By Mr. CHANTLAND: Question. That should be added; should it? Mr. CHANTLAND. I think that makes it clear. By Mr. CHANTLAND: Question. Let us pass now to the second subject of your report, Mr. Adams. At page 282 of your original report on the North American Light & Power Co., exhibit 5241, you showed intangibles in the amount of $722,336.40 included in the electric fixed capital account of the Missouri Light & Power Co. Have you since that time got the elements of those intangibles as they appear on the books? Answer. Yes, sir. Question. Will you state them? Answer. The total of $722,336.40 consisted of the following intangibles: Engineering and superintendence__. Legal expenses in connection with construction__. Interest during construction___ Organization --. Injuries and damages during construction_ Insurance Franchise Other intangible capital_--_. Question. Making a total of what? $425, 196. 03 24, 279.03 105, 587.43 35,982. 03 77,542, 63 7, 266. 01 250.51 46, 232, 73 Question. Now turn to page 282 of your exhibit 5241 and tell us what total, less depreciation, this makes a part of. Answer. $9,714,276.88. Question. Approximately what percent of that total, then, is it? Answer. Just under 712 percent. Mr. CHANTLAND. I will ask the representatives of the companies if they have an questions to ask. Mr. HAGENAH. None. Mr. CHANTLAND. Thank you, Mr. Adams. (The witness was excused.) Mr. CHANTLAND. Mr. Miller, will you take the stand? KENNETH A. MILLER, recalled as a witness for the Commission, being previously duly sworn, testified as follows: Direct examination by Mr. CHANTLAND: Question. Mr. Miller, in printed part 39 of this investigation there is a report by you on the parent company, the North American Light & Power Co., is there not? Answer. Yes, sir. Question. And you prepared and wrote that report? Answer. Yes, sir. Question. And at that time the chief counsel asked you to get some itemization or break-down or detail of certain items shown at pages 270 and 271 of that typewritten report, which appears in the printed report, part 39, at page 442, touching certain charges to welfare reserve; did he? Answer. Yes, sir. Question. And also, as to certain other items of charges to management expense found at page 287 of your typewritten report, and appearing on page 449 of the printed report, he asked that you also obtain an itemization or detail? Answer. Correct. Question. Have you now prepared a report with the detail-as much as you could find-of what those items are made up of? Answer. I have prepared a tabulation from my working papers, showing all the information I was able to obtain [producing statement]. (The statement referred to was marked "Commission's Exhibit No. 5600" for identification.) By Mr. CHANTLAND: Question. Is the report, made up of 8 sheets, identified by the reporter as exhibit 5600, this itemization prepared by you as you have just stated? Answer. Yes, sir. Mr. CHANTLAND. We offer it. Examiner ADDISON. Received. (The statement previously marked "Commission's Exhibit No. 5600, Witness Miller ", for identification was received in evidence.) By Mr. CHANTLAND: Question. The first item that you take up on sheet 1 is the item of “Unexplained cash items", as it appears on page 442 of the printed report, Unexplained cash items", amounting to $55,530; and does this page 1 of your report give all the information you could get from your working papers? Answer. Yes, sir. Question. Does that mean that that was all you could get out of the records of the company? Answer. Yes sir; and from talking with officials of the company also. Question. What did you understand this welfare reserve fund was? Answer. This so-called "welfare reserve 99 was a reserve that had been assumed by the North American Light & Power Co. from the Illinois Traction Co. when that company was acquired in 1923. The nucleus of the reserve may have been a sort of pension fund for old employees, but the North American Light & Power Co. used it as a reserve for contingencies. Question. When you say "may have been ", where did you get the impression or information, Mr. Miller, that it was a pension fund? Answer. I made that statement from information that I obtained from some of the records of the Illinois Traction Co., which indicated that that was what it originally started out as. Question. Then, it is more than a guess on your part? Answer. Yes. Question. That is what I wanted to get at. Now, this sheet 1 here simply shows that out of this fund there were paid unexplained items in cash amounting to this sum of $55,530, in some 18 different items? Answer. Yes; that was the amount of unexplained cash items found, or charges found, during the period from January 1, 1924, to December 31, 1929. Question. Now, out of this same fund, Clement Studebaker, Jr.he was the president; was he? Answer. He was at that time; yes. Question. And he is now dead? Answer. Yes, sir. Question. He drew $32,370.06, in 13 different items, as shown on sheet 2; is that correct? Answer. That is correct. Question. And there is no explanation offered of what that was for, any more than what you have on sheet 2, which is none; is that correct? Answer. Yes, sir. Question. And you were unable to secure any other information from the supporting papers or vouchers? Answer. I could not locate any. Question. On sheets 3 and 4 you show what? Answer. Various cash payments to several different individuals. Question. Out of this same welfare-reserve fund? Answer. It was not out of any fund. It was charged against the welfare reserve. Question. I see. And these are the amounts paid these various people as shown on page 442 of the printed report? Answer. Yes, sir." Question. And you found no explanation of why these payments to these different people of these different amounts were made? Answer. No, sir. Question. The total, then, thus withdrawn or charged to this account of cash items unexplained and paid to these different people— Mr. Studebaker, Mr. Hanley, Mr. Fischer, Mr. Berta, Mr. Baehr, Mr. Palmblade, Mr. Campbell, Mr. Hamilton, Mr. Lane, Mr. Hess, Mr. Johnson, Mr. Patten, Mr. Mitchell, Mr. La Forgee, Mr. Peck, and Mr. Thomas-amounting to $194,393.66, was charged to or withdrawn from this account; is that right? Answer. Yes; although that may not represent all the unexplained cash items. This [indicating] is merely an analysis of items of a thousand dollars or more. Question. You have told me what position Mr. Studebaker had in the company. What other of these people had official positions in the company? Answer. Mr. Hanley. I think that at that time he was executive vice president. Mr. Fischer was vice president and general manager of all the operating properties. Mr. Berta was treasurer. Mr. Baehr, up until 1926, was one of the owners of the North American Light & Power Co. I do not know who Mr. Palmblade was. Mr. HIGHT. He was manager of the Peoria division of the Illinois Power & Light Corporation. The WITNESS. Mr. Campbell-I do not know anything about him. Mr. Hamilton was a lawyer. Mr. Lane was connected with some properties in southern Illinois. I do not know who Mr. Hess was, nor Mr. Johnson. Mr. Patten was manager of the properties in Iowa, I think, or Kansas. I do not know who Mr. Mitchell was. I understand that Mr. La Forgee was a lawyer. I do not know who Mr. Peck was. That item of "Cash paid to C. Thomas, special publications' I believe, we determined was for some special advertising. Question. Do you know the nature of the advertising? Was it good-will advertising, appliance advertising, or security advertising? Answer. I think it was for security advertising. Question. Was that part of what was paid for that 1-page advertisement in the Washington Post? Answer. I do not recall whether it was for that particular item or not. I do not think it was. Question. Now let us pass to other sheets in your report. Referring to the itemization of certain charges to management expenses, page 449 of the printed report shows that in 1924 $50,182.03 was charged against this account; in 1925, $44,617.42; in 1926, $79,369.28; in 1927, $94,135.17; in 1928, $154,460.65. Those are the totals that you have tried to get the items of in the second part of your report, sheets 1 to 4? Answer. Yes. Question. And do these sheets show all the items or information you obtained concerning them? Answer. Yes. Question. This exhibit shows that how much was paid out in cash, unexplained? Answer. $61,141.11. Question. It gives the banks on which the checks were drawn? Answer. Yes, sir. Question. How much of this is charged to or obtained by Mr. William A. Baehr? Answer. None of that. Question. I am talking about these charges against management expenses. Answer. $10,305.85. Question. And how much of these management expense charges went to Clement Studebaker, Jr.? Answer. $37,085.65. Question. Representing quite a large number of items ranging between what figures, Mr. Miller? Answer. From $100 up to $2,500. I might say that I was told. that a large number of these items which referred to Mr. Studebaker represented miscellaneous payments which he made on his various travels, and that he never did furnish any itemized expense account of any kind. He would just make out a slip for it. So, how much of it was of that character and how much completely unexplained, I do not know. Question. And how much did Mr. H. W. Briggs obtain? Question. And Mr. H. L. Hanley? Answer. $4, 923.62. Question. And Messrs. Green and Palmer? Answer. $2,000. Question. Do you know who Green and Palmer are? Answer. A firm of lawyers in Champaign, Ill. Question. Who is H. W. Briggs? Answer. I do not know. Question. How much did L. E. Fischer receive? Answer. $12,500. Question. W. S. Morrison? Answer. $1,000. Question. Who is he? Answer. I do not know. Question. H. R. Maxon? Question. J. E. Johnson? Question. E. B. Hamilton? Answer. $1,785. Question. L. A. Pettit? Answer. $500. Question M. L. Harry? Answer. $500. Question. There is a transfer credit memorandum taken out there. It does not show where it went; does it? Answer. No, sir. Question. How much is it? Answer. $8,097.76. Question. Here is another one, called "Salary adjustment." How much is that? Answer. $22,500. Question. You do not know to whom that went? Answer. I was told that it was bonuses in cash paid to various employees at the end of the year, but I could never get a list of the employees who got it. Question. Employees including executives, or minor employees? Answer. I do not know. Question. Now, you show there a list of items charged to miscellaneous expenses, totaling for this period how much? Answer. $29,989.79. Question. And you do not know the character of these miscellaneous expenses? Answer. No, sir. Question. Mr. Miller, have you given, in this report and in your verbal testimony, all the information you can give on this subject? Answer. Yes, sir. Mr. CHANTLAND. That is all. (The witness was excused.) Examiner ADDISON. We will take a short recess at this point. (A short informal recess was here taken.) Mr. CHANTLAND. I will ask Mr. Gale to take the stand, please. W. D. GALE, recalled as a witness for the Commission, being previously duly sworn, testified as follows: Direct examination by Mr. CHANTLAND: Question. Mr. Gale, I show you a copy of a letter from the chief counsel of this Commission, to yourself, dated January 13, 1934, concerning these welfare reserve and management expenses and ask |