Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1917-11-06
UTILITIES NOW
FACING CRISIS
Cost OF Operation Cripples
Them, Says Prof.
Conway.
PAY ROLLS A HEAVY DRAIN
Expert Tells Convention oftDe.
creased Earnings.

ATLANTIC CITY. Oct. 26-SIembers
of the New Jersey Utilities Association,
in annual convention at the ST. Charles
Hotel here. heard an address this after
noon by DR.. Thomas Conway, Jr, pro-
fessor of finance OF the University Of
Pennsylvania. His subject was ''Ths
Problem of Higher Operating Costs and
Commission Control OF Rates" He said. /
in part: t
"The cost of operation of every ella 50
of public utility is rising so RAPIDLY
that only those who are giving close
and constant attention to their opera-
ton are fully aware of the serious sit
uatfon which has developed. The. testi.
mony before the New York Publicl Serv-
ice Commission in the so-calleda 6-centa
fare cases shows the dire straits into
which the electric railways have fallen,
Less than half the companies are earn.
ing their fixed charges; only three out
of thirty-three city lines show sufficient
earnings to enable them to sell bonds,
or, in other words. to secure newscap-
ital for additional facilities" a
DR.. Conway reviewed recent ten.
denotes in the electric and gas fields.
He pointed out the almost UNIVERSAL
decrease I'm net earnings, selecting for
his Illustrations well-managcd andfco
servativeIy financed companies. Con-
tinuing. he said: II might multiply the
record indefinitely. but all that could
do would be to show over and over
again the effect of the alarming i'm
crease in operating costs upon the
financial welfare Of all classes OF pub.
lie utilities. IS
Rates have remained stationary.
while operating costs have increased.
The result has been a decrease In net
earnings available for interest and divi-
dends. The rise in operating costs has
been due entirely to the tremendous
increases in the cost OF materials and
supplies of every class and to. the,
higher wages which the companiess
were compelled to pay because ofywage5
advances in other industries which are
the utilities competitors for labor.
The utilities are turning. to the pub
lie service commissions for relief
They are asking that'rates be sufficient
ly increased to equalize the growth lin
operating expenses. The future of the
public utility is dependent largely upon
the broad mindedness with which WE'LL
founded pleas are received and. con-
sidered. ;fFa
IF history IL any guide. It would
appear that there Is a strong probabil.s
ity OF abnormally high prices prevail
Ing over period OF years. e. ~
The public service commissionsimust
make choice between gambling upon
the speedy passing OF high prices and
which assumes that high pricesrwiHl
prevail for som" years. The latter ar
tentative would allow the utilities t.
advance rates until the recession. oc.
ours. 1t seems to me that there can
be, no question that the spirit offths
public utility law in every State is that
these corporations shall be permitted to
earn a reasonable return under al, con-:
ditions. Theirs is not a specuiatiys
business, in which they must takeslehK
chances, and in which success is to be
rewarded by very large profits. Pub 2
lie utility profits are closely limited In
good years, and because Of this limIta-
tion they must be sustained in years
of adversely. 'Sy
The utilities accurately appreciate
the psychology Of the American people
when they conclude that we aresa ma
ton which will not tolerate poor sery-S
Ice. We are willing to see useless pas s
senger service curtailed when track
capncity is necessary for the movment
OF munitions and materials OF war; but
we are not willing to see our public
utilities retrograde lin the absence rof
some imperative national necessity
Adv tSs.5