The Washington herald., 1907-07-05
BOSTON'S CHEAP GAS.
Larger Dividends and Lower Price Tn
der State Regulation,


From the New York Tribune
They do things better in Massachusetts
than We have yet done them in New
York. Public service corporation regula-
tion is an established fact there Of years
standing. Stock watering has been pre-
vented In all the mergers Of recent origin.
And SO II comes about that the Boston
Consolidated Gas Company has not so
much stock out that il cannot sell gas at
40 cents a thousand and earn "a handsome
dividend. And the people Of Boston are
quite contented that their gas company
they are really beginning to take a sort Of
civic pride in that gas company up in
Boston-shoUld pay its stoCkh lders divi-
deuds Of g per cent. so long as the COM
pany furnishes gas at a lower rate than
any other great city I'm the country en-
JOYS. That. we say. is public service at
its best, the people Contented with low
rates. the stockholders blessed with high
dividends. the employees sharing in the
general prosperity. the management not
rigging the stock market or corrupting
legislators. but devotIng all its attention
10 making gas as cheaply as possible.
Boston has accomplished. by legislation,
p1at unrestricted competition Is supposed
90 do-namely. il has divided she gains
from economies in production between the
consumers and the producers. The only
way the Boston gas company can in
crease its dividend and 50 raise the value
of its stock is by economizing on the cost
Of production. If by improved methods
or better management fl can earn enough
10 pay higher dividends. it can af-
ford 20 reduce the price Of its product to
the consumers. That is the essence of the
sliding scale" law, which fixes a stand
ard price Of 20 cents and standard divi-
dend iate Of Z per cent. To raise its rate
20 Pc cent the gas company must lower
its price to So cents, and for each jump
T. Of / per cent ia dividend there must be a
drop Of cents IN price.
Now. the stockholders have Jared just
as well as the public under the sliding
scale law. The common stock Of the
Massachusetts, Gas Company. which owns
the Boston Consolidated Gas Company,
has gone upon a regular dividend basis.
and has risen since April 1895 from Az
to 57i2. although there has been a general
fall in the price of stocks from the high
quotations of 1903 to the low figures Of
to-day The preferred stock Of the COM
pany. with a limited dividend. has held
its own during that time. despite the gen
eral slump in prices.
Now. of course. it IS always possible to
say that post hoe is not propter hoe; that
the sliding scale law had nothing TO do
with It. and that with the consolidation
there entered into the Boston Consoiidat-
ed a wise and remarkably efficient man
agement. So there did. 1t quit politics
and the stock maTket-BOston Gas had
always been scandalOusly active in both
and devoted itself with a single purpose
10 making gas as cheaply as il could. It
stimulated the wits and reused the loyalty
of its employees by system Of profit
sharing: and it has been so successful
that il has been able in a little over a
year to cut its price 10 cents and raise its
dividends per cent. and another cut with
another raise is confidently predicted in
Boston. Let US give the management all
credit for its success, but II is not to be
forgotten that IL the good people Of
Massachusetts had allowed that manage
ment to be burdened with twice as
many securities as are outstanding, the
Q per cent dividend would be only a beg
CARLY 4is per cent. and a reduction in the
price from 81 to SO cents would be CON
fiscation.'