account of the gas department stood at $4,592.55, did it not, Mr. Prichard?

Answer. Yes, sir.

Question. As of December 31, 1931, was there any intangible capital by classified accounts in the gas fixed capital?

Answer. No, sir.

Question. Was there any intangible capital by classified accounts in the electric fixed capital?

Answer. Yes, sir; there was organization, $28,981.45, and miscellaneous intangible capital, $51,426.03, making a total of $80,407.48. Question. How was this total of $28,981.45 organization expense made up?

Answer. A summary of this amount can be stated as follows:
Brought on to the books as a result of mergers, $379.43;
Included in fixed capital acquired by purchase, $2,000;

Various other additions from time to time during the period from 1914 to 1930, inclusive, $19,486.44.

This account was increased as a result of the adjustments in the sum of $7,115.58, making the total of $28,918.45.

Question. How much was this account increased in 1930 as a result of adjustments?

Answer. $7,094.78.

Question. How did these adjustments arise?

Answer. In accordance with an order of the Public Service Commission to bring the amount of organization up to 3 percent of the other fixed-capital accounts.

Question. Had that sum of $7,094.78 actually been expended by Malone Light & Power Co. in connection with organization? Answer. No, sir; not to my knowledge.

(There was a discussion off the record.)

Mr. WALSH. Counsel for the company have advised the Commission that the $7,094.78 added to organization expenses in 1930 as a result of an order of the Public Service Commission of the State of New York, is a purely arbitrary apportionment of organization expenses. It is assumed that over the course of the life of the corporation, at least 3 percent of the fixed capital account has been expended by the corporation for organization expenses; hence the corporation is authorized to have its organization expenses stand on its books at a sum equal to 3 percent of the fixed capital accounts.

By Mr. WALSH :

Question. Was there any way in your examination of the books and records of the Malone Light & Power Co. that you could have discovered whether or not that sum of $7,094 had been spent?

Answer. It would be impractical and practically impossible to go through the expense accounts with sufficient detail to determine whether or not any expenditures had been made of a nature which would have been charged to organization expense. If any expenses had been incurred in this connection other than those charged to the organization account, they could have been charged to an expense account, which was not analyzed.

Question. Of the total fixed capital of the Malone Light & Power Co. how much had been retired by December 31, 1931?

Answer. During the period from 1909 to 1931, inclusive, there had been a total of $272,444.42 of fixed capital retired.

Question. This left the retirement reserve as of December 31, 1931, at what figure?

Answer. At the end of 1931 there was a balance in the retirement reserve in the sum of $168,434.45.

Question. How had the retirement reserve been created during the years from 1909 to 1931?

Answer. During that period there were credits to the retirement reserve from accruals which were charged to retirement expenses, electric, $208,162.60; accruals charged to retirement expense, gas, $23,409.25; other accruals for renewals, replacements, and repairs to benches and retorts, mains and services, charged to maintenance expense, gas, $23,317.98; accruals charged to a clearing account, $28,720; appropriation from surplus, $27,481.52; and a retirement reserve entered on the books as a result of mergers and acquisitions of property, $19,754.29, making a total of $330,845.64 of credits to retirement reserve during the period from 1909 to 1931, inclusive.

Against these amounts were charged the sum of $13,214.74 as a result of adjustments to fixed capital, $116,984.01, due to losses from retirements of electric fixed capital, including transportation equip ment; $8,623.13 due to losses from retirements of gas fixed capital; $11,373.13, due to losses from repairs and replacements to benches, retorts, gas mains, and so forth; $12,216.18, due to replacement of benches and retorts, making the total debits, $162,411.19. Deducting this from the total credits leaves a balance in the retirement reserve account at December 31, 1931, of $168,434.45.

Question. As of December 31, 1931, what was the retirement reserve for electric fixed capital?

Answer. $158,977.

Question. And what was the depreciable electric fixed capital as of date?

Answer. $2,168,942.

Question. What was the ratio between the retirement reserve and the depreciable electric fixed capital as of December 31, 1931? Answer. 7.33 percent.

Question. What was the retirement reserve for gas as of December 31, 1931?

Answer. $9,457.

Question. And the depreciable gas fixed capital was what?

Answer. $205,924.

Question. What was the ratio between the retirement reserve for gas and the depreciable gas fixed capital as of December 31, 1931?

Answer. 4.59 percent.

Question. The table on page 64 of your report shows the accruals to the retirement reserve and the maintenance expense for the years 1924 to 1931, expressed in percentages of gross operating revenue, does it not?

Answer. Yes, sir; on both the gas and electric departments. Question. What was the accrual to retirement reserve, electric, in 1924?

Answer. It was equal to 5.78 percent of the gross operating

revenue.

Question. In 1925?

Answer. 1.99 percent.

Question. Was any accrual to retirement reserve, electric, made in the years 1926, 1927, and 1928?

Answer. No, sir.

Question. What was the accrual in 1929?

Answer. 1.63 percent of the gross electric operating revenue.
Question. And in 1930?

Answer. 5.80 percent.
Question. 1931?

Answer. 8.89 percent.

Question. In the years 1924 through 1931, was maintenance expense set up for electric fixed capital in each year?

Answer. There were expenditures for maintenance made during all of those years, or during that period.

Question. What was the percentage of gross electric operating revenue used in 1924 for maintenance?

Answer. 5.36 percent.

Question. 1931?

Answer. 4.81 percent.

Question. What was the percentage of the total depreciation and maintenance expense, electric, in 1924?

Answer. 11.85 percent.

Question. 1925?

Answer. 7.50 percent.

Question. 1926?

Answer. 4.05 percent.

Question. 1927?

Answer. 5.50 percent.

Question. 1928?

Answer. 6.29 percent.

Question. 1929?

Answer. 8.35 percent.

Question. 1930?

Answer. 11.16 percent.

Question. 1931?

Answer. 13.70 percent.

Question. Were provisions for retirement reserve, gas, made in each of the years 1924 to 1931?

Answer. No, sir. Accruals were made crediting the retirement reserve and charged to retirement expense, gas, only during 1924, 1925, 1929, 1930, and 1931. No provision was made for accruals to

the retirement reserve charged to gas expenses during 1926, 1927, and 1928.

Question. Were expenditures made for maintenance for gas fixed capital during each of the years from 1924 through 1931? Answer. Yes, sir.

Question. What was the total depreciation and maintenance expenditures for gas fixed capital in the year 1924?

Answer. 9.12 percent of the gross gas operating revenue.

Question. In 1925?

Answer. 6.78 percent.

Question. In 1926?

Answer. 5.76 percent.

Question. That included maintenance expenditures only, did it

not?

Answer. Yes.

Question. In 1927?

Answer. 10.53 percent.

Question. That was also maintenance expenditures only?

Answer. Yes.

Question. In 1928?

Answer. 9.03 percent.

Question. That was also maintenance expenditures only?

Answer. Yes.

Question. 1929?

Answer. 13.07 percent.

Question. 1930?

Answer. 18.59 percent.

Question. 1931?

Answer. 27.16 percent.

Mr. WALSH. May we have a short recess?

Examiner ADDISON. We will take a short recess.

(Thereupon a short recess was taken.)

Examiner ADDISON. The hearing will come to order.

Mr. WALSH. We come now to the chapter in your report, Mr. Prichard, dealing with capital liabilities and advances from affiliated companies.

By Mr. WALSH:

Question. As of December 31, 1931, what was the total amount of bonds of the Malone Light & Power Co. outstanding?

Answer. $999,500 of bonds outstanding, consisting of first-mortgage 512-percent 30-year gold bonds dated January 1, 1926.

Question. Was this the only issue of bonds put out by Malone Light & Power Co.?

Answer. No, sir. During the period from organization to December 31, 1931, there had been 4 issues of bonds issued by the Malone Light & Power Co., and 1 issue of bonds of the Franklin County Hydraulic Corporation, which had been assumed by the Malone Light & Power Co. when the Franklin County Hydraulic Corporation was merged as of April 1, 1914. There was also an issue of 5-year bond-secured notes dated January 15, 1921, issued by the company.

Question. What was the first issue of bonds put out by Malone Light & Power Co.?

Answer. First-mortgage 5-percent bonds dated July 1, 1899, issued in the sum of $25,000.

Question. What was the consideration received by Malone Light & Power Co. for the issuance of these $25,000 par-value bonds? Answer. $25,000 in cash.

Question. Were these bonds paid at or before maturity?

Answer. They were reacquired as follows: $1,000 principal amount each year when they became due, from 1900 to 1908, inclusive, or an aggregate of $9,000, and the balance of the issue in the sum of $16,000 was reacquired in 1909 for cash at the face amount of the said bonds.

Question. What was the next issue of bonds put out by the Malone Light & Power Co. ?

Answer. First-mortgage 6-percent bonds, dated July 1, 1909.
Question. In what principal amount?

Answer. There was $40,000 face amount of these bonds issued at par value.

Question. What was the consideration received by the Malone Light & Power Co. for the issuance of the $40,000 first-mortgage 6-percent bonds dated July 1, 1909?

Answer. $40,000 in cash.

Question. Were these bonds reacquired at or before maturity? Answer. Yes, sir. All of the $40,000 par value was acquired during the period 1910 to 1920, inclusive.

Question. Was any premium paid by Malone Light & Power Co. in the reacquisition of these bonds?

Answer. No, sir.

Question. What was the next issue of bonds put out by the Malone Light & Power Co. ?

Answer. First and refunding 6-percent gold bonds dated July 1, 1914. Under this mortgage there was an authorized limited amount of $750,000 of bonds.

Question. What principal amount of these bonds was issued up to December 31, 1920?

Answer. There was a total of $619,000, principal amount, issued during the period 1914 to 1920, inclusive.

Question. Were these bonds paid at maturity or reacquired before maturity?

Answer. They were retired $5,000 per year at face amount from 1919 to 1925, inclusive, aggregating $35,000. The balance, $584,000, was called in 1926 at face amount plus 1 percent, or at a premium of $5,840, which amount of premium was charged to surplus.

Question. What was the amount of bonds of the Franklin County Hydraulic Corporation which was assumed by the Malone Light & Power Co.?

Answer. $147,500 principal amount assumed.

Question. Were these bonds exchanged for bonds of the Malone Light & Power Co.?

Answer. Yes, sir; they were exchanged for first and refunding 6-percent bonds of the Malone Light & Power Co. Question. Of the same face amount?

Answer. Yes, sir.