Evening journal., 1918-06-14
PUBLIC UTILITY CREDIT AND IT'S PROTECTION.


N the Wall street Journal we ind an article on public
1 utility credit aud IT'S protection which should be
read and digested by all Wllnngonians view OF the
trolley fare controversy that exists in
munliy and the nearby territory.
That article shows that the public utility corpora
tons in the United States aggregate capitalize
tlon Of more than sl0O0000OO0 The combined annual
gross earnings OF these companies amounts to more
than si50O000O0O annum and their funded debt ma
turing in 1918 approxmaes s225OO0OO0. II Is estimated
that they carrying in addition. about s3OO0000OO OF
short-term notes
"These obligations cannot be met II the companies
have impaired credit and this is Of the important
problems that has been taken up by bankers OF the large
cities in the East is asserted zone plan under con-
sideration is for the bankers to join with the utility
companies requesting State public service commissions
TO allow such advances rates necessary to meet
Increased costs Of operation and leave margin to sup
port the credit basis Of The companies.
"Tle low rates for service rendered by the public
utilities were in many cases. fixed years by special
law or by provisions contained in the ordinance or fran
ehise. The rate OF fare. in effect made part OF
the consideration for granting the franchise
but the franchise method Of fixing rates is too rigid
10 meet present day conditions. The franchise while
holding down the charges for the service on the one
hand does not hold down costs the other hand and
so top-heavy condition has gradually been created
with costs rapidly overcrowding gross revenues.
"The commission form Of regulation was developed
10 remedy the evils OF the rigid franchise method Of
regulation but the commission form OF regulation
is beginning TO lose esteem among thinking people be
caune OF the rut into which the Interstate Commerce
Commission allowed the railroads TO drift.
From 1910 until December %. 1917 when the Presl-
dent took over the carriers the railroads made steady
gh before the commission for living rates Instead Of
granting the carriers the relief required the commission
either refused their applications or allow increase
IN rates and gave largo quantities Of advice TO the
economical operation Of the roads That the situation
had been explained by the heads Of the railroad
companies shown in the action Of Drecor-Genera
McAdoo few months after taking hold Of the work
when he ordered the largest increase in freight and
passenger revenues granted at time The action
Of the Director-Genoral interpreted by many as
virtually dscredng the decisions and policy Of the Inter
state Commerce Commission.
"Now public utilities arc faced with similar prob
lem They have laying their before the State
public service commissions but relief has very
slowly The necessity for the maintenance Of efficiency
and credit OF the public utility companies has been point
ed out by such Government heads President Wilson,
Secretary McAdoo, Vicc-Govenor Warburg Of Federal
Reserve Board and Comptroller Williams. They have
supported The position of the public utility companies
on the question Of the readiustmen Of TO meet
war conditions.
'Tho lesson drawn from the action OF the Government
in taking the railroads plainly that the
posing The rae-makng bodies Of the various states must
have the courage TO rcadus rates TO conditions and
prevent ruin from overtakng many Of these corpora
lions face the possibility Of The Government taking
control OF the utilities so deprving the rate-making
bodies their regustive power II the Government does
fake hold rates VIII be adjusted 70 the OF service II
the action OF the DlrectorGonera in the OF tho rail
roads can he taken as a criterion"