The daily Gate City and constitution-Democrat. (Keokuk, Iowa) 1916-1922, 1919-07-24
THE PUBLIC UTILITY SITUATION
From Stone & Webster Corporation


a solid basis for optimism in the
public utility situation, and that at
present prices, with conditions i'm
proving, the opportunity is open for
profitable investment in many securi-
ties of established companies. Pres.
dent Wilson, in his recent message
to congress, has called the attention
of the country to the need of con-
structive action in regard to public
utilise. Acting upon the joint
recommendation of the secretaries of
commerce and Of labor the appoint
ment of the federal electric railways
commission was announced on June
9Th. This commission has been in
structed to investigate the street rail
way situation and make recommen-
dations. The question, therefore, of
restoring public utility credit has be.
come definitely recognized as one Of
to be solved during the coming
period of readjustment.
This credit must be re.established
on a basis that will insure to this
great industry. representing an in
vestment Of rising twelve billions of
dollars, not only an adequate return
on the capital already invested but
also sufficient safeguards for the new
capital that must continually be at
! tracted SO that utilities may serve In
the growth of the nation. One must
lose faith in our institutions and in
: the common sense OF the American
people to believe that necessary re-
adjustments in rates for service will
not continue until capital is again
/ Forthcoming for investment.
! The service rendered in supplying
light, power, gas and transportation
in our cities and for our manufac-
tories is as fundamental to the In
dustrial and economic life OF this
country as are our railroads, our
mines, our oil fields, our agricultural
/, lands and our factories. 1t is esti-
mated that the urban population
served by street railways and inter-
urbans is upwards of 100000 and
| that they move over 20,000,000,0 900
passengers annually. More than so
/ per cent. Of the industrial factory
power of the country is furnished by
light and power companies and the
proportion of our total population of
about 1O7,000,000 not touched by
either electric light or gas is very
small indeed. The savings invested
in this branch of industry as reflect
ed in public service securities held
by savings banks and societies, by
trust companies, life insurance COM
panies, endowment funds of educa-
tional institutions. hospitals and
churches, as well as by thousands #
individual investors, both rich and
/ poor, are a considerable part of all
the savings invested in the pernna-
nent structures of the country, de
voted to the great community neejs.
Yet, this great group Of public
service companies, serving national
needs, shouldering all the higher
costs Of labor, taxes, materfa's end
supplies occasioned Wire s.. ar. fe.
ceivca prt otically s.ns.r -tnc'al aid
from governments a. arces and no
assistance in a -llprehensive plan
for effective and speedy relief in the
way of securing higher rates and
fares,-except as could be worked
out by each Individual company
through the slow method Of applica-
ton to the state commissions, NUM-
!cipal authorities and referendum
vote. This great industry was
obliged to "carry on" and the record
achieved instead of deserving the
more or less popular comment,
What is the matter with public
utility credit?" is more worthy of
the question, WHY'S 1t in such COM
paratively good shape as 1t is?" The
fact is, that public utilities did
carry on" In spite of the Difficult
ties of operation they took up the
war burden with no guarantee such
as that which went to the farmer for
the price of wheat, and with no fixing
Of minimum prices for their product
such as was placed on other basic
commodities in order to encourage
production, and with no guarantee
from the government such as was
established in the control Of the rail
roads, telephones and telegraphs.
/ Capital had to be secured to take
care of maturing obligations, amount
| ing in 1918 to over S225, 900, 900, at
! interest rates in many instances
much higher than the fixed rate Of
return allowed on the investment by
! franchises 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 for extensions to
plant aggregates from 100000, 900
I to $500, 900 During the period of
/; the war these requirements were cut
z! to approximately s25000O,0oO per
annum, but this money had to be
raised in addition to the maturing
obligations. In not a few cases new
plant was supplied and financed for
war requirements which may prove
unnecessary when peace conditions
are completely restored. No broad
provisions were made to enable pub
lie utilities to write off expenditures
of this kind to war loss" yet we
read that in the operation of the rail
roads the government today is spend
ing over 80 cents out of every dollar
talren in and the cost to the tax
payer is already reflected in the ap-
preparation applied for at this ses-
sion of congress by the director gen
eral of the railroads amounting to
$1,000, 100000.
For the year 1918 it was estimated
that the net operating revenue of the
fra ction companies in the limited