The Cairo bulletin. (Cairo, Ill.) 1???-1928, 1911-06-18
'FO[[OW|NGE EUROPE
LACLEDE GAS LIGHT co. OF ST.
LOUIS ADOPTS NOVEL
METHOD OF BUSINESS,
"Slidng Scale" Which Involves Re.
ducin1 Price to Consumers as
Earnings lncrease--Avoids
Friction.


IS regarded by many corporation Off
cials and others interested in the sub
ject of state and federal regulation
of public service corporations as of,
fering the first workable solution of
the problem. The plan which is new
TO this country has been in success
full operation for maAy years in Great
Britain and provides practically an
automatic regulation of rates charged
by public service corporations. The
company adopting It here is the La
clede Gas Company which supplies
the local community with gas and
which, under the direction Of promi-
nent St Louis business men, has had
very successful financial history ia
recent years.
Although The p Ian OF automatic re-
duction in rates with increases in
dividends as it is being put into
practice here has no officfia force,
having been adopted by the com
pany on its own initiative, it IL be-
lieved that it will work as satisfac-
torily in the United States as it has
in the past in Great Britain. One of
the chief advantages OF the new sys-
TEN is that it does away with all Or
binary causes of friction between the
ublic and the public seryiyee corpo-
ration by making the members of the
former practically profit sharers with
the latter and by making it to athe
Benefit Of the corporation to conduct
It's business in the most economical
manner possible because thereby it
Is enabled to increase it's own re.
Turns.
In Great Britain where the plan
originated it is applied only 10 gas
companies but there seems to be no
reason in the orhion Of those who
have studied 1t why it cannot be
adapted to electric lighting, tele-
phone, telegraph companies and in
fact to practically ali public service
CORPORATIONS.
The plan which Is known as the
sliding scale. as 1t Is operated in
Great Britain, provides in brief
that a company shall be permitted to
increase the amount it distributes to
its stockholders whenever it reduces
the charge to the public for its com
| modify. In other words, whenever
public service company raises its
dividend to its owners it must also
distribute a dividend to the public
in the form OF a reduction in rates,
The proportion in which the stock
investors and the users of the corpo-
ration's facilities are allowed to
share in increased earnings varies in
different communities according to
local conditions, but the general aver
age is from three.fifths to two.thirds
for the public and one-third to two
iliths for the shareholders.
Some of the advantages of this
| plan are obvious. Under ordinary
| methods of regulation the public SER
vice corporation has no special in
ducement to give good service and
| TO provide an economical admins.
, tration OF its own affairs. Attempts
are made to enforce service through
the mandatory rulings of commits
sions, courts or state legislatures but
! there Is always room for wide differ
ences Of opinion as to whether the
statements OF the companies as to
costs of operation are correct or not
or as to what is a proper return upon
its investment, These controversies
foster ill-feeliag on both sides and
lead to protracted litigation that re-
, suits in loss both the public and
to the corporation.
Under the sliding scale plan all
thcse causes of misunderstanding are
removed. The companies have every
inducement to extend their business
by good service and to Civ it careful
management in order to increase
thei net eanings 70 it is only by max.
ing these large enough to make pos
sible a reduc tion in rates that they
can increase the distribution toetheir
stockholders. Thus the elaborate
and expensive machinery of commits.
sions with highly paid experts and
reports covering every detail OF ope-
ration are rendered largely unneces-
sary. The interests of the companies
and the public become identical and
the main causes of friction are re-
moved.
While the plan is simple one In
its general outlines and in its method
OF operation there are many details
to be settled in starting it in opera
ton, A fair initial rate of dividend
must be decided upon. In the case
Of the British gas companies this fig.
ure has usually been set at 10 per
cent, 1t must be made high enough