New-York tribune., 1918-06-23

wages and higher prices the people
will pay the necessary higher rates for
utility service, rs q war measure to
help win the war. There can be but
one answer.
Tho obligation to inform the people
on this vital question rests on the pub
lie utility commissioners Of the several
states. The whole question Of rates is
in their hands. They have met the
popular demand for low rates, so low
that most utility companies have no
reserves to carry them through pc
riods of high costs of operation, and
they have, like the Interstate Com
merce Commission, held down the
earnings of public utility companies,
notwithstanding increasing demands
for better service and, during tho war
period, increasing costs Of operation,
until tho utility companies are starved
for want Of funds and want Of credit.
If their regulation is to be constructive
and OF value to their communities it is
for them to inform the people that
their communities can prosper and the
war industries Of the country can be
efficient and effective only If they have
adequate service in all the time and
labor saving devices furnished by the
public service corporations, and that
service can be had only If fairly paid
for.
The securities Of public service COM
panies are very widely distributed and
are held in large amounts by other
publicly owned institutions, by insur-
ance companies, savings banks, trust
companies and national banks. The
public service companies, exclusive of
railroads, and including equipment
companies, represent an investment Of
approximately $4,000, 100000. the in
trinsic value Of much Of which, as we'll
as the immediate earning power, Is Sc
riously affected.
A settled practice Of starving the
utilities through inadequate rates
under existing conditions must have q
wider and deeper financial effect on the
welfare Of the nation at war, than the
mere loss to the individual investor.
Defaults in principal and interest Of
the sums required for public utility
financing react on the ability of the
people to respond to the country'S
financial needs through subscriptions
to war loans and payment of large tax
assessments. Permitting defaults in
turing public utility securities must
shake the confidence Of our people in
the industrial and financial institution
and loss Of confidence means loss Of
initiative and effort, boarding, unrest,
and all the dangers incident to doubt
and suspicion of the leadership Of
those responsible for our policies.
The War Finance Corporation is be-
lieved to have been the response of
Congress to the public recognition by
the President, the Secretary Of the
Treasury and the Controller Of the
Currency, Of the vital need of utilities
to our war preparations, and the pas
sage Of the bill was welcomed, not
only as the expression by Congress Of
the need Of preserving the efficiency of
these quasi-public institutions, but
also as making provision for all the
machinery for giving national aid to
meet their maturing obligations.
The War Finance
Corporation Attitude
Unfortunately, the board of directors
of the War Finance Corporation do
not feel that they have any authority
under the law to make loans directly
to utilities, except in exceptional
cases, and the War Finance Corpora
tlon expects to deal only with con-
Germs that are solvent and able to
provide bankers guarantee; mean
ing, as 1t is generally understood, that
they will lend money to banks on their
own responsibility where the banks in
turn have bought or loaned upon pub
lie utility securities, requiring the in
dorsement of the bank, as we'll as the
obligation Of the borrowing company.
This would require the assumption by
the banks Of the country Of obligations
to the War Finance Corporation for
the payment Of such loans at their
maturity, an obligation which, as the
bankers of the country declare, they
ought not and cannot under the law
or with safety to their depositors
properly undertake. The banks of the
country are merely merchants in deal
ing with long time securities. They
cannot safely nor should they be per-
mitted to lock up their funds in obli-
cations Of long maturity, or which are
even temporarily unmarketable. Nor
should they be expected to make ac-
commodation Endorsement for public
utility companies or any other bor-
rowers, as a condition to the granting
Of national aid to meet a nationai ne
cessity.
The directors Of the War Financs
Corporation have, however, urged upon
the proper authorities that prompt
consideration be given to applicants
made by public utilities for permission
to increase rates. They have said that
sit is matter for the local authorities
to determine whether or not an increase
in rates, sufficient to maintain the en-
terprise as growing concern, should