and less temperate than heretofore expressed, I will say:
Whenever both House of Congress cease to regard as above the law the loaded-dice, thimble-rigging gambling fraternity of Wall Street, purloiners of the public's purse with their pockets packed with pickings whose controlling, overpowering, overwhelming sentiment is: All is well within the gates of hell, when the greed of gold assuages the soul, when a government of might puts up no fight, that the gambling dens need heed from fright, the looters and plunderers of power plants, of expanding expense and rate charges by their traction, transmission and other within-or-without-the-law conquest-by-strategy corporations, and undertake to restrain these privileged criminal money rapers who usurp governmental functions in levying tolls and taxes, appropriate the public's property and rob and plunder and shackle humanity with excessive racketeering service, license and other charges, and accept stolen money without question, then and not until then will the masses of the people, engulfed by the greed of the gougers, a greatly preponderating majority of the people nearing 90 per cent, now held under the heels of the plutocratic free-booters of pelf and the manipulators of juggled money, will begin to receive protection from the greatest aggregation of sordid, insatiably greedy corruptionists and unrestricted bandits ever gathered together for ang purpose since the dawn of history.
My language and claims are readily, justified and substantiated. The billions and billions of boodle now in unquestioned possession of financial bandits can be readily accounted for and traced.
If a return of only 2% per cent invested in public utilities is confiscatory, why have New York stockbrokers gambled $13,000,000 for $2,000,000 worth of equity legally authorized by Congress represented by 100,000 shares of stock of the Washington Gas Light Co. out of a total issue of 130,000 shares, $2,600,000 total par, on the chance that Congress will legalize their at present unlawfully intended program so that this $13,000,000 of gambling funds can possibly be made to earn several times 2% per cent interest to meet the Supreme Court's idea of a fair and reasonable return.
Income of 2% per cent on $13,000,000 invested in 100,000 shares of gas stock on a subterfuge basis by Wall Street manipulators is all the return those Wall Street manipulators get or could reasonably expect to get when they bought the stock at sky-high prices, unless they could hoodwink Congress. Now they ask Congress to validate a situation that is illegal as it affects their plans and purposes, purposely made so under a special law of Congress to forestall the present developing consummation. The present owners can not vote their stock through a corporation without violating the La Follette antiforeign corporation control law of 1913. They have already violated the spirit and intent of the La Follette act by buying more than 20 per cent of gas stock as a holding group of brokers, unincorporated, or as an investment trust. To completely counteract, circumscribe and nullify existing law this holding group of manipulators are asking Congress to reverse itself and permit the group holders to vote stock in excess of 20 per cent as a corporation with authority to issue new and additional common stock. They will be able to do everything the La Follette act now interferes with their doing and expressly forbids, with some new privileges if Congress will obligingly repudiate the La Follette law, nullify it and in effect repeal it by passing the present innocuous appearing legislation in the guise of merger, the merger alone and by itself being acceptable provided existing stock issues are not in the least enlarged. There is a nigger-in-the-woodpile to be sure, but up to Tuesday, April 15th, everyone connected officially with our District of Columbia utilities had accepted and swallowed the bait of the new gas owners, hook, line and sinker, inadvertently.
From the time the present group owners began buying gas stock at six or more times its par value, on an income-earning basis of less than 3 per cent per annum, in the spring of 1928, until after they had corralled more than 100,000 shares at an average price of $130 per share, cash money in the call-loan market of New York was in demand at 9 and 10 per cent much of the time. Under such circumstances no one in his sane senses would credit the new Wall Street gas owners with altruistic purposes in spending over $13,000,000 on a less than 3 per cent net income investment as against a 9 per cent call money income rate unless they expect to make up this loss later, possibly by doubling or trebling this $13,000,000 through their tried and true stock jobbing methods.
The biggest conundrum of all is how a utility issue of stock of $2,600,000 a large part or all of which undoubtedly was predicated and raised on profits from the people, extortion and usury against the people, can possibly become worth nearly $17,000,000 when the utility is taken under control of Wall Street manipulators unless the public is robbed of the difference, exceeding $14,000,000 of boodle.
STATEMENT OF EVAN H. TUCKER, PRESIDENT OF THE NORTH.
EAST WASHINGTON CITIZENS' ASSOCIATION
The CHAIRMAN. Mr. Tucker.
Mr. TUCKER. Evan H. Tucker, president of the Northeast Washington Citizens' Association.
The CHAIRMAN. For 33 years.
Mr. Chairman, I am not prepared to go into the details of this matter. This bill was considered by my association last night, and the association disapproved it for reasons stated at the meeting. We feel that it is not any interest of the citizens of the District of Columbia to pass this bill. This is a matter that we feel should be given very careful consideration.
There are two companies here doing business. We all know it is an axiom in this matter that the question of distribution figures very largely in the matter of supplying gas to the communities. You can supply thousands of people through a main, or you can supply only a few people through a main. If you have a main that extends a long distance to supply only a few people the cost is very excessive.
Now we understand—I do not know that we are right in our contention--that the Washington company supplies the people within the District of Columbia almost entirely with gas in communities that are well built up, where it can be distributed at a reasonable cost. We understand that the Georgetown company has outlying
. extensions, even into Maryland and Virginia, to a large extent, and when you consolidate these two companies you are impoverishing the Washington company to benefit the others.
The CHAIRMAN. Have the two companies been competitors?
Mr. TUCKER. No; they are not competitors. They have different territory, I understand. But the situation is that now extensions have been made long distances out into Maryland, and I understand into Virginia, too, by the Georgetown company, the small company. Now, when we consolidate these two companies we have got to keep our rates up here in order to make up for deficiencies in the other company.
The CHAIRMAN. How have the rates of the two companies compared in the past?
Mr. TUCKER. I do not know what the rate is now of the Georgetown company, but, as a matter of fact, I do not believe the earnings of the Georgetown company are anything like comparable to the earnings of the Washington company.
The CHAIRMAN. Well, the consumer has paid the same price whether buying of the Georgetown company or of the Washington company, has he not?
Mr. TUCKER. I do not know.
Mr. TUCKER. Well, that might be so. At the same time the earning power of one company may be very different from the earning power of the other, and this company here that is supplying the gas to us is the one that is going to suffer if we consolidate them.
We are not trying to save the company, because they are foreign people, but we are trying to look out for our consumers. We do not
believe this would be to the interest of the consumers in the District of Columbia. Therefore, we are opposed to it.
The CHAIRMAN. I was rather pleased to hear it announced by Mr. Burroughs that he is going to reduce the cost of gas here 10 per cent.
Mr. TUCKER. It ought to be reduced anyway. I am a little surprised it has not been done. But after consolidation and these people can come in and show the consolidated company is not making a fair return on the investment, then the natural thing is to keep the price up.
Senator COPELAND. Mr. Tucker, is it not a consequence of urban growth that the original restricted area of residences must always bear more of the cost of the general expansion of municipal activities?
Mr. TUCKER. As a general proposition that is so, but I do not feel, and we do not feel, that we ought to extend ourselves out into Maryland and Virginia, and furnish them gas at reasonable prices and keep our prices up in order to pay for it. There is the situation here, and that is the principal reason that we have taken this attitude.
Senator COPELAND. Mr. Tucker, is the situation really changed when you have the new structure proposed here? At the present time the Washington company owns the Georgetown company.
Mr. TUCKER. They are separate propositions. Senator COPELAND. They are separate propositions, yes, but after all, the losses or gains all involve one pocket.
Mr. TUCKER. No. When they go before the Public Utilities Commission and recommend that their rates be increased, they would not. They have got to make a showing on the bookkeeping of that one particular company. The stock they own in the other companies has nothing to do with the equation at all. That is a different proposition. They might go and buy the stock of another company and bring it in here, so far as that is concerned. It has no effect on the figures they will present to the Public Utilities Commission.
Senator GOULD. Now, Mr. Tucker. We will say this is Georgetown over here and this is Washington here. There is a line drawn here. Washington could not get over into Georgetown and do business, and Georgetown can not come over into Washington and do business. If I understand rightly, the price of gas is 70 cents a thousand feet in each division.
Mr. TUCKER. It is $1 in Washington; that is, to the consumer. The street lights, I understand the Government gets at a special rate of 70 cents.
Senator Gould. I see. Well, here is one suite of offices in Washington and here is one in Georgetown. Now, can not that overhead of these two companies be condensed there so as to make a material saving?
Mr. TUCKER. It was stated here by one of the witnesses to-day that the saving would be $50,000, but I consider that is a mere bagatelle in the matter of distribution.
Senator Gould. But that is something. If something jumped up the expenses $50,000 you would think they were justified in going and asking for higher rates.
Mr. TUCKER. $50,000 is a very small amount to be considered in this
case. Senator Gould. Well, it is something. It is a saving.
Mr. TUCKER. Yes, sir.
Senator Gould. Now, if this merger should take place we are not giving them liberty to go ahead and raise prices or raise salaries or anything of that kind. They are still subject to the Utilities Commission, are they not?
Mr. TUCKER. Yes, sir.
Senator Gould. Now, if this merger is a good thing, you are not afraid to leave the rates and the details of this merged concern to the Utilities Commission, are you?
Mr. TUCKER. As a general proposition I would not be, but the conditions would be such that the Utilities Commission's hands would be tied. They will come in here with their figures based on the earnings, or what not, of the consolidated company, taking what loss may come from these extensions out into Maryland, Virginia, and so forth, as part of their figures.
Senator Gould. A company is foolish to go and buy something that does not pay them as well as their own for the sake of marking up some losses of their own company. That would not be good business.
Mr. TUCKER. We do not know how much farther they will make their extensions into Maryland. We do not know what they may do to increase their expenses so they could come before the Public Utilities Commission to make an upward move and say, “We have got to keep our price up or charge higher rates."
Senator Gould. That is a little far fetched as a business proposition.
Mr. Tucker. There is the condition as it exists the way we see it. I am only presenting the matter as it was expressed last night. I have not had time, as I told you, to study this, but there is the point that was made, and we think it ought to receive careful consideration from the committee.
Senator Gould. Everything should be considered. In a merger of this kind it is quite evident that a saving can be made in overhead and cutting out expense. This bill does not make any rates or any. thing of that kind.
Mr. TUCKER. Not at all.
Senator Gould. The Public Utilities Commission has to handle all that.
Mr. TUCKER. But the Public Utilities Commission has to base the rates on the earnings, and so forth, that are brought in to it by the company
The CHAIRMAN. I do not quite understand, Mr. Tucker, how you arrive at the conclusion that the interest of the consumer would be better off with these two companies than with one.
Mr. Tucker. Because at the present time we are not taking care of any of these extensions in Maryland and Virginia. STATEMENT OF HARLEIGH H. HARTMAN, VICE CHAIRMAN
PUBLIC UTILITIES COMMISSION
Mr. HARTMAN. Mr. Chairman, Mr. Tucker is in error in stating that the Georgetown company has any operations outside of the District of Columbia. Neither the Washington company nor the Georgetown company has any such operations.