and, indeed, the amount annually made there is probably as much as it can make and run those works at their highest efficiency. Due in a measure to these facts, the gas made by the company in the last fiscal year cost approximately 35 cents a thousand. For that bought from the Boston company it paid 50 cents. As these figures indicate only the cost in the holder, a fair selling price must cover, in addition, the cost of maintenance, distribution and sale (including taxes), interest and dividend charges. The actual expenditure for these items in the fiscal year just closed was 41 cents.

Somewhat more than 98 per cent. of the stock of the East Boston company is owned by the trustees of the unincorporated voluntary association known as the Massachusetts Gas Companies, which also has an even more complete ownership of the stock of the Boston Consolidated Gas Company; the latter supplies all the remaining portions of the city of Boston, excepting those commonly known as Charlestown and Hyde Park. This association also owns or controls the New England Gas and Coke Company, from which the Boston company buys substantially all its coal gas. The same persons virtually control and manage all of these companies. The profits of all these, as well as other allied companies, however derived, are pooled to meet the interest and dividend requirements of the association. These relations naturally direct attention to the reasonableness of the price for the gas bought and to the reasonableness of the dividends paid.

Any attempt to reach a correct basis for a trade, when both parties to the transaction are virtually identical, must always be attended with serious difficulties. Theoretical refinements are likely to modify or obscure those motives which actual conditions would be likely to induce in absolutely independent trading, entirely free from any community of interest. Some facts are thus given too great, and others too little, weight. Even outside parties may find it difficult to measure reliably the proper effect of all the theoretical factors which are assumed to be entitled to consideration when viewing the interests and legal relations of the parties, and to give to each and all of them the same force which parties might give who were strangers to each other or whose business judgment was en

tirely free. Particularly is this true where, as in this instance, the seller is itself a purchaser under like conditions. If the question of the reasonableness of the price of the gas bought be viewed as one merely concerning the immediate parties to the trade, it might be difficult to say conclusively whether the ability of the buyer to provide for himself or of the seller to sell should be most influential. It is not unlikely that in this case the former may have been the more important factor. While the price may be less than the figure at which the East Boston company could supply itself, it is by no means certain that a lower price would be unprofitable to the Boston company, notwithstanding the possibility of a higher profit from some other possible customer.

The questions involved, however, are distinctly broader than these suggestions would imply. Both the Boston and the East Boston companies are engaged in a public service, and are affected with a public interest which each is bound to consider. Because of this the reasonableness of the entire return or profit which is received by the owners of the East Boston company's stock from all the transactions by or with that company becomes important. The profits from these relations reach the owners of this stock not only directly through the dividends paid, but hardly less directly, though perhaps less obviously, from the sale of gas by the Boston to the East Boston company. It is therefore unnecessary for the purposes of this case to determine separately and conclusively the reasonableness of the price charged in any single transaction between the two companies or of the dividends received directly from the profits on the business of the company as a whole. It is the combined profit from all sources taken together which will determine the reasonableness of the return which the owners of the East Boston company receive.

It was urged by the petitioners that the value of the service in East Boston is no greater than in other sections of the same city where a lower price is now charged. Indeed, the characteristics of the population and the business of this district, as compared with those in certain other districts of the city, are so similar as to raise a question whether the difference in price may not be in effect discriminating against the East Boston

section. Much emphasis was placed upon this proposition at the hearing.

The recent annual dividends of the company have been undoubtedly ample, not to say liberal, to the stockholders. If, however, the margin of apparent profits remaining in recent years, after the dividend payment, be considered, it will be found to be much less than successful companies have thought advisable for the continued success of their business. Whatever difference of opinion may exist as to the use of its profits or as to the amount which should be reserved out of profits for depreciation, the company is entitled to charge such rates as, with proper management, may afford a reasonable return upon the investment. The real profits are not always to be measured by the difference between operating expenses and income, with a fair allowance for depreciation or replacement, for not only these profits which accrue directly to the shareholders, but those which come to them by indirection, must be considered in determining whether, under all their relations with the corporation, they are in receipt of a fair return.

As already indicated, the Board has had occasion in an unusual degree to familiarize itself with the property and affairs of this company, but it has seemed unnecessary to discuss at this time some of the features commonly considered in rate cases and which have influenced the Board's conclusion. It is perhaps sufficient to say that, in the opinion of the Board, upon all the facts in its possession and in harmony with the principles stated, the price hereinafter named will allow, above all necessary cost of conducting the company's affairs, a fair return upon the value of the property which it is actively and necessarily employing for the public convenience.

The Board recommended that, in all bills rendered on and after the first day of August next, the net price charged by the East Boston Gas Company for the gas sold and delivered by it should not exceed 80 cents a thousand cubic feet. (July 17, 1914.)

Capital Stock and Bonds.

Twenty-seven applications for approval of issue of stock or bonds have been decided during the year. The par value of the securities asked for was $5,349,100, and the par value of

the amount approved was $4,526,200. In 15 cases the full amount asked for was approved.

The following table shows the securities approved by the Board for the several companies applying therefor, giving both the par value of the capital stock and the issue price thereof, determined as required by law; in the pages following will be found the several orders and votes of the Board relating thereto:

PETITION OF THE AGAWAM ELECTRIC COMPANY.

This was an application by the Agawam Electric Company for the approval of an issue of additional capital stock of the par value of $100,000 to pay the floating indebtedness of the company already incurred for new construction, extensions and permanent improvements, and to pay for such additional construction, extensions, permanent improvements, plant and property as the directors may think best.

On Sept. 5, 1913, the Board approved of the issue by this company of original capital stock to the amount of $25,000 for the purpose of acquiring the plant and property situated in Agawam and used in connection with the electric light business theretofore carried on in said town by Oley L. Allen, contractor. Upon the purchase of said lighting business control of the stock of this company passed into the hands of the interests controlling the Amherst Power Company, and it appeared that it was the purpose of those interests to operate the Agawam Electric Company solely as a local distributing company, furnishing to its customers electricity supplied to it by the Amherst Power Company. In furtherance of this purpose the latter company had begun, before the completion of the purchase by the Agawam company of the existing plant and the passing of the control of its stock to the new interests, to build the high tension line and substation in Agawam necessary for the consummation of this plan. This work was substantially completed on Nov. 30, 1913, at a cost of something over $100,000, and this expenditure was assumed by the Agawam company, and is represented in its promissory notes outstanding on that date to the amount of $128,074.

The following was therefore adopted:

On the petition of the Agawam Electric Company, pursuant to the provisions of section 24 of chapter 109 of the Revised Laws, for the approval of an issue of additional capital stock of the par value of $100,000 for the objects named in said petition, after public notice and hearing, it being deemed by the Board that said amount of stock is reasonably necessary for the purpose for which such issue is authorized, it is

Ordered, That the Board hereby approves of the issue by the Agawam Electric Company, in conformity with all the requirements of law relating thereto, at the price of $100 a share, as determined by its directors, of