Omaha daily bee., 1903-03-22

crate has been abandoned. Their exclusive
use of a portion of the streets, the menace
Of their wires to life and property, the
interference of their poles and equipment
with fire fighting, all constitute points Of
contact with public needs outside OF the
matter of quality Of service and price regu-
lation. The assent Of the municipality is
required before an electric lighting plant
may be installed and the right of the public
through its municipal government to exer-
else control even where its powers are
delegated to a private corporation is fully
conceded.
Law of Increasing Returns.
3. Electricity is subject to the law of in
creasing returns. In former discussion
much was made of this proposition, namely,
that with every additional Investment of
capital and labor an established plant bears
more than a corresponding return from
sales Of product. The point sought TO be
scored was that the very fact Of increasing
returns placed a concern, once entrenched,
in position to monopolize the field and to
bar out all competitors. But the same
Importance no longer attaches to this thesis
because more careful analysis Of the in
dustrial organism has demonstrated it TO be
from one point OF view a mere truism and
from another simply a measure OF franchise
value. 1t has been found that the law Of
increasing returns does not apply eXclu-
sively to monopoUes, but is to be discerned,
though perhaps within lesser limits, n
industries essentially competitive, where II
is traeeable more particularly to effective
Industrial organization. That the mu-
nieipal monOpolies Of service are susceptible
OF close and systematic organization goes
without saying. Looked at from another
standpoint, the law of increasing returns
so far as II is accumulated In this and allied
fields measures the variations Of franchise
value. II the area supplied is occupied by
a steadily growing population, or by people
whose demand for the service is increas-
ing. the increment OF profit that flows from
expanding business aecumulates at a rate
In excess of that of increased expenses.
Per contra, should the population for any
reason fall away, or the demand for the
product shrink, or be satisfied with sub
s%titutes, the value Of the franchise would
suffer q more than pTOportionate diminu-
ton.
Statistical Limitation.
When we come to the comparative cost
statistics we meet with many difficulties.
These difficulties l have already discussed
in another place (American Statistical AS
6oclallou QudTleflyt MhIcn, 1881 and j
will concede that the best figures that have
so far ben at our disposal are not to be
implicitly relied upon for purposes OF Gloss
comparison. To undertake to figure out
with precision how much, II any, advantage
accrues in dollars and cents from municipal
ownership as against contracts with private
corporations is quite impossible from tho
data at our command. In the nrst place
the comparison OF contract prices by
themselves is often deceptive because tbs
amount OF lighting service varies from
place TO place. In our city the lamps ma,
burn but a few hours nightly on a moon.
light schedule, whereas in another they ar,
burned all Of every night. Again. III,
length OF the contract period is importan.
because in response to an advertisement FOL
lighting bids under contracts for one. two
three, hve or ten years respectively, Il viii
be found that the proposals for the d~ifereu.
terms will diner very materially. The 10.
} cation OF the wires underground OF over
head-the location Of the lamps In cluster
lPr singly on poles-theiT distribution oYeI