The Richmond Virginian. (Richmond, Va.) 1910-1920, 1917-11-06
UTILITIES NOW
FACING CRISIS
Cost of Operation CrippIcs Then, Says
Professor Conway.
PAYRoLr4s A HEAVY DRAIN
Expert Tells Convention of Decreased
Earnings.

Atlantic City. Oct. 5e.--Members 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 The
Problem OF Higher Operating Costs
and Com mission Control of Rates"
He said in part:
The cost of operation of every class
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
situation which has developed. Thu
testimony before the New York Public
Service commission In the so-caIied
8 cents fare cases shows the dire
straits into which the electric rail.
ways have fallen. Less than half the
companies are earning their fixed
charges: only three out OF thirty
three city lines show SUFFICIENT earn
ings to enable them to sell bonds. or.
In other words. to secure new capital
for additional facilities"
Or. Conway reviewed recent ten.
denotes In the electric ard gas fields
He pointed cut the almost universal
decrease in net earnings. selecting for
his Illustrations well managed and
conservativelv financed comapanies
Continuing, he said. IT might multiply
the record indefinitely. but all that I
could do would he to show over and
over again the effect OF the alarmins
increase in operating costs upon the
fna ncial welfare OF all classes OF pub
lie utilities
Rates have remained stattonarv
while operating costs have increased.
The result has been decrease In net
earnings available for interest and
dividends. The rise in opera ting costs
has been due entirely 70 the trcmen-
dous increases in the cost of rnaterials
and supplies of every class and to
the higher wages which the compan-
les we're compelled tn pay because of
wage advances in other industries
which are the utilities competitors for
labor.
The utilities are turning to the
public service com missions for relief.
They are asking that rates he suf-
fciently Increased to equalsze the
growth in operating expenses. The
future Of the public utility in darend-
ent largely upon the hroadmin etness
with which well founded pleas arA
received and considered.
II history II any guide ~ would
appear that there Is a strong proha.
biiity of ahnormaily high prices pre-.
waiting over a period OF years
'"The public service commissions
must make a choice between gam
bling upon the speedy passing of high
prices and the adoption Of conserva-
tive policy which assumes that high
prices wifi prevail for some wears.
The latter alternative would allow the
utilities to advance rates until the re-
cessien occurs. 1t seems to me that
there can be no question that the
spirit OF the public utility law In very
State Is that these corporations shall
be permitted TO earn a reasonable re-
turn under all conditions. Theirs is
not a speculative business In which
they must take long ehaneex- ard In
which success Ia to he rewards I'd by
very large profits. Public utility
profits are closely limited in good
years. and because Of this limitation
they must be sustained IN years OF
adversely.
THE utilities accurately appreciate
the psychology of the, American peo-
pie when they conclude that we are a
nation which will not tolerate poor
service. We are willing to see useless
rassen ger service curtaiied when trs elk
capacity IL necessary for the move
mcnt of munitions. and materials OF
war. but wa are not willing to see cur
public utilities retrograde In the alb
sence OF some imperative national
necessity."-Adv.