Question. And in 1929?

Answer. 7.1 cents.

Question. And in 1930?

Answer. 6.8 cents.

Question. Now, do you know how the amount consumed per customer, as shown here, compares with the country's average consumption?

Answer. According to statistics given me, for which I cannot vouch, the national average was 548 kilowatt-hours.

Question. Do you know how these prices per kilowatt-hour received compare with the national average?

Answer. I haven't the figures here. I have seen them, but I cannot give them.

Question. I think it safe to say that they are over a cent higher. Answer. I know they are higher than the national average. Question. Say a cent, more or less, than the national average? Answer. I believe they will run a cent higher.

Question. Than the national average?

Answer. Yes.

Question. For similar service, of course?

Answer. For similar service, but perhaps different territory.
Question. That is all right. You have told us about that.
Answer. Yes; a similar class of service.

Question. Now, on page 58 you also show the total received by this company for all its current; do you not?

Answer. Yes, sir.

Question. And what did it receive per kilowatt-hour for all classes of service?

Answer. In 1928, 3.6 cents.

Question. And in 1929 and 1930?

Answer. Three cents even.

Question. Do you know how that compares with the total received by some of the companies that you had to do with, for those years?

Answer. These figures are certainly higher than some with which I am familiar.

Question. Once again, of course, we have to recognize that the conditions are different, Mr. Depue?

Answer. Yes, sir.

Question. Let us pass now to chapter III, where you begin to take up your financial structure. In section 2 you are discussing there the kinds of securities or issues outstanding in proportion to the whole, are you not, largely?

Answer. Yes, sir; the relation of each class of security to the whole.

Question. Yes; that is what I have in mind. Now, at the bottom of the page you show what percentage of the outstanding securities of all kinds were out for the operating companies and what were out for the holding companies of the group, do you?

Answer. Yes; that is right.

Question. And how much of the total issues did the operating companies have in 1925?

Answer. 47 percent.

Question. And the holding companies?

Answer. Fifty-three percent.

Question. This had changed so that in 1931 what did the operating companies have out?

Answer. Seventy-seven percent.

Question. And the holding companies?

Answer. Twenty-three percent.

Question. Now, coming to the classes outstanding for all, we find that in 1925 what percent of the total of 100 was long-term debt? Answer. Forty percent.

Question. And what percent in prior-lien or preferred stocks?
Answer. Thirty-five percent.

Question. And what percent in common stock?

Answer. Twenty-five percent.

Question. Now, this had changed so that in 1931 how did it stand? Answer. Long-term debt, 39 percent; prior-lien and preferred stocks, 26 percent, and common stock, 35 percent.

Question. Now, on page 62 you have a short table showing the ratios of the combined total outstanding bonds and stocks of the operating subsidiaries at the end of 1927 and for the following years; have you not?

Answer. Yes, sir.

Question. That is, of the operating subsidiaries about which we are now talking?

Answer. That is right.

Question. Now, in 1927 the operating companies had what percent of the total out in long-term debt?

Answer. Fifty percent.

Question. What percent in prior-lien and preferred stocks?

Answer. Twenty-six percent.

Question. And what percent in common stock?

Answer. Twenty-four percent.

Question. In 1931 had that changed greatly?

Answer. The long-term debt had become 51 percent.

Question. That is not much of a change.

Answer. Prior-lien and preferred stocks were 19 percent, and

common stock 30 percent.

Question. The common had increased, and the prior-lien and preferred stocks had decreased?

Answer. That is right.

Question. That is a good set-up for the company; is it not?
Answer. That is an improvement; yes, sir.

Question. Now, the corresponding ratios for the two main holding companies, namely, the Central & South West Utilities Co., and the American Public Service Co., are shown in the next short table; are they?

Answer. They are.

Question. And the Central and South West had no long-term debt; did it?

Answer. None at all.

Question. It did have prior-lien and common stocks in 1925 in what percentages?

Answer. Sixty-three percent in prior-lien and preferred stocks and 37 percent in common.

Question. How had that changed in 1931?

Answer. Fifty-one percent prior-lien and preferred stocks, and 49 percent common.

Question. And the same figures as to the American Public Service Co. for 1925?

Answer. In 1925 the American Public Service Co. had long-term debt of 47 percent, prior-lien and preferred stocks of 27 percent, and common stock of 26 percent.

Question. This long-term debt was wiped out some time during 1927, so that at the end of that year they had only two kinds of stock out; is that right?

Answer. That is right.

Question. And in what percentages?

Answer. Forty-nine percent prior-lien and preferred stocks and 51 percent common.

Question. And at the end of 1931 they stood at what percentages? Answer. Forty-five percent prior-lien and preferred stocks and 55 percent common.

Question. Next we pass to the subject of bond discount, premium and expense. What did you find on the matter of bond discount in this group?

Answer. I found a good many instances of redemption before maturity, which resulted in extremely high costs for the use of money.

Question. Are you talking about redemption at a premium?

Answer. Yes.

Question. Go ahead. How had these been disposed of, at a premium?

Answer. No; at substantial discounts.

Question. So it worked against them both in the sale out at a discount and in the buying back at a premium; did it?

Answer. Yes, sir; but the losses were largely due to refunding before the issues had matured, and thus the entire discount had to be spread over short periods.

Question. That just made the price that much higher, didn't it? Answer. Yes.

Question. That is the only effect of that. Was this so bad as to have you designate it in this report as appearing to be in many instances an excessive cost of money?

is?

Answer. It surely was in some instances.

Question. Have you set this out in figures?

Answer. Yes, sir.

Question. Where?

Answer. At page 64.

Question. Tell me what the table occupying this double page 64

Answer. A comparative statement of interest and expenses pertaining to bonds and notes issued prior to December 31, 1930, by subsidiaries of the Central & South West Utilities Co.

Question. Your heading should be changed accordingly, Mr. Depue.

Answer. The figures apply only to the companies listed.

Question. All right. The first company's issue that you are talking about is that of the American Public Service Co.; isn't it? Answer. Yes, sir.

Question. And their first issue is of 5-percent first-lien gold bonds, series C, of which how much was issued?

Answer. Five and a half millions.

Question. In what year?

Answer. 1926.

Question. How soon redeemed?

Answer. The next year; although they would not mature until 1942-15 years later.

Question. And this was an issue that was to have borne 5 percent! This was a 5-percent issue; wasn't it?

Answer. Yes, sir.

Question. At the rate at which they redeemed them and the rate at which they sold them, what did this make the money cost for that period?

Answer. 5.72 percent in the way of interest, 20.95 percent in the way of discount, premium, and expense; or a total of 26.67 percent per annum for the period.

Question. For the period that they had the money?

Answer. Yes.

Question. Now, the next item shows an issue of over $2,000,000 in 1925 which was redeemed in 1927.

Answer. Yes.

Question. What was the total cost of that for the period?
Answer. 13.18 percent.

Question. Now, next we have a very large issue of 6-percent first-lien series A gold bonds of nearly ten and a half millions, issued when?

Answer. During the years 1912 to 1924.

Question. And redeemed when?

Answer. During the years 1926 and 1927.

Question. Although they were due when?

Answer. December 1, 1942.

Question. The interest cost in that instance was what?

Answer. 6.98 percent.

Question. And the discount and redemption figure on them was what?

Answer. 3.02 percent.

Question. Making the total cost of the money for the period how much?

Answer. Ten percent.

Question. Ten percent on over $10,000,000 is quite an excessive sum; isn't it?

Answer. Yes.

Question. It is not an over-night accommodation on a small sum; is it?

Answer. No, sir.

Question. Now let us pass over to the Ceneral Power & Light Co. issues. The first issue by them is of 6-percent first lien refunding gold bonds, 30-year, issued at about six and two-thirds millions from 1923 to 1925, and redeemable when?

Answer. September 1, 1952.

Question. What was the total cost of these in interest, discount, and so on?

Answer. 19.16 percent.

Question. The next issue of over $3,000,000 cost how much for the time they had the money?

Answer. 14.28 percent.

Question. Now let us pass on down to the Southwestern Gas & Electric Co., and we there find the third item to be an issue of 6-percent 30-year general-mortgage bonds, in an amount of nearly five and a half millions, issued in 1922, and redeemed in 1927. That cost what for the time out?

Answer. 13.59 percent.

Question. So it cost nearly 14 percent for 5 years; didn't it? Answer. Yes.

Mr. CHANTLAND. That is rather a high price for a long period. I think we will quit there, your Honor, if agreeable.

Examiner AVERILL. At what time do you wish to resume tomorrow, Colonel?

Mr. CHANTLAND. If the weather is not too bad tomorrow morning and we have good luck getting here, suppose we start at 9:30. Examiner AVERILL. Very well.

Mr. CHANTLAND. We will let it be contingent upon the depth of the snow and other things.

(Whereupon, at 4:05 p.m., Feb. 1, 1934, the hearing in the aboveentitled matter was adjourned to meet at the same place tomorrow, Feb. 2, 1934, at 9:30 a.m.)

HEARING ROOM, FEDERAL TRADE COMMISSION, Washington, D.C., Friday, February 2, 1934. Met, pursuant to adjournment, at 9:30 a.m. Before Edward M. Averill, examiner.

Appearances: Hon. Robert E. Healy, counsel; Dr. Francis Walker, chief economist; Col. William T. Chantland, associate counsel; Col. William H. England, assistant chief economist; J. Butler Walsh, associate counsel; and C. F. Rhodes, associate counsel, on behalf of the Commission. Bernard F. Weadock, New York City, William J. Hagenah, Chicago, Ill., and Martin V. Callagy, New York City.

Examiner AVERILL. You may proceed.

CARL H. DEPUE resumed the stand and testified further as follows:

Direct examination by Mr. CHANTLAND:

Question. When we finished yesterday we had just taken up chapter 3 and had got over into the second part of that and called attention to your tabulation on page 64 to some of the outstanding examples of high cost of money as exhibited thereby, and this morning I want to take up a few instances in further discussion of how some of these came about. Let us turn first to page 65 of your report, where you deal with the bonds of the American Public Service Co. subgroup. Tell me what was the practice in that company with its bonds and then the pledging of them.

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