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The Gas Investigation 
 
 of 
 
 1900 . 
 
 MASSACHUSETTS LEGISLATURE. 
 
 ARGUMENT OF PARKER C. CHANDLER. 
 
 CONDENSATION OF THE ORDER OF INVESTIGATION — 
 THE TESTIMONY — 
 
 REPORTS OF THE COMMITTEE. 
 
) 
 
 \CUWY\ 
 
 CONTENTS. 
 
 PAGE 
 
 Argument of Parker C. Chandler, 5 
 
 Order of Investigation, 15 
 
 Condensation of Testimony, 17 
 
 Summary of Reports of the Committee, 21 
 
 The Report of the Committee, 23 
 
 The Minority Report of Charles F. A. Smith, 34 
 
 The Minority Report of the Committee, 38 
 
| O W\YOCj ,*TC) 
 
 INTRODUCTION. 
 
 V 
 
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 tS 
 
 L 
 
 & 
 
 (T> 
 
 A 
 
 This pamphlet is printed because no authorized report of the 
 investigation has been published or is generally accessible, and 
 more especially because some “views” have been more fully 
 exploited in the press than others, and perhaps have had an 
 undue prominence ; and for the reason that a majority report 
 of the legislative committee acting in the matter has not been 
 possible, so inconclusive was the evidence or lack of evidence 
 presented to it, that that most unsatisfying of Scotch verdicts, 
 “ JSTot proven ,” may be rendered, — and such a verdict warrants 
 the fullest exploitation of the testimony, the reports and the 
 arguments, before the final decision of the Legislature, by those 
 who have a real interest in the matter at issue. 
 
 

 Digitized by the Internet Archive 
 in 2017 with funding from 
 
 University of Illinois Urbana-Champaign Alternates 
 
 
 https://archive.org/details/gasinvestigationOOchan 
 
ARGUMENT OF PARKER C, ‘ CHANDLER. 1 
 
 Mr. Chairman and Gentlemen of the Committee : — 
 
 In 1884 the sun rose and set over Boston town, as it had tim- 
 idly ventured to do for several centuries before. The sun found 
 the gas business of Boston in the ownership and management 
 of the highest class of local Brahmins, who were conducting 
 the business in what is termed the “good, old-fashioned way,” 
 i.e., selling their neighbors a low candle-power coal-gas at three 
 times the price now charged under our “modern, degenerate 
 ways” for a high candle-power water-gas. The sun naturally 
 approved the situation, because it was something of a monopolist 
 itself ; and it came up and went down with old-time Boston 
 regularity, having but one great anxiety, and that lest the 
 control of the then high-priced Boston gas monopoly might 
 be changed. 
 
 Fearing this loss of control, the patriotic and philanthropic 
 Boston gas men of 1884 secured the passage of an act by 
 the Legislature that no gas company should be incorporated in 
 Massachusetts with over $500,000 capital and an equal amount 
 of bonds. This law was passed to prevent competition in the 
 Boston gas field, as it was well known that a gas plant to 
 compete in Boston would cost several millions of dollars ; but, 
 in spite of this attempted prohibition, in 1884 the Boston 
 Board of Aldermen, urged by the press and the petitions of 
 thousands of Boston’s leading citizens who were paying exorbitant 
 prices for inferior gas, granted to the Consumers’ Gas Company 
 — organized by me under the general laws of Massachusetts — a 
 location in the streets of Boston ; but this order was vetoed by 
 Mayor Martin, and for the time competition was prevented 
 and high prices for gas continued. 
 
6 
 
 In 1885 the Bay State Gas Company was organized, under 
 the general laws of Massachusetts, with the maximum capital 
 allowed by law, JSOOjtKX) 1 ; : and on one condition, proposed by 
 Alderman Hart, now Mayor Hart, was granted by the mayor 
 and aldermen in 1885 a location in the streets of Boston. This 
 condition was that the company should lay pipes immediately 
 in every street and lane of the city of Boston in which pipes 
 were then laid, and was intended to secure real and actual 
 competition with every gas company then doing business in 
 Boston. In the words of ex-Mayor Matthews: “In February, 
 1885, the Bay State Gas Company entered into a solemn 
 contract with the city of Boston to compete with all the 
 existing gas companies in the city.” 
 
 In 1885 the old Boston gas companies, with their usual 
 benevolent instincts, secured the passage of an act creating the 
 Gas Commission, giving it the power to regulate the price of gas 
 to consumers, and a veto power over the creation of new gas 
 companies, so as to prevent local competition in gas and instead 
 secure a regulated monopoly in the gas business. 
 
 In 1885 the Bay State Gas Company of Massachusetts made its 
 arrangements to carry out its contract to compete with all the 
 existing gas companies in Boston. It was advised by eminent 
 legal authority that under the laws it could only issue $500,000 
 stock and an equal amount of bonded debt, but that there was no 
 limit fixed by law upon its general indebtedness ; that was left as 
 a mere question of credits. 
 
 The problem in 1885 of entering into competition with the then 
 powerful and prosperous local Boston gas companies, with no 
 bonded indebtedness and a capital of less than $6,000,000, with 
 plants worth nearly double that amount, was not a trifling one, 
 and, were it not for the then high prices paid for gas and the large 
 earning capacity of the Boston gas field, this work would never 
 have been undertaken by the Bay State Gas Company. The 
 greatest impediment was the legislation which limited the issue of 
 
i 
 
 capital stock and bonds to an amount inadequate to construct 
 competing works ; but the problem was present, and action was 
 | demanded, and promotive energy and boldness was not lacking 
 in this instance any more than in a thousand other instances in 
 the nineteenth century development of the United States. 
 
 In 1885 the Bay State Gas Company of Massachusetts, after 
 it had received a location from the mayor and aldermen in the 
 streets of Boston, contracted with J. Edward Addicks, a citizen 
 of Delaware, to construct in Boston harbor at deep water — 
 where the coal and oil and manufacture of gas could be most 
 economically handled — one of the largest and most modern of 
 water-gas plants, which to-day supplies nearly half the gas 
 used by the citizens of Boston. 
 
 This gas plant was judicially declared, through a commission 
 appointed by the Supreme Court, to have cost $2,000,000. The 
 consideration paid the contractor in 1885 to invest $2,000,000 
 cash, to build a plant, to enter into a fierce competition with 
 the then rich and powerful Boston gas companies which were 
 established in the field and making great profits and owned 
 by powerful local investors, was $500,000 stock, which was to 
 be used to hold control of the situation, and $4,500,000 in the 
 promise and obligation of the Bay State Gas Company due in 
 ninety-nine years from date at a rate of interest equal to nine- 
 tenths of the net profits of the business of the company. This 
 $4,500,000 was redeemable in an equal amount of 7% stock of 
 the company, provided the Legislature of Massachusetts should 
 authorize it ; and so unanimous was the public and official 
 demand for this competition in gas and lower prices that the 
 authorization of the proposed increased issue of stock was 
 expected. Had its refusal been anticipated, this contract never 
 would have been made. 
 
 Under any circumstances, this promise to pay did not call 
 for any fixed return to those who put $2,000,000 into the plant 
 and business, but only “a percentage of the net profits of the 
 
8 
 
 business.” This transaction was no hardship to the stockholders 
 who were party to the transaction, and proved no hardship to 
 the public, because the Gas Commission fixed the price of gas 
 regardless of this document, which on its face did not call for 
 any fixed return. 
 
 The risks of this new competing company were great, and it 
 was recognized even in 1885 that the profits must be commen- 
 surate. We must remember that this was lon^ before the anti- 
 stock-watering tidal-wave beat upon the sides of the ship of 
 state in 1894. It was ten years before the morals of Massa- 
 chusetts had become attuned to their present high key, and 
 nearly thirty years since the immortal but immoral Massachu- 
 setts pioneers used oceans of watered bonds as well as stock 
 to bind the Pacific to the Atlantic Ocean by iron bands, which 
 saved the Union and wrecked the Confederacy. Still the germ 
 of inflation lurks in our midst, for even the present pluperfect 
 Legislature — both the Senate and House — have passed an act 
 deliberately giving a canal company $12,000,000 of securities 
 on which to raise about $3,000,000 of cash to build its plant, 
 thus officially providing a speculative remuneration to promoters 
 for the taking of what they confess is an excessive and unusual 
 risk — almost water enough to fill the canal itself and provide 
 for lockage for several years of its operation. 
 
 History relates, when the great Bay State gas plant was con- 
 structed, that the local Boston gas companies — the Boston, 
 South Boston, Roxbury, and Dorchester companies — made a 
 proposition to sell their stocks to the Boston Gas Syndicate, in 
 which Mr. Addicks had as associate trustees Mr. Samuel Little 
 and Mr. Eustace C. Fitz. These local Boston gas stocks were 
 purchased by this syndicate at a price far above the market value 
 and on terms most agreeable to the Boston owners, and purchased 
 with cash brought from outside the Commonwealth. All were 
 pleased ; no local investor was harmed by this transaction . The 
 proverbial investing widow and orphan slept safely and soundly. 
 
9 
 
 In this matter Mr. Addicks and his associates were received with 
 encomiums. 
 
 By this arrangement a prolonged gas war, which, as Brother 
 Anderson states, always means more capital charge against the 
 public, was prevented. More than this, the result of regulation 
 and great reduction of price of gas to all the public, without the 
 great expense and inconvenience of digging up all the streets of 
 Boston and paralleling of pipes, was secured. This peaceful 
 result was brought about without loss and with profit to the old 
 gas security holders, many of whom were trustees ; and these old 
 gas stocks were then made collateral security to $12,000,000 of 
 gas bonds which were issued against them ; so that the result of 
 the Boston eras war and settlement of 1885 was the establishment 
 
 O 
 
 under one control of the most modern and effective gas plant in 
 the United States ; and this investigation has proved that down to 
 the present day it compares most favorably in efficiency and 
 economy with the best plants in Europe and America. The gas 
 settlement of 1885 was made at no inconvenience to the public by 
 reason of tearing up the streets, and at no increase of charges 
 against the public; and, while the securities issued were increased, 
 they did not exceed the actual value or cost of the combined plants. 
 It is rather a conservative result of a gas war when the outstand- 
 ing securities, while increased, only represent real values, and no 
 increased charges against the public in the light of the results of 
 the last gas war in Boston, which leaves the outstanding securities 
 increased by about $34,000,000 based on an increase of only a 
 few millions of property. 
 
 After the settlement of the Boston gas war of 1885, by the 
 sale of the stocks of the Boston, South Boston, and Roxbury gas 
 companies to the Boston Gas Syndicate — which syndicate had 
 already acquired by purchase the stock of the Bay State Gas 
 Company of Massachusetts, thus concentrating the stocks of all 
 the central and important gas companies in Boston in one owner- 
 ship and control, which was essential to the most modern and 
 
10 
 
 economical conduct of the business — all these stocks became the 
 property of the Bay State Gas Company of Delaware, which 
 caused $12,000,000 of bonds to be issued against them; and, as 
 these same gas companies were then earning nearly double the 
 amount of the charges on these bonds, this arrangement did not 
 seem unfair to the consumers of gas or unjust to the investing 
 public, and until 1893 the constant report of the watch in Boston 
 town was ‘ ‘ All is well ! ” 
 
 The Boston gas companies, under the Addicks control, had been 
 gradually reducing the cost of gas to consumers and perfecting 
 the efficiency of the plant, introducing water-gas of a very satis- 
 factory quality, and all under the wise and efficient control and 
 direction of the Gas Commission, when a new star arose in the 
 firmament. Another reformer had to be placated ! — Mayor 
 Matthews, assisted by the officially recognized guardian of the 
 public conscience, George Fred Williams, and leading by hand 
 Brother Anderson, who then sat in a high chair at the reform 
 table, resplendent in new frock and pantalettes of a youthful 
 reformer. This coterie of aspiring saints, with misfitting halos, 
 started the gas investigation of 1893, which resulted in great 
 happiness to its investigators, because it made others unhappy 
 and caused a shrinkage in values which ruined many an investor 
 in gas securities, — securities which were legally issued and 
 honestly outstanding. There was no necessity, save selfish, reck- 
 less personal ambition, for this raid on gas in 1893. There had 
 been no increase in the outstanding stocks of the local gas com- 
 panies, and if the $4,500,000 note was illegal the law courts 
 could have settled this question in due course, and the Gas Com- 
 mission had full power to make the price of gas based on its 
 actual cost and the capital charges which should properly be 
 considered, which were not increased by the terms of the 
 $4,500,000 note, which, in fact, were not considered by the 
 Gas Commission when in 1893 they reduced the price of gas in 
 Boston to $1 per thousand feet. 
 
11 
 
 The investigation of 1893 resulted in an act which forced a 
 valuation of the Bay State works, which were valued by the 
 } Supreme Court commissioners not at $500,000, as alleged by 
 the investigators, but $2,000,000 ; and under the act that amount 
 of stock was issued by the Bay State Company in lieu of the 
 $4,500,000 contract. This was all that came out of that 
 virulent, expensive investigation ; and this result could have 
 been attained in usual and orderly methods, as it was in the 
 same year by an order of the Gas Commission, reducing the 
 price of gas in Boston to $1. 
 
 This raid on the property and values of the gas companies 
 in Boston, and the reduction in price of gas, and some personal 
 controversies brought on the gas war in 1894, led by the 
 Standard Oil interests, which resulted in much of the Boston 
 pipe system being duplicated by the Brookline Gas Company ; 
 and in 1896, after an exhaustive struggle, a halt was called 
 and terms of peace made. 
 
 In 1896 the Massachusetts Pipe Line charter was obtained, 
 with a $5,000,000 joker attached, and in 1897 the New England 
 Gas and Coke Association made its bow in the arena, with a 
 few bales of attractively illuminated securities. I am aware 
 that the modern circus operates several rings simultaneously, 
 but, all the same, the modern boy sees no more at one time 
 than the old-style boy, although he may honestly think that he 
 does. 
 
 I represent at this investigation the Bay State Gas Company 
 of Delaware, a corporation which was chartered by the sovereign 
 state of Delaware, with the right to buy, sell, or hold gas 
 securities in any state of the Union. This Delaware corporation 
 has purchased and holds millions in value of gas securities in 
 several states of the Union ; and it purchased in 1885 several 
 millions of gas stocks of Massachusetts corporations, and paid 
 cash for them to the profit of citizens of Massachusetts, hundreds 
 of thousands of dollars more than the price they were selling 
 
12 
 
 for in the open market. Certainly it is no crime, although it 
 may be a danger, to invest in Massachusetts securities. 
 
 The conduct of this Bay State Gas Company of Delaware of 
 its own business affairs is the concern of our sister state of 
 Delaware, not of the legislature of any other state. It has 
 never done any business in any other state than Delaware. The 
 most it has ever done in Massachusetts is to vote the stock 
 it owns at annual meetings, and that is no*' prime, but an 
 obligation imposed by this commonwealth. 
 
 Since 1893 and one-dollar gas, the Massachusetts companies 
 owned by the Bay State Gas Company of Delaware have not quite 
 earned an amount equal to the interest on the $12,000,000 of 
 gas bonds outstanding, and this deficit the Delaware Company 
 has paid, together with several hundreds of thousands of dollars 
 of sinking fund, so as to protect its equities in these Boston 
 properties, for when the bonds are paid off these plants, 
 constantly increasing in value, will be the property of the Bay 
 State Gas Company of Delaware. It has not been since 1893 
 in receipt of income from its investment in Massachusetts ; and 
 it is not gracious, to say the least, to make fun of its enforced 
 misfortunes, brought upon it by no intentional fault of its own, 
 but by drastic legislation, which if continued in the future in 
 our good old commonwealth will have one advantage in that 
 it will do away with any need for legislation, as no one who 
 can escape will permit his property to be legislated out of 
 existence ; and the flags will come down from the State House, 
 and only the signs remain, “Keep off the Grass” and “Closed 
 for Repairs.” 
 
 As men grow older, Mr. Chairman, they hesitate to risk the 
 happiness of others, and so I shall close my remarks without 
 useless invective. In the olden times history has been repre- 
 sented by mural illustrations in processional form ; permit me 
 to describe this investigation as a suggested procession to be 
 painted on the walls of this committee room. 
 
13 
 
 First come the sappers and miners, Engstrom and Anderson, 
 “blazing the way.”, 
 
 | Second come your honorable Committee, 44 eZe bene.” 
 
 Third, the New England Coke and Gas Company, masquerad- 
 ing as 44 the inscrutable man in the iron mask.” 
 
 Fourth, the Massachusetts Pipe Line Company, masquerading 
 as the local lire department, more especially the hose company. 
 
 Fifth, the Brookline and Dorchester companies, the Whitney 
 aggregation, with Brother Butler as bandmaster, with the refrain 
 44 1 Object.” 
 
 Sixth, the old Boston gas companies, the Addicks contingent, 
 Brother Morse bearing a banner with the legend, 4 4 Lost, 
 Strayed, or Stolen ! ” 
 
 Seventh, supernumeraries, villagers, peasants, chorus and 
 ballet, by Brothers Barron and Whipple. 
 
 Eighth, the 4 4 Little Child of Delaware,” the real orphan on 
 this occasion, led by counsel. 
 
 The procession closes with Brother Albers leading the great 
 bear of State Street, surrounded by several hundred of the gas 
 consumers, whose bills average less than one dollar a year. 
 
 Permit me, in closing, to quote with a slight change, a verse 
 from the second chapter of Genesis, describing the Creation : 
 44 And God made man and rested; and God made the earth and 
 rested ; and more recently God made Thomas W. Lawson, and 
 since then neither God nor man has rested,”' — but I will. 
 

 r 
 
 i 
 
 
 
 
 
 
 
 
 
 
THE ORDER OF INVESTIGATION. 
 
 The order instructed the committee to investigate the 
 expediency of reducing the price of gas in the city of Boston ; 
 to report the evidence on which their recommendations are 
 based, and also copies of all contracts made by and between 
 all corporations or associations engaged in the production 
 or distribution of gas in Boston ; and also whether there 
 has been any violation of any of the laws of this Common- 
 wealth by any such corporation or association, and, if so, 
 what violations, and what measures have been taken to pun- 
 ish or restrain the offenders, together with the committee’s 
 recommendations to the General Court. 
 

 
 
 
 
 
 
 
 
 
 
 
 
 9 
 
 
 
 
 
 
 
 
 
 
 
THE TESTIMONY. 
 
 The twenty-six sessions of the investigation were more 
 remunerative to the stenographers than other participants, 
 for there were hours and hours of words, accusations 
 and oratory, and many “heated moments.” The records 
 and reports of the Gas Commission and privately printed 
 romances of monocular-English gas companies and dreamy 
 tabulated statements of gas amateurs, as well as yards of gas 
 company contracts, were introduced on the record. The 
 investigators did not produce any outside gas expert talent 
 as to the cost of gas in other localities than Boston or in 
 Boston itself ; and, as the gas manufactured at Everett is a 
 by-product, and confessedly costs nothing, this information 
 naturally had little bearing on the subject of cost. The 
 chief engineer of the Boston Gas Company was called and 
 examined and cross-examined, and by general consent of 
 the committee and council his testimony was accepted as 
 able and true ; and, while he declined to respond to those 
 matters of which he had no knowledge, he did testify that 
 the present cost of manufacturing gas was about fifteen cents 
 a thousand more than in past years, by reason of the in- 
 creased price charged for coal, naphtha and other supplies, 
 as well as for labor ; and he also averred that in his opinion 
 the cost of gas would not be less for the coming year. 
 
 Price of Gas not excessive. 
 
 The concensus of the opinion of all witnesses familiar 
 with gas manufacture was that the present price of gas was 
 not excessive ; and, taking into account the conceded legiti- 
 mate charges to be made in making up, the price of gas 
 was at the present time too low rather than too high, — in 
 fact, that the present was an “off year” for the consumer 
 to examine into the price of gas. There was evi- 
 dence produced that “ foreign citizens ” of the United States, 
 
18 
 
 i.e ., non-residents of Massachusetts, had had the temerity 
 to invest in the stocks of Massachusetts corporations in vio- 
 lation of the constitution and laws of this Commonwealth ; 
 but it was clearly shown that they had been sufficiently 
 punished, and no further drastic legislation was needed to 
 prevent any repetition of the crime. 
 
 There was proof that in 1893 the then Legislature made 
 an exhausting investigation of the Boston gas situation, and, 
 finding nothing done contrary to law, made some laws with 
 reference to the local gas situation, which were thereafter 
 fully and fairly lived up to by the local gas company mostly 
 concerned. 
 
 The Boston Gas War. 
 
 There was further evidence that from 1893 to 1896 there 
 was a violent gas 44 competitive examination” in Boston, far 
 more useful and interesting to the spectators than the con- 
 testants ; that this gas war resulted in the investment of 
 several millions of dollars by the 4 4 Standard Oil party,” in 
 duplicating the works and gas mains of the local Boston gas 
 companies and in largely exhausting the surplus of the 
 owners and backers of the old Boston gas companies. This 
 war was concluded by the treaty of May 6, 1896, — the Boston 
 and Brookline contract, — by which the competition was 
 ended, and 4 4 nursing ” guaranteed to the Brookline Com- 
 pany by the Boston Company until the former became 44 con- 
 valescent.” And this agreement has remained in force with 
 44 hospital charges ” to date of about $200,000. 
 
 The Massachusetts Pipe Line Company. 
 
 There was evidence introduced that in 1896 the Massa- 
 chusetts Pipe Line Company was incorporated, and was 
 intended as a means of consolidating all the local Boston 
 gas companies into one aggregation ; but this much-to-be- 
 desired result did not come about, but instead some venture- 
 some 44 foreigner Americans” formed the JSfew England Gas 
 and Coke Company, which was not exactly a company, — 
 44 limited,” — but, as it turned out, an 44 involuntary associa- 
 tion ” of underwriters, — 44 unlimited,” — who contracted to 
 purchase a menagerie, — the Brookline, Dorchester and 
 Jamaica Plain companies, and an assorted lot of patents, 
 
19 
 
 bonds and stocks, all the property of the late Standard Oil 
 party’s gas picnic in Boston. By spipe qver or under sight, 
 some property “ lost its tag,” and when the u round-up ” took 
 place in the “ gloaming,” the mgyig]g,omhnt,6i the Bpsfon, Bay 
 State, South Boston and Roxbury companies,, Tylii,ch should 
 have been tagged “ II. II. Rogers, ll± If if Ridge, A. C. 
 Burrage , Trustees,” was advertised and appeared without 
 its “ brand ” in the corral and later in the official caravansary 
 of the nondescript New’ England Gas and Coke Company. 
 
 The Present Boston Gas Situation. 
 
 Evidence further showed that the result of this unfortu- 
 nate mix-up has been that the “ gas situation ” in Boston is 
 no nearer settlement than it has been for years ; for, while 
 the “ management ” of the Bay State, Boston, South Boston 
 and Roxbury companies was “at home” in the Coke Com- 
 pany corral, these “lost, strayed or stolen” corporations 
 were formerly violated and entered into uniform and uni- 
 lateral contracts to buy all the gas they should use at a 
 -fixed price for fifty years to come , thus to abandon their 
 plants and manufacturing business without the knowledge or 
 consent of their stockholders or the Commonwealth which 
 had created them to do business. These contracts are 
 against public policy, not only prevent these local gas com- 
 panies from making gas more economically, if the state of 
 the art in coming years might enable them to, but prevent 
 them for fifty years from contracting with any other company 
 which might have a cheaper system for gas production than 
 the Everett works, and also put a stop to municipal owner- 
 ship, unless these contracts are bought up. But, most wicked 
 of all devices, the Coke Company have a fifty-year option 
 during which this “hold-up” continues, and no obligation 
 on its part to supply any gas at any price at any time. 
 
 The Real Danger to the Public. 
 
 It was shown that, if the fifty-year contracts are not de- 
 clared illegal by the courts or abrogated by the Legislature , 
 the New England Gas and Coke Company may at its option 
 manufacture and sell — via the Massachusetts Pipe Line 
 Company, the entire stock of which company is in its 
 
20 
 
 treasury — all the gas used in Boston; and, no matter how 
 cheap gas may be ‘mfthnfactured in the next fifty years, under 
 these contracts (of which the Legislature now has full notice 
 and lcilwQledge, by the' I'efioffsof this investigating committee , 
 and if it dees not annul them , in effect ratifies them for 
 all time) "tliC . price 'to the public must be based on the 
 contract price by the Gras Commission when it estimates 
 the price of gas. This is an unfair arrangement for 
 the gas-consuming public, but the real danger , almost a 
 crime , is for the Legislature to permit all of the numerous 
 splendidly equipped gas plants, economically and con- 
 veniently located in the several sections of the city, to be 
 disintegrated and dismantled, and the sole reliance placed on 
 a single manufacturing plant not located in the city, or pay- 
 ing taxes to it, as does the several millions of dollars worth 
 of gas property to-day. The destruction of the works at 
 Everett would leave the city of Boston without a gas sup- 
 ply, as would their abandonment after afire, or when a tariff 
 or change in the price of materials or the failure of the 
 general business venture at Everett should make the gas by- 
 product a manufacturing impossibility. This is a real dan- 
 ger, because after the local gas companies go out of business 
 and dismantle their plants, and the Pipe Line Company — 
 which has no manufacturing plant , and its guarantee is not 
 good for more than its short-service pipe line — cannot or 
 will not supply gas at a price demanded by the public or 
 Gas Commission, then the New England Gas and Coke 
 Company will be in “the saddle.” It is not and possibly 
 legally cannot be controlled in the manufacture of gas by the 
 Legislature, so long as it is not a nuisance and makes and 
 delivers on its own property gas to the Pipe Line Company. 
 The control of the Pipe Line Company is of no practical 
 avail, as soon as the local gas works are dismantled, because 
 the city will have only the Coke Company plant to supply 
 it with gas, and even the Commonwealth cannot afford to 
 prevent the citizens of Boston having a supply of gas, even 
 at an exorbitant price, rather than be without a supply. In 
 a few months the manufacture of gas will in fact pass out 
 of the control of the Gas Commission and in law will 
 practically be beyond reach of the Legislature. 
 
21 
 
 SUMMARY OF REPORTS OF COMMITTEE. 
 
 Do not recommend Reduction of Price. 
 
 That it is unwise, under existing conditions, to reduce 
 the price of gas in Boston, — legislation ordering a reduction 
 from present prices might force the companies to reduce the 
 present candle-po\^er in order to escape selling gas at a 
 loss ; that the cost of gas, on account of the increased price 
 of coal, naphtha and other ingredients, as well as of labor, 
 is at least fifteen cents more per thousand cubic feet than 
 last year. 
 
 The New England Gas and Coke Company. 
 
 That the New England Gas and Coke Company, if its con- 
 tract with the Massachusetts Pipe Line Company and the 
 contracts of these companies with the Boston local gas com- 
 panies are maintained by the courts and upheld by this 
 Legislature, will in the near future manufacture at Everett 
 all the gas consumed in Boston. 
 
 That when all the gas is manufactured by the Coke Com- 
 pany at Everett, all the gas-manufacturing plants in Boston 
 owned by the local companies will go out of business, and 
 then the manufacture of gas for Boston will cease to be under 
 the control of the Gas Commission. 
 
 That the clause in the Pipe Line charter restricting the 
 price charged for gas in Boston applies only to sixteen 
 candle-power gas, and an unrestricted and arbitrary charge 
 may be made for enriching the gas to a higher candle-power. 
 
 The Gas Commission. 
 
 That, where the Gas Commission has power, it should 
 exhaust that power before application is made to the Legis- 
 lature for relief. 
 
22 
 
 That the Legislature should give the Gas Commission 
 power to annul, after notice and hearing, any contract or 
 arrangement for the purchase of gas made by any corpora- 
 tion selling gas in this Commonwealth. ( 
 
 That the Coke Company shall be incorporated, and submit 
 itself to the same laws and regulations that all other Massa- 
 chusetts gas companies do, or shall by agreement with the 
 
 Gas Commission submit itself to the usual laws and re<mla- 
 
 © 
 
 tions governing gas corporations, or be retired from the 
 business of selling gas to Massachusetts corporations. 
 
 That a consolidation of all the companies in Boston would 
 expedite a settlement of the gas war and Boston’s “gas 
 problem.” 
 
 That the Boston-Brookline contract, which has cost the 
 former company nearly $200,000 to date, is an unjust charge 
 against the Boston public, and is beyond the scope of its 
 charter rights, a detriment to its stockholders, ultra vires 
 and hence illegal, and should be declared void by the 
 Legislature. 
 
 That the removal of the gas-manufacturing plants from 
 Boston to Everett will result in a large reduction in tax 
 receipts to Boston. 
 
23 
 
 CONDENSATION OF COMMITTEE REPORT. 
 
 SIGNED BY C. J, McPHERSON, CHARLES H. HANSON, JAMES H. McKINLEY, 
 THOMAS H. GREEN, JAMES PEARCE, FRED. H. BATES, 
 
 A. WEBSTER BUTLER. 
 
 The Boston Gas Situation. 
 
 There are nine gas companies selling gas in Boston, — 
 the Bay State, Boston, South Boston, Roxbury, Dorchester, 
 Brookline, Jamaica Plain, East Boston and Charlestown, — 
 with a total capital stock of $9,029,600; total assets, 
 $19,335,538.03; total liabilities, $13,709,206.39; accumu- 
 lated surplus, $6,233,523.14. 
 
 The gas companies have charged all new work to “ con- 
 struction ” and charged off nothing to depreciation, so the 
 book assets are largely in excess of the actual assets. The 
 4 ‘ accumulated surplus ” shows that besides paying dividends 
 a considerable sum has been accumulated to secure against 
 accident or contingency and depreciation. A single excep- 
 tion must be made to this statement. The Brookline Com- 
 pany has no surplus. Its liabilities are $303,595.75 in 
 excess of its assets. In 1893 the Brookline Company sold 
 less gas than the Dorchester Company, had a capital of 
 $500,000, total assets of $1,111,985.36, total liabilities of 
 $1,068,116.67, showing a surplus of $43,868.69. From 
 1893 to 1896 this company entered into a gas war with the 
 Boston companies, and at its close the book assets of the 
 company are $4,627,907.35 and liabilities of $4,931,503.10, 
 showing a deficit of $300,000. Its actual assets are less, as 
 estimated by the Gas Commission, — $1,000,000 less than 
 the above book assets. 
 
 The Charlestown and East Boston companies have no 
 outstanding bonds, and their management and stock are 
 strictly local, although negotiations are under way to secure 
 
24 
 
 the gas manufactured by the New England Gas and Coke 
 Company. The Bay State, South Boston, Boston and Rox- 
 bury companies have no bonds outstanding ; but the stocks 
 of these companies are owned by the Bay State Gas Com- 
 pany of Delaware, and these stocks are pledged with the 
 Mercantile Trust Company of New York for an issue of less 
 than $12,000,000 of debenture bonds. The Brookline, 
 $1,000,000 bonds outstanding, Dorchester and Jamaica 
 Plain companies, no bonds outstanding, are controlled by 
 the New England Gas and Coke Company, which pledged 
 their ownership in the stocks of these three companies 
 with the Central Trust Company of New York, and issued 
 $17,500,000 bonds. 
 
 The Bay State of Delaware owned and controlled the 
 companies mentioned above in 1893, when the Legislature 
 held an investigation of the gas situation, and still holds 
 them under the terms and conditions decided upon by the 
 Legislature. There has been no change in the situation so 
 far as these companies are concerned, except the contracts 
 made between the Brookline and Boston companies and the 
 Massachusetts Pipe Line Company and the several local 
 companies. 
 
 The gas war between Mr. Rogers of the Standard Oil 
 Company interest of New York and Mr. Addicks of the Bay 
 State Company of Delaware was concluded in May, 1896, 
 by a contract made between the Brookline, Mr. Rogers’s 
 company, and the Boston Gas Company, Mr. Addicks’s 
 company. The object of this agreement was to, and did, 
 stop competition, — each company was to keep out of the 
 territory of the other. In consideration of this, the Bos- 
 ton Company agreed to provide funds to pay interest on 
 the debts created by the gas war and ten per cent, on its 
 capital. About $200,000 has been paid from the treasury 
 of the Boston into the treasury of the Brookline under this 
 arrangement. 
 
 This Boston and Brookline contract was part of a larger 
 arrangement made at that time between the so-called Ad- 
 dicks interests, or the Bay State of Delaware interests, and 
 the Standard Oil interests. The Bay State of Delaware was 
 to purchase from the Standard Oil interests their entire hold- 
 
25 
 
 ings in the Boston gas field, paying for them on Nov. 1, 
 1896. This arrangement was also part of a still larger un- 
 dertaking. Early in the winter of 1896 Mr. Henry M. 
 Whitney applied to the Legislature for a charter for the pur- 
 pose of enabling him to sell the gas which he proposed to 
 manufacture as a by-product of the process of manufacturing 
 coal bought from the Dominion Coal Company of the Prov- 
 inces into coke. It was claimed that a great public benefit 
 would be derived by means of this charter, and that the 
 price of gas would thus be rendered very much lower, and 
 that it would be practicable for the community to use gas 
 very largely for fuel purposes. After this proposition had 
 been before the Legislature of 1896 for some time, an ar- 
 rangement was made between all the large interests then 
 represented in the Boston gas field, by which this charter 
 was to be used as a practical method of consolidating the 
 Boston gas companies. The Boston and Brookline contract 
 was a part of the arrangement by which the gas companies 
 of Boston were to be practically consolidated, the Standard 
 Oil interests were to be bought out, leaving Messrs. Acldicks 
 and Whitney in full control of the field. The veto of the 
 original Pipe Line charter by Governor Wolcott on June 2, 
 1896, thwarted these plans. But the Boston and Brookline 
 contract remained after the larger scheme of which it 
 was a part had gone to wreck. Owing to a failure 
 on the part of the Bay State Gas Company of Delaware 
 to pay the sum agreed for the Standard Oil interests on 
 Nov. 1, 1896, the old directors, designated by Mr. Addicks, 
 of the Boston, Bay State, Dorchester, South Boston and 
 Roxbury companies, resigned, and persons designated in 
 the Standard Oil interests were elected in their places. 
 The stock of the Bay State Gas Company of New Jersey, 
 which company was then in the possession of the Bay State 
 Gas Company of Delaware, was transferred to three trus- 
 tees, — Messrs. Henry H. Rogers, John G. Moore and 
 Albert C. Burrage, who thus became the trustees of the 
 voting trust, and were enabled to designate directors for 
 all the Boston gas companies except the East Boston, 
 Charlestown and Jamaica Plain, none of which had then 
 come under their control. 
 
26 
 
 No steps were taken to avail of the charter granted the 
 Massachusetts Pipe Line Company until the fall of 1897. 
 
 At that time a new and important development occurred in ( 
 
 the Boston gas field, — the New England Gas and Coke Com- 
 pany was formed. This is an unincorporated, voluntary 
 association, whose affairs are managed by a board of trustees 
 whose powers and purposes are defined in a declaration of 
 trust dated Sept. 30, 1897. The following description of 
 this concern is taken from the report of the Gas Commis- 
 sioners for 1898, pages 6 and 7 : — 
 
 The New England Gas and Coke Company is an unincorporated 
 voluntary association, whose affairs are managed by a board 
 of trustees, and whose powers and purposes are defined in a decla- 
 ration of trust dated Sept. 30, 1897. By the terms of this declara- 
 tion the property of the company is divided into two hundred 
 thousand shares of the par value of fifty dollars each. Its 
 property is to be held and its affairs managed by a board of 
 trustees, who are empowered to “ employ the trust property . . . 
 in manufacturing, buying, selling and dealing in coal, oil, coke, 
 gas and all the products thereof, and in business similar thereto, 
 including electrical business of all kinds.” The trustees are 
 also empowered “ to buy any property ” (including shares and bonds 
 issued under the declaration of trust), “real and personal, and 
 any rights, franchises, privileges or securities which the con- 
 duct of said business may, in their judgment, require, and may, 
 in their judgment, tend to promote its successful prosecution 
 and the interest of the shareholders, and to hold, use or sell 
 the same, or any part thereof, at their discretion ; ” “to borrow 
 money for the business or for the purchase of the property 
 herein authorized, to give notes or other obligations therefor, 
 and to pledge or mortgage all or any part of the trust property 
 to secure such notes and obligations or any contract entered into 
 in the course of the execution of this trust ; ” “to make a lease or 
 leases of the trust property or any part thereof.” Acting under 
 these powers, the company has executed a mortgage or deed of 
 trust to secure its bonds or certificates of indebtedness for the 
 total amount of $17,500,000 par value, being 17,500 obligations 
 of $1,000 each, to the Central Trust Company of New York. 
 Thirty-five hundred of these obligations are not to be issued until 
 other property is acquired, but 14,000 ($14,000,000) are to be 
 issued at once, for which the following properties are named in 
 the mortgage as security : certain real estate in the city of Chel- 
 
27 
 
 sea and town of Revere in this Commonwealth ; a certain con- 
 tract with the Dominion Coal Company ; licenses from the Otto 
 Coke and Chemical Company and the United Gas and Coke 
 Company to use certain patent processes for the manufacture of 
 gas and coke, including those known as the Otto-Hoffman patents ; 
 Boston United Gas bonds, first series, of the par value of $1,000,000 ; 
 18,500 shares of the capital stock of the Brookline Gas Light 
 Company; 5,176 shares of the capital stock of the Dorchester 
 Gas Light Company; 1,382 shares of the capital stock of the 
 Jamaica Plain Gas Light Company ; certificates of indebtedness of 
 the Brookline Gas Light Company of the face value of $1,615,000 ; 
 all the right, title and interest of the New England Gas and Coke 
 Company in and to the entire capital stock of the Massachusetts 
 Pipe Line Gas Company, with the right of subscription thereto, 
 and the right to any and all increase of stock of said company 
 hereafter issued. 
 
 The bonds referred to are dated Dec. 1, 1897, mature Dec. 1, 
 1937, and bear interest at the rate of five per cent, per annum. 
 
 This curious and anomalous organization was made possi- 
 ble by the words in the Pipe Line charter authorizing it to 
 buy and to deal in gas. The capital stock of the Pipe Line 
 was thus paid in out of the proceeds of the so-called bonds 
 of the Coke Company. Its officers are practically the same ; 
 its control is certainly the same. The Coke Company sold 
 a part of its holding in land to the Pipe Line Company, and 
 erected thereon a holder and purifying house. The same 
 set of men do work for both concerns; their offices are the 
 same ; in all practical effects the two concerns are identical. 
 The Coke Company denies that it is in any manner subject 
 to the jurisdiction of the Gas Commission or to any of the 
 provisions of law applicable to gas companies. The prop- 
 erty upon which it has issued $35,000,000 of stocks and 
 bonds may be worth $7,000,000 or $8,000,000. It is a 
 stock-watering enterprise on a gigantic scale. On Decem- 
 ber 1, 1897, as a part of the initiation of this scheme, con- 
 tracts were entered into between the Pipe Line Company 
 and the various Boston gas companies. 
 
 The contracts between the Pipe Line and the other com- 
 panies are precisely the same, except that the amounts of 
 gas to be taken at the outset slightly vary. To all of these 
 contracts the New England Gas and Coke Company is a 
 
28 
 
 party. All of the gas companies in Boston, except the East 
 Boston and the Charlestown, have thus agreed to take all 
 their gas from the Coke Company’s works, through the Pipe 
 Line, so soon as a sufficient amount is manufactured and the 
 required notice is given. Coke ovens have been erected, 
 and in December, 1899, gas first began to be supplied from 
 these works in Everett. The manufacturing works of the 
 Jamaica Plain Company have been shut down; about nine- 
 tenths of the gas of the Brookline Company is being supplied 
 from these works, and some quantities to the Boston and 
 Dorchester companies. On the evidence, the capacity of 
 the works is now about two-thirds of the annual consump- 
 tion of all the Boston companies. While the written con- 
 tracts above set forth provide that this gas shall be sold by 
 the Pipe Line from the coke works to the various gas com- 
 panies at the price of twenty cents for twelve candle-power 
 gas, the gas actually delivered is said to be of eighteen or 
 nineteen candle-power, and the prices charged to the com- 
 panies under the direct control of the Coke Company are 
 thirty cents per thousand cubic feet. The Boston Gas Light 
 Company has refused to pay in excess of twenty-five cents 
 per thousand feet, under the advice of counsel. The ground 
 of this objection is that the charter of the Pipe Line Com- 
 pany does not permit it to sell gas to any gas company at a 
 price in excess of twenty-five cents. This ground seems to 
 your committee well taken. There is no doubt that the Pipe 
 Line charter was obtained on the assurance of its promoters 
 that the price of gas to consumers would be very much re- 
 duced. There is no doubt that the Legislature did not intend 
 to permit competition and duplication of capital in the gas 
 companies, except with the assurance that the price of gas 
 should be reduced ; hence the provision in the Pipe Line 
 charter that on sales to other companies the price should 
 not exceed twenty cents per thousand cubic feet for gas of 
 five hundred and eighty British thermal units, and not ex- 
 ceeding five cents additional for gas of the candle-power 
 required by law, within the five-mile limit of the State 
 House applicable to the gas companies now under considera- 
 tion. If the Pipe Line Company is relieved from the limita- 
 tion of price in its charter simply by selling gas of one or 
 
29 
 
 two candle-power above the candle-power required by law 
 (which is sixteen) , it may then, under the speculative manage- 
 ment which has gotten control of several of the Boston gas 
 companies, fix any price it pleases to consumers in Boston. 
 If it has or can obtain control of the Boston, Bay State, 
 South Boston and Roxbury companies, as it now has control 
 of the Dorchester, Jamaica Plain and Brookline companies, 
 it will be enabled to sell 2,500,000,000 feet of gas per year, 
 at such price as it chooses to fix. If contracts for the sale 
 of gas by the Pipe Line at prices in excess of twenty-five 
 cents are valid contracts, their obligation cannot be impaired 
 under the constitution of the United States, and the Legislat- 
 ure is powerless. Your committee are of the opinion that 
 the sales from the Pipe Line Company to the various com- 
 panies at prices in excess of twenty-five cents are violations 
 of law, contrary to public policy, and that the public welfare 
 absolutely demands that these sales should be effectually 
 prohibited, and that the limitation in the Pipe Line charter 
 of a price of twenty-five cents for sales to other gas com- 
 panies should be made effectual. 
 
 For fifteen years the Commonwealth has been endeavor- 
 ing to regulate public-service corporations by commission, 
 and to exclude competition. If the scheme now being oper- 
 ated by the New England Gas and Coke Company by means 
 of the Pipe Line charter is permitted to go unchecked, both 
 competition and regulation would have been excluded, and 
 the Boston gas consumers would be subject to the mercies 
 of an unregulated monopoly. The situation is critical. 
 None of the previous attempts to exploit these companies 
 have involved so dangerous an encroachment upon the rights 
 of the consumers, or have promised so much of extortion 
 from the gas consumers. This New England Gas and Coke 
 Company, an association of eleven trustees, nine of whom 
 are non-residents of this Commonwealth, deny any account- 
 ability to our laws or regulating commission, controlling the 
 Pipe Line charter granted by the Legislature for the purpose 
 of cheapening gas, are now attempting by and through this 
 charter to set at defiance every one of the principles hitherto 
 relied upon to give the consumer a fair product at a fair 
 price. 
 
BO 
 
 In regard to that portion of the order wherein your com- 
 mittee is ordered to report if there has been any violation 
 of any of the laws of this Commonwealth by any corporation 
 or association, your committee reports that the Boston and 
 Brookline contract is a violation of law. That it is such 
 violation seems too clear to need argument. In the 
 case of Davis v. Old Colony R.R., 131 Mass. 258, our 
 supreme court held that an arrangement made by the 
 railroad company to contribute to the Peace Jubilee fund 
 was illegal and would not be enforced. It is elementary that 
 corporations have only those powers which are specially given 
 them by their charters. The Boston Gas Light Company and 
 the Brookline Gas Light Company were organized for the pur- 
 pose of manufacturing and selling gas. Neither was organized 
 for the purpose of earning money for the benefit of the stock- 
 holders of the other. If the Boston Gas Light Company may 
 illegally pay from the treasury of its company into the 
 treasury of the Brookline Company moneys desired by 
 that company to pay a dividend upon its stocks, any gas 
 company may make a gift to any person or corporation at 
 the will of its directors. If a gas company may give away 
 its assets, it may so cripple itself as to be entirely unable to 
 perform its public duties. As the Board of Gas and Electric 
 Light Commissioners have already denounced this contract 
 as an unconscionable one, contrary to public policy, and 
 recommended that it be abrogated (see their report for 
 1898, page 10), it may fairly be assumed that if given power 
 this Board would order the contract to be abrogated. We 
 recommend that it be abrogated, and we recommend the 
 passage of an act which shall provide that no contract be- 
 tween gas companies shall be valid unless the same be first 
 approved by the Board of Gas and Electric Light Commis- 
 sioners. 
 
 There is a third violation of law which in the judgment of 
 your committee the public interest demands to have reme- 
 died. The New England Gas and Coke Company, as above set 
 forth, denies any accountability to the Gas Commission or to 
 the laws applicable to gas companies in this Commonwealth. 
 It has issued $17,500,000 of bonds not under the provision 
 of Acts of 1885, chapter 346, and the other provisions appli- 
 
31 
 
 cable to gas companies. The proceeds of these bonds have 
 not, as required by law, been applied to the payment of 
 obligations incurred for the enlargement and extension of the 
 works and the purchase of real estate for the use of the com- 
 pany. They have in large part been applied to the payment 
 of the capital stock of the Pipe Line, to the purchase of 
 stock of the Jamaica Plain and Brookline companies and of 
 Boston United Gas bonds. Not only has this company thus 
 violated the laws of the Commonwealth, but its entire 
 scheme is one which in the judgment of your committee is 
 contrary to public policy, certain to work great injury both 
 to the investing public and to the gas-consuming public. 
 
 If it is obnoxious to sound public policy to permit a for- 
 eign corporation to issue stocks and bonds based upon or 
 secured by the stock of domestic corporations, it is cer- 
 tainly obnoxious to sound public policy to permit a syndicate 
 to do it. The purpose of this re-capitalization is in all cases 
 to induce the investing public to purchase stocks and bonds 
 supposed to be based upon the earning power of the public- 
 service corporation far in excess of ordinary interest rates. 
 When these securities have once been placed, then the Leg- 
 islature is met with the claim that bona fide investors would 
 be injured by a reduction of rates, and that therefore what 
 would otherwise be extortionate rates must be permitted to 
 continue. This New England Gas and Coke Company has 
 contracts by which it proposes shortly to manufacture the en- 
 tire gas supply of Boston. It needs no argument to show 
 that it is inconsistent with public interest that the company 
 manufacturing all the gas of this metropolitan district should 
 be freed from all the statutory obligations and regulating 
 supervision applicable to other gas companies. 
 
 In regard to that portion of the order which directs us to 
 report the gross and the net cost of the production and dis- 
 tribution of gas, together with all details showing how such 
 cost and prices are arrived at, your committee has to report 
 the following resolution, which was adopted by your com- 
 mittee on May 15, 1900, by a vote of 7 to 5, 3 members of 
 the committee being absent, the vote subsequently standing 
 at another meeting 7 to 7, one member not voting : — 
 
32 
 
 Whereas , The New England Gas and Coke Company, an asso- 
 ciation of individuals, is now manufacturing a large part of the 
 gas sold in the city of Boston, and is selling the same through 
 companies under its control ; and 4( 
 
 Whereas , Said New England Gas and Coke Company has stated 
 that it owns or controls practically all the gas companies in the 
 city of Boston, and that it earns or will earn $1,298,500 net per 
 annum, of which all but $248,000 comes from the sale of gas in 
 Boston ; and 
 
 Whereas , The aforesaid income of the New England Gas and 
 Coke Company can be derived only from the control of practically 
 all the gas companies doing business in Boston ; and 
 
 Whereas, Said New England Gas and Coke Company has such 
 control of certain gas companies of Boston that no inquiry can be 
 effectual unless said New England Gas and Coke Company can be 
 made to be subservient to the laws of this Commonwealth ; and 
 
 Whereas , Said association refuses to submit its books to the 
 examination of this committee, and refuses to inform this commit- 
 tee regarding the cost of the production of the gas manufactured 
 by it, and a fair return on the capital invested by it in the manu- 
 facture of said gas, and contends that, not being a corporation, it 
 is beyond the control of the laws of this Commonwealth ; now 
 therefore — 
 
 Voted , That, unless and until said association is thoroughly 
 investigated, it is impossible to report to the Legislature the cost 
 of gas in Boston ; that we cannot recommend the passage of any 
 act compelling any reduction in the price of gas in said city until 
 said investigation has been made, or until the New England Gas 
 and Coke Company has been brought under the laws of this Com- 
 monwealth relating to gas companies. 
 
 Voted , That we recommend to the Legislature the passage of 
 the following act : — 
 
 An Act relative to the Sale of Gas in the City of Boston. 
 
 Be it enacted , etc., as follows : 
 
 Section 1. After the first day of January, in the year nineteen 
 hundred and one, no gas for heating or illuminating purposes shall 
 be sold in the city of Boston, excepting gas manufactured, distrib- 
 uted and sold by a corporation, or corporations, which have com- 
 plied with the laws of Massachusetts relating to gas companies and 
 to the requirements of the board of gas and electric light commis- 
 sioners. 
 
 Section 2. The supreme judicial court and the superior court 
 shall each of them have jurisdiction in equity at the suit of the 
 
33 
 
 attorney-general or of any ten citizens of Boston to enjoin any 
 and every person and corporation from selling any gas for heating 
 or illuminating purposes in the city of Boston after the first day of 
 January in the year nineteen hundred and one, excepting gas which 
 has been manufactured by a corporation which has complied with 
 the laws of Massachusetts relating to gas companies. 
 
 Section 3 . Any person or association now engaged in the busi- 
 ness of manufacturing gas which is sold in Boston may, within six 
 months from the date of the passage of this act, organize, or cause 
 to be organized, a corporation for the purpose of continuing the 
 manufacturing business heretofore carried on by such person or 
 association, including the business of manufacturing gas and for 
 other manufacturing purposes. All existing laws relating to gas 
 companies shall apply to such corporation, excepting that the cap- 
 ital stock thereof shall not be limited to five hundred thousand 
 dollars. 
 
 Section 4 . This act shall take effect upon its passage. 
 
 It would be infinitely better for the public to leave the 
 New England Gas and Coke Company to work out its own 
 salvation or destruction as a trust, than to sanction its past 
 and merely provide that in future it shall be subject to the 
 supervision of the Gas Commission, without first compelling 
 it to incorporate. This w T ould be legislative recognition and 
 approval of its $35,000,000 of securities, and would compel 
 the Gas Commission for all time in arriving at the cost price 
 of gas to reckon and allow all charges, interest and dividends 
 that the Coke Company chose to pay upon its $35,000,000 
 securities, not exceeding the ten per cent, heretofore recog- 
 nized by custom. Clearly under such a law the price of 
 gas must be at once raised. Clearly after such legislative 
 approval no court would permit commissioners to fix a price 
 of gas so low that a fair dividend on all its capitalization 
 oould not be paid. 
 
CONDENSATION OF A MINORITY REPORT. 
 
 SIGNED BY CHARLES F. A. SMITH. 
 
 I agree in the main with the facts set forth in the so-called 
 majority report of the committee, but am unable to concur 
 with them in all their conclusions and recommendations. 
 
 The order under which we acted was so broad and far- 
 reaching in its scope as to open up a vast field of inquiry 
 and to severely tax even the -trained minds of experts. We 
 were to report on the price of gas and in detail how it was 
 reached, and also any violations of law and what punishments 
 had been rendered unto the offenders. As the Gas Com- 
 mission, established and maintained to oversee the business, 
 has never been able to solve the Boston gas problem, it 
 would not be expected that a committee of the Legislature, 
 without any special training on the subject, would be able 
 to agree on any one remedy. 
 
 The Boston gas question, already greatly befogged, be- 
 came even more complicated upon the entry of the New 
 England Gas and Coke Company into the arena. This com- 
 pany is an association of individuals to manufacture coke, 
 tar, ammonia and other residuals. It produces as a by- 
 product about two-thirds of the gas now used in Boston, 
 which it sells to the Massachusetts Pipe Line Company, 
 which it re-sells to several of the local Boston gas compa- 
 nies. Hence, to solve the problem of the cost of manufact- 
 uring gas, the most important factor of the hearings was the 
 Gas and Coke Company’s books and business ; but any 
 question directed to any part of the business of that company 
 was objected to by counsel, on the ground that this company 
 was not amenable to the laws relating to gas companies. A 
 request for the books of this company which would disclose 
 to them such information as they needed for the purposes 
 
35 
 
 of the investigation was refused by the treasurer, your com- 
 mittee having previously voted to investigate this associa- 
 tion. Having thus voted, consistent action of the committee 
 required that said treasurer be summoned before the bar of 
 the House, that its demand might be enforced ; but at this 
 juncture a majority voted not to further press the point. 
 Thus was lost an opportunity of early testing the legal 
 status of this great enterprise, and its right to defy the 
 Legislature and its laws. 
 
 Relative to the Price of Gas . 
 
 It is conceded by all parties that the Charlestown and 
 East Boston companies cannot afford to sell at a price under 
 one dollar. An examination of the returns filed with the 
 Gas Commission shows that the Brookline, Jamaica Plain 
 and some of the gas used by the Boston Company is manu- 
 factured by the Coke Company and sold to the local com- 
 panies, and that contracts have been made to supply all the 
 other Boston companies except the Charlestown and East 
 Boston. All these contracts are on a basis of not over 
 twenty-five cents. It seems clear that a substantial reduc- 
 tion in the price of gas charged by these companies might 
 be made if all gas used in Boston was supplied by the Pipe 
 Line and Bay State companies at a price between twenty- 
 five and thirty cents ; that the companies might sell for less 
 than one dollar and still pay a profit and fair dividends ; 
 but legislation ordering a reduction from the present price 
 of one dollar, which might drive the companies to reduce 
 the present candle-power in order to escape selling gas at a 
 loss, certainly would not be in the interests of the people. 
 It would be far better for the community to improve the 
 quality, or at least not lower it, than to take off ten or fifteen 
 cents from the present price, and lower the grade. 
 
 A consolidation of all the companies would still more 
 expedite a settlement of the gas war and Boston gas prob- 
 lem. The Boston and Brookline contract is a cleverly 
 arranged scheme of quasi-consolidation, by which the former 
 company has paid the latter company thousands of dollars, 
 in order that the Brookline Company should be able to pay 
 
3G 
 
 a dividend of ten per cent. The transaction is a simple gift 
 of money, and would seem to be beyond the scope of its 
 charter rights, — a detriment to its stockholders, ultra 
 vires , and hence illegal. But, as the question of its legality 
 is now before the courts, action on the part of the Legislat- 
 ure may well be deferred until a decision is received. 
 
 It is fair to assume that Boston will soon be almost wholly 
 dependent upon the Coke Company for its gas supply. The 
 manufacturing plants of the other companies will be idle ; 
 all gas will be sold to them by it ; it will then practically 
 control the situation. If it is to sell gas and operate in the 
 territory of the present companies, which are under the 
 control Qf the Gas Commission, why should it not be super- 
 vised by that tribunal ? The Coke Company must have been 
 conceived in the brains of men far from being imbeciles. 
 Considering that it deals with a subject the sale of which is 
 regulated by law, it is apparently one of the cleverest ar- 
 ranged schemes to avoid giving publicity to its affairs that 
 has ever been called to the public attention. But this does 
 not excuse it from complying with laws made for the good 
 of the community. No law prevents an individual or an 
 association of individuals from manufacturing gas and selling 
 the same, provided that he or they comply with laws regu- 
 lating such manufacture and sale. It is not necessary to 
 incorporate in order to do this ; hence the individuals com- 
 prising the New England Gas and Coke Company have a 
 perfect right to manufacture gas. But as soon as they 
 offer it for sale, justice, if not the law, would seem to 
 require that they comply with such laws as other companies 
 are forced to obey. 
 
 The following bill is offered to prevent the New England 
 Gas and Coke Company, by any technicality, from escaping 
 that regulation by the authorities which all companies in 
 Massachusetts are bound to obey : — 
 
 An Act in Relation to Manufacturers of Gas. 
 
 Be it enacted , etc., ds follows: 
 
 Section 1 . All persons, associations and corporations engaged 
 in the business of manufacturing and selling gas suitable for illu- 
 minating, heating or manufacturing purposes, or gas which by 
 
37 
 
 mixture, enrichment or other process of treatment may be con- 
 verted into gas suitable for illuminating, heating or manufacturing 
 purposes, shall be subject to all the provisions, rights, liabilities, 
 penalties, privileges and duties which by general laws now are or 
 may hereafter be applicable to gas companies. 
 
 Section 2. This act shall take effect upon its passage. 
 
 As the above bill accomplishes all that seems to be neces- 
 sary by way of regulating the manufacture of gas by the 
 New England Gas and Coke Company, and as the legality 
 of an act enforcing incorporation on the part of that company 
 is at least of doubtful legality, I cannot favor the bill offered 
 by others of the committee, calling for such incorporation. 
 
38 
 
 CONDENSATION OF A MINORITY REPORT. 
 
 SIGNED BY B. HERBERT WOODSUM, WILLIAM H. LOTT, FRANCIS A. 
 HARRINGTON, ALBERT S. APSEY, M. W. BURLEN, JAMES 
 HOWELL, WILLIAM L. MOONEY. 
 
 Relative to the Price of Gas. 
 
 We believe it unwise to recommend this year any reduc- 
 tion in the price of gas to the consumers of the city of 
 Boston. 
 
 It has been admitted by all parties that the cost of gas has 
 been increased at least fifteen cents a thousand cubic feet 
 since July 4, 1899. 
 
 Relative to Violations of Law. 
 
 We are not of opinion that sales of gas by the Pipe Line 
 Company, at a price in excess of twenty-five cents, where 
 the gas is of a higher candle-power than that required by 
 statute, is a violation of the law ; but we think if this is a 
 violation of the law the Board of Gas and Electric Light 
 Commissioners may at any time order a reduction. This 
 we believe is distinctly a matter which calls for action by the 
 Board rather than by the Legislature. 
 
 We are of opinion that there was a valid consideration for 
 the contract now existing between the Boston and Brookline 
 companies; viz., the prevention of the competition which 
 existed prior to the execution of the contract. 
 
 We do not believe that the organization and operation of 
 the New England Gas and Coke Company is in violation of 
 law. It was organized as a voluntary association of indi- 
 viduals for manufacturing purposes, and, while it sells gas 
 to the Pipe Line Company, the price of gas can be regulated 
 by the Gas Commissioners. 
 
39 
 
 There may come a time when the Coke Company, through 
 the Pipe Line Company and the various local companies, 
 may produce and supply all the gas consumed in Boston and 
 neighborhood. In order to prevent the companies from 
 contracting to pay more for gas than they could manufacture 
 it for, we report the following bill, and recommend its 
 passage : — 
 
 An Act relative to Contracts for the Purchase of Gas by 
 Gas Companies. 
 
 Be it enacted , etc., as follows : 
 
 Section 1 . Whenever, in the opinion of the board of gas and 
 electric light commissioners, any contract or arrangement hereafter 
 made for the purchase of gas by a gas company of any corporation 
 or association provides for the purchase of gas at a price greater 
 than the cost of manufacture thereof, if manufactured by the pur- 
 chasing company, including in said cost a fair rate of interest on 
 the cost of the works required for such manufacture, said Board 
 may, after notice and hearing, order such contract or arrangement 
 to be annulled, and such order shall annul such contract or ar- 
 rangement ; but either or any of the parties to said contract or 
 arrangement shall have and may take an appeal from such order 
 to the supreme judicial court within thirty days thereafter. 
 
 Section 2. Any court having jurisdiction in equity may, on 
 application of such board, by any suitable process or decree in 
 equity, enforce the lawful orders of said board made under section 
 one of this act. It shall be the duty of the attorney-general, on 
 request of said board, to institute proceedings to enforce the pro- 
 visions of this act. 
 
 Section 3. This act shall take effect upon its passage.