POLICY AS TO CONSOLIDATION OF COMPANIES (MASSACHUSETTS) The statutes allow the purchase and sale of the rights of one company by another, or the consolidation of two or more companies, only on the board's approval. Thus the board has full control of a company's actions in this direction.
The board bases its decision, in cases of this kind, upon its estimate of whether or not the community will benefit from the proposed changes. A study of two cases shows this.
In 1889 the New Bedford Gas Company and the New Bedford Electric Company pe titioned for authority for the sale of the plant and franchise of the electric company to the gas company. At the hearing the Edison Electric Illuminating Company appeared in opposition. Since the consolidation seemed to promise no public benefit the board refused to allow it. At the request of the petitioners the board later reopened the case. The new evidence showed that the incandescent elec tric lighting company confined itself to one section of the city, that it was making no effort to increase this area, and that it could make no considerable extension except at an expense practically prohibitive. It also ap peared that considerable economies might re sult from the operation of the business by the gas company. These would be effected by the use of fuel of little or no market value in the place of coal, by a reduction in labor costs, and by the removal of the electric plant to unoccupied land which the gas company owned. The gas company was ready to erect a plant with facilities for lighting the whole city. The board believed these facts pointed to improvement in both quality and price and permitted the consolidation.
The Worcester Gas Light Company and the Worcester Electric Light Company ap plied for authority (in 1891) for the gas com pany to engage in electric lighting. Plans had
been made for the purchase of the rights and property of the electric light company by the gas company. The electric light company had just completed an addition costing $125,000, making a building of ample size to meet the wants of the community for years. It had managed its affairs with strict economy, and pursued a conservative policy. The board was unable to find that any appreciable sav ing in the conduct of its affairs or the manu facture of product could be secured by the change. The businesses used no article in common. Coke for fuel would be available from the gas works only a few weeks a year, and even then transportation charges would be prohibitive of its use. The wide separation of the plants and the difference in the training of the employees would make necessary sepa rate superintendents and employees. The present dividends of the gas company were eight per cent, of the electric light company, five per cent. The contract between the two would probably require $300,000 extra cap ital. With no facilities for reducing the cost of electric light, the stockholders of the gas com pany would doubtless suffer a reduction in dividends. This could be prevented only by advancing the prices, lessening the service, or using the surplus profits of the gas company. Any of these courses would be contrary to the public interest. It would be for the interest of the consolidation to increase the sales of gas rather than of electricity, and the public would object to such a policy. The board refused to permit the combination.