The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1912-07-17
Equal Wafer
Rates for All


the negotiations now pending about
you will read its contents to the board
Of public works. ! would like to ap-
pear before your meeting Wednesday
to discuss the proposition regarding
rates that will deal with in this let
ter but political organization work
that is demanding my time in the 9TH
er counties of this district prevents
me doing SO.
As write ! have before me the re-
eeipted bill Of the Water Works COM
pany for water supplied the Palladium.
On II is a schedule Of rates beginning
with domestic consumers at twenty
five cents per thousand gallons and
running down to $4,000 gallon con-
sumers at six cents per thousand gal
Ions. OF course this is simply the old
business policy Of giving the larger
purchaser a cheaper price than that
accorded the smaller purchaser. Be-
cause, however, this policy happens to
be very old is no reason why 1t needs
be considered right.
As a matter Of fact at the end Of
it's business year the Water Works
company subtraets from the total
amount of money received for the to-
tai amount Of water II has sold dur
ing that time the entire amount OF
it's operating expenses, the remainder
representing the sum from which fix
ed charees-bond interest-are to be
met and profit figured. In other
o< ite r
the Water Works company finds that
it is the average price it has received
per gallon that is the determining fac
tor in meeting the average cost Of de-
Iivering the average gallon OF water.
II that average cost is six cents per
thousand gallons, then those who are
paying twenty-five cents per thousand
gallons are being charged an exorbi-
tant price. II the cost per thousand
saIIons-and without a doubt 1t Isis
! considerably above six cents, then
those large consumers who are
! receiving the latter price, who are
buying below the cost Of production,
are being favored still more at the ex.
pense of the smaller consumers.
cannot but contend that it 10 a
| grave injustice to the domestic con.
sumers of water In Richmond to carry
the policy Of protection to such
lengths that they are charged price
high enough to enable the larger con-
sumers of water to receive price con-
siderably below the cost Of production
Suppose in the first place the city
would no longer permit this condition
to exist. Suppose that the schedule
| of rates to be bid upon contained az
/ its lowest ratee ten cents per thousand
gallons, which we will consider the
cost of production for one thousand
gallons. The Water Works company
we will say, will contend that at this
minimum rate it will lose the busi
ness of a number of large consumers
who have been enjoying the six cent
rate. Would an impartial judge be
able to prove this was depIorabie
| Ioss-this business that was obtain
ed by selling a Thousand gallons Of
water at 400 under cost?
Let me use another illustration
Take the case of Gaar, Scott E. Com
pany and the Robinson Company, both
manufacturers OF threshing machinery
the one concern employing consider
ably more labor than the other-be
tween four or five times we will say
In this instance consider labor as q
commodity-just as water Is a com
modify. Suppose the average wage
per man is ten dollars a week. Take
that figure as the cost Of production
| per unit Of labor. Gaar, Scott e. Com
pany is the larger consumer OF labor
and Robinson g. Company the smaller
Does that mean that Gaar, Scott &
Company pays it's iaborer six dollars
the smaller consumer, fourteen dol
lars? No. Both pay the same wage
an average wage.
Why not apply the same principle
/ to the price. that is to be paid in the
future for water in Richmond? Why
not charge all consumers the same
price per thousand gallons and allow
large consumer and the other a small
one? Take the average cost Of pro
duction of a thousand gallons Of wa
ter and base the one rate on that
standard, allowing a liberal margir
from which to meet fixed charges anc
pay fair profit. II there Is any diff
fieuIty in deciding just what a fall
profit is study what Louis Brandeis
did for the city Of Boston and its sas
company. Roughly and only approx
mateiy for ! have not at hand my
data regarding that example. he drew
up a franchise that was satisfactory
to the citizens and the gas company
that settled the question of fair profit
in this manner; At 81 per Thousand
feet the company could pay five pei
cent dividends from earnings; Il
/ through increased consumption and
! lower production cost the company
reduced the price to 80 cents pei
thousand feet 1t could pay six per cent
| dividends; II this lower price stimu
| lated increased consumption and ef
ficiency so that the company could
reduce its price to 80 cents per thous
and feet, then il could pay seven pei
cent. dividends, and 50 on. Naturally
under such an arrangement as applied
to the Water Works company IL would
! first be necessary to ascertain its true
/ investment SO that dividends on IVA
tered" stock would be out of the ques
| ton.