Evening journal., 1919-07-05
THE PUBLIC UTILITY SITUATION

I price Of wheat, and with no fixing oi
minimum prices for their product suct
as was placed on other basic commo-
dities in order TO encourage produc-
/ ti0n, and with no guarantee from the
government such as was established In
the control Of The railroads, telephone:
and telegrapbs
Capital had TO be secured % take
care OF maturing obligations. amount
| ing in 1918 10 over S225, 100000. at in
terest rates in many instances much
! higher than the fixed rate Of return
allowed on the investment by fran
chises and other regulations, and with
| the temporary sacrifice in many cases
Of a large part OF the equity value. In
normal years The amount OF new money
required annually by public utilities f0I
extensions 10 plant aggregates from
SGOOO0O,OOO TO S1O0OO0OOO. During the
period Of the war these requirements
were cut 10 approximately S25000O0O0
per annum, but this money had TO be
raised in addition TO The maturing .ob-
legations. In not a few cases new plant
was supplied and financed for war re-
quiremenis which may prove unneces-
sary when peace conditions are COM
pletely restored. No broad provisions
were made 10 enable public utilities TO
write off expenditures Of this kind 10
"war loss" yet we read that in iho
operation Of The railroads lbe govern
ment today is spending over. 90 cents
out OF every dollar taken In and the
cost TO the taxpayer is already effected
in the appropriation applied for at this
session Of Congress by the director
general Of The railroads amounting to
81 100000 .000
For the year 1918. 10 was estimated
that the net operating revenue OF the
traction companies i'm the United States
approximated s7OOOOOOO, with only a
few months Of the National War Labor
Board awards reelected in expenses.
Increases i'm expenses through these
awards amount TO over Si0OO00000 an
nually I'm many cases the credit Of
these companies had been previously
impaired by the competition Of the
"iitney,' which flared mp as \ serious
menace during 1915 With regulations
imposed 10 safeguard the public and
because through actual experience 10
was found that the "iitney' business
at best afforded only a precarlOus lv-
ing. by 1917 10 ceased 10 be an import
ant factor except as 10 left companies
i'm q weakened financial condition 10
Withstand The adverse factors OF opera
tion during the war period As far as
the fractions are concerned since we
entered the war I'm 1871 and up 10 Feb
ruary 4. 1919. companies operating
4 ffne ~ fwnnlr rnrturennf n
approximately one-tenth Of the total
street railway mileage, have gone into
receivers hand, that about 800 miles
Of track have been completely aban-
doned and that foreclosure sales of %
roads, representing 52i miles Of track
have resulted.
In speaking Of public utility credit
it must be borne in mind that by far
the greatest problem Of readiustment
applies more particularly to the build
lng up OF the credit Of the traction
companies. Electric lighting. gas and
power companies have not had so
an Increase in costs Of la
Dor and through coal clauses and
rate increases have been better able to
make the selling prices Of their product
bear the additional costs of production.
the business Of these
companies has been based more nearly
on the cost OF production, Whereas the
street railway business has heen dc
Veloped with a fixed unit Of fare re
Of The cost OF service. The
profit from the short haul that was
possible in times Of lower costs car
ried the lOng-haul passengers for the