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Mr. LAMBERT. Yes; but they are running the two separate and distinct companies. You must remember originally Georgetown and Washington were as though in two different States.

Senator ROBSION. Yes; but this other concern swallowed them up. I mean the Washington company owns all the stock of the Georgetown company, so I do not see where the economy is going to come there, because the Georgetown company is not operating, is it?

Mr. LAMBERT. Oh, yes, the Georgetown company is operated by its board of directors and has its habitat in Georgetown.

Senator ROBSION. It is covering territory that this company would cover if this were perfected.

Mr. LAMBERT. If this were perfected, one organization would take it all.

Senator ROBSION. You would not put in new mains, or anything like that; the same ones would go on.

Mr. LAMBERT. They would put in new ones if there was demand. Senator COPELAND. Are you maintaining two offices?

Mr. LAMBERT. Yes; two offices and two separate sets of officers. Senator COPELAND. You are operating two plants as though they were distinct?

Mr. LAMBERT. Yes.

Senator COPELAND. What additional powers are you getting by this act?

Mr. LAMBERT. We are getting authority to merge the two companies into one.

Senator COPELAND. I mean what additional physical powers? Mr. LAMBERT. No additional physical powers, but to have additional stock for the betterment of the company.

Senator COPELAND. I did not mean that. What can you do in the way of putting down new pipes or mains?

Mr. LAMBERT. We could not do a single thing in the way of putting down new pipes or mains because we provide that the law as it exists to-day in the District of Columbia shall be held to govern operations of that kind, and that means the permits have to come through the District Commissioners.

Senator COPELAND. Then, so far as physical activities are concerned, you get no new rights or new powers?

Mr. LAMBERT. No new rights or powers.

Senator ROBSION. Except to issue new stock.

Senator COPELAND. I was speaking about physical rights.

At the top of page 4 is there anything unusual about this permission given the Public Utilities Commission to permit the company to increase from time to time the amount of its capitalization and the issuance of additional capital stock?

Mr. LAMBERT. Every corporation has it in the District of Columbia under the Code of the District, but this company, getting a charter from Congress in 1848, did not have this provision in its charter.

Senator COPELAND. Are there companies under the Public Utilities Commission to whom the Commission can give this authority that you are seeking?

Senator ROBSION. The power to issue stock by a corporation in the District of Columbia is very limited and there is a bill on the subject now before the committee.

Mr. LAMBERT. You are talking about what they call the blue-sky law, the wildcat finance scheme. The blue sky law for the District of Columbia has nothing to do with this.

Senator COPELAND. Let me ask General Patrick or the attorney this question. Does the Public Utilities Commission now have the power to authorize certain public utility corporations in this District to issue new stock or to increase their capitalization?

General PATRICK. Yes, Senator Copeland, where there is no restriction placed upon the companies by the charters from Congress. Senator COPELAND. Then this is not novel in any sensethis new authority given to the Public Utilities Commission to authorize this merged company to issue more stock?

General PATRICK. No, sir; our law gives us the power to grant permission to the companies when we see fit, provided, as I say, that Congress has not limited the number of shares that they can issue.

Senator COPELAND. That is true generally; for instance, on lines 18 and 19 it is stated that such shares heretofore issued may be changed, shall be deemed and taken to be fully paid and nonassessable and not subject to further call or assessment, and so forth. That is not novel; that is an authority that certain other corporations have now?

The CHAIRMAN. But this, as I understand, General, is novel so far as Congress is concerned; that is, your commission can go ahead and authorize the issuance of stock, and so forth, but I do not remember a case such as this as long as I have been here.

Senator ROBSION. That is really a direct authoirty from Congress. I do not know any other concern that has got that.

Senator COPELAND. It is not the concern that has it, it is the Public Utilities Commission that has that authority. That is what I want to find out, whether that is novel.

Senator ROBSION. It says that this concern can do it.

Mr. LAMBERT. Subject to the authority.

Senator ROBSION. Subject to the commission.

The CHAIRMAN. I have no recollection of any company coming here to Congress to get a special act which would authorize the issuance of stock.

Senator COPELAND. Well, this is a common thing in cities comparable in size to Washington to have the public service commission have such control over the financial structure of a public utilities corporation so that the commission may authorize or approve a change in the structure as suggested here. Is there anything unusual in that?

Senator ROBSION. I doubt if any other city than Washington is organized like this city. They are not run by commissions.

Senator COPELAND. Well, there are plenty of cities that have public service commissions. I want to know is this the common practice. Is there anything unusual about it? I assume that there is not anything unusual about it.

Senator ROBSION. In most States the State authorities have control over the issuance of stock.

Senator GOULD. Evidently, in the District of Columbia, the Utilities Commission does not have quite the authority that a commission would have in a State or city.

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General PATRICK. May I interrupt you, Senator? We do have that same authority. The law gives us the authority over the issuance of stocks and bonds by any company. That is under our jurisdiction.

Senator GOULD. Why do you have to come here?

General PATRICK. Except where Congress has limited the number of shares.

Senator ROBSION. If that is true, why this bill?

Mr. LAMBERT. Because the charter limits the amount.

Senator COPELAND. Is this the situation: You have an ancient organization, times have changed, we now have a Public Utilities Commission-is it your desire to get away from the old method of handling the matter and put yourself under this commission under the new conditions that exist?

Mr. LAMBERT. Exactly. Now, as illustrative of that, I want to read to you just what has happened to this company in the past and how cumbersome it has been.

The original act incorporating this company was approved July 8, 1848, giving it the power to manufacture and sell gas. At that time the entire capital stock of the company fixed not to exceed $50,000, at the par value of the shares fixed at $20.

By act of Congress approved August 2, 1852-that was the first amendment to the charter-the company was authorized to increase its capital stock from $50,000 to $350,000.

Senator COPELAND. That was not done by Congress?

Mr. LAMBERT. By Congress. Each time it had to go through the cumbersome method, and there was, of course, no Public Utilities Commission.

Senator COPELAND. That was the only possible way it could be done?

Mr. LAMBERT. The only way.

Another amendment was asked in 1855 to increase the capital stock by $150,000. That would be $350,000 plus $150,000.

Then May, 1856, United States Statutes at Large, the capital stock was further increased by $500,000. By virtue of the act of 1872 it was increased to the extent of $200,000 with the privilege given it to issue stock, not exceeding a million as might be required from time to time.

The CHAIRMAN. Mr. Lambert, that was all before we passed this public utilities act?

Mr. LAMBERT. Yes; long before.

The CHAIRMAN. Which does give authority to increase securities? Mr. LAMBERT. Yes; the public utilities act was not passed until 1913, and the last amendment to this charter was in 1886.

Senator COPELAND. Now, is this a fact, that the Public Utilities Commission has in general the power to do these things, but they can not exercise their general power because this old act of Congress places limitations upon them and upon you?

Mr. LAMBERT. That is exactly right.

The CHAIRMAN. Is not the chief reason why this is necessary that there is on the statutes and still in operation this La Follette Act which prohibits?

Mr. LAMBERT. It has nothing in the world to do with this feature. The CHAIRMAN. It has nothing to do with this?

Mr. LAMBERT. No; not a single thing.

The CHAIRMAN. There is on the statutes of the District of Columbia a law introduced by Senator La Follette which prohibits mergers. Mr. LAMBERT. No; it simply prohibits the holding of 20 per cent or more of the capital stock of a public utility local corporation by any other public utility corporation or holding corporation.

The CHAIRMAN. Yes.

Mr. LAMBERT. That is all. But any bank or any individual or any group of individuals can come in and buy the whole 100 per cent and there is no law to interfere with them in the slightest degree. Senator COPELAND. Does the Public Utilities Commission have regulatory power over you as regards the rate you shall charge? Mr. LAMBERT. Yes.

Senator COPELAND. And the amount of profits you may make? Mr. LAMBERT. Yes.

Senator COPELAND. And I suppose they now have the right to go in your office and see how things are going?

Mr. LAMBERT. Yes; they do it now.

Senator COPELAND. And so the only thing, so far as the financial structure is concerned, that is changed is that you are taken out of the old act of Congress and the power is transferred from Congress, so to speak, to the Public Utilities Commission to direct you in any setup that you may make as regards new financing?

Mr. LAMBERT. And in that connection, of course, referring to the minority suggestion made awhile ago, the minority stockholders would be protected in having their right, the same as the majority stockholders, to subscribe to any additional stock at the rate which the Public Utilities Commission fixed.

Senator ROBSION. According to these statements, then, any time you want to make a change in this company, you must come to Congress.

Mr. LAMBERT. We must come here.

Senator ROBSION. It would seem to me a similar amendment could be prepared putting it under the general code here.

Mr. LAMBERT. That is what we think we have done.

Senator COPELAND. That is the purpose of the bill, is it not?

Mr. LAMBERT. Yes.

Senator ROBSION. That is, this particular company?

Mr. LAMBERT. You mean as to all companies?

Senator ROBSION. It has been argued here that all other companies have the rights you are seeking. Is not that what you claim, Mr. Lambert?

Mr. LAMBERT. I do not claim that. I do not say all other companies have such rights.

Senator ROBSION. In answer to Senator Copeland, of New York, you said we had to do this because this company was in a class by itself because of the charter granted in 1848.

Senator COPELAND. It is not in a class by itself, as I understand it, Senator, so far as regulation is concerned, but the Public Utilities Commission is helpless and the company is helpless jointly to set up any new structure because they are operating under what we would call a government charter.

Senator ROBSION. That is the point I am making. If it is different from the others and the other companies have certain rights, a simple

amendment putting it under the general code, so they would not have to come to Congress every time they wanted to make some change, but making it subject to the general law, the same as all other concerns, would accomplish it.

Mr. LAMBERT. That is what we have done here in one feature of this bill where we have said "amend its charter so as to make any such change" subject to subchapter 4 of chapter 18 of the Code of Law for the District of Columbia as amended June 7, 1924.

Senator COPELAND. That is on page 5.

Senator ROBSION. If that should be passed would not that be all that was necessary?

Mr. LAMBERT. It might not with this charter coming down from ancient history, as it does. We do not want to do it halfway; we want to accomplish what we start to do.

Senator ROBSION. If that amendment is good for the future, then it would be good now, wouldn't it? If it would not be good new, it would not mean anything for the future, it seems to me.

Mr. LAMBERT. It has to be good for both.

Senator COPELAND. I am anxious to know, Mr. Chairman, if the Public Utilities Commission approves this bill and if they feel all the rights of the stockholders and of the citizens and the public have been preserved by the language used in the bill. That is what is in my mind. What does the commission say about that? I do not want to sweep you off the floor.

Mr. LAMBERT. I would like to hear from General Patrick.

General PATRICK. As provided by the law, Senator Copeland, the commission held a public hearing, considered the bill and heard everyone who appeared before it concerning all the features of the bill.

There was very little opposition.

The people's counsel was present at the hearing and had an opportunity to examine witnesses. The commission itself studied the bill.

Answering your question as clearly as I can, the commission is convinced that the rights of all parties concerned, including the minority stockholders and including the public of Washington, are amply protected by the provisions of the bill as drawn.

The CHAIRMAN. Mr. Lambert, you say Mr. Burroughs wishes to be heard?

Mr. LAMBERT. Yes, I would like to have Mr. Burroughs answer some of your questions.

Senator COPELAND. Has there been opposition to this bill?

The CHAIRMAN. No. There has been quite a little comment in the newspapers about this transaction.

Senator COPELAND. They are inquiring into the significance of it, I think.

The CHAIRMAN. Yes.

STATEMENT OF FREDERICK S. BURROUGHS, TREASURER OF THE SEABOARD INVESTMENT TRUST

The CHAIRMAN. Mr. Burroughs, I assume you are more closely associated with this enterprise than anyone here, and you have just entered the picture. We would like you, in a short statement, to tell

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