Douglas daily dispatch., 1928-02-22
PINCHOT GIVES
PERSONAL VIEW
ON WALSH BILL


he quit the governors office in Penn
sylvania has become evident recently.
He took an active part in the fight Of
the U S. senate against Smith and
Ware because of their expensive meth
ods in campaigning for the u. S. SEN
ate. Ware defeated Pinchot, who, him
self, had spent about Sl50,000 but
Wares campaign cost over one million.
Now Pinchot is campaigning for con-
troll of the public utilities with special
reference to the power companies of
the nation. He has just given out a
widely used interview in which he
says:
Can regulation be made to regulate
can the consumer of electricity be
assured of reasonable rates by regula-
ton, or can and will the electric in
terests prevent it?
THAT is the essential question in
volved in the Walsh resolution in the,
U. S. senate. The same issue is at
this moment before the legislature of
Massachusetts in form that gives it a.
direct interest to every householder in,
America.
This question has been put before
the legislature by the Massachusetts
utilities commission because of the
very serious difficulties it has met IN
its effort to protect the public against
eXtortion by electric utility corpora
tons
when the commission reduced
electric rates in the city of Worcester
from seven cents per kilowatt hour To
five, on the general principle that rates
should be fixed on the basis of money
actually and prudently invested, the
company brought suit in the federal
court Of Boston. Thereupon the court.
by injunction, forbade the enforce
ment of the Massachusetts commits
sion's order until the suit should be
decided which may well take many
years. For all these years the consum-
ers of Worcester will have to keep on
paying seven cents instead of five.
"The Massachusetts, commission says
that it has been constantly confronted
in the fixation of rates with long, in
volved and expensive hearings in which
the electric utilities have seriously
presented the value of the property
based upon the cost of reproduction
less depreciation, as base upon which
they we're entitled to receive re-
turn g
"The commission further says: The
danger of the so-called United States
supreme court doctrine (rlte fixing
on the basis of present value chiefly
measured by reproduction cost less
depreciation) being enforced in this
commonwealth is so great that we
think that we should at this time
make preparations to avoid the results
Of such doctrine. This doctrine pro-
notes greed and gluttony upon the
part of the owners of public utilities.
It asserts that the''owners of the pub !
lie utilities are entitled to retain and
earn profit upon excessive earnings
which they may have exacted from
the public. 1t asserts that the public
has no real control over these utilities
other than an Intellectual method of
regulating rates. Notwithstanding thatI
the public gives to them exclusive
rights in the highways and confers up
on them the sovereign power to take
private property by eminent domain.
Moreover it asserts that the prop
erty of the utility is increase in value
by improvements in the public high
ways and that the owners of the util-
erty of the utility is increased in value
by reason of these improvements and
of the enhanced value upon its prop |
erty resulting from the growth of the
communities It also asserts that the
owners of the utility are entitled to
earnings upon the reproduction value
of the property less depreciation, not
withstanding the service performed by
it could be performed as well, if not
better, by property that would cost
much less
"To meet a like situation in PENN
sylvania the giant power survey board
proposed state legislation offering to
+l-o power companies q contract, to be
embodied in their charters, which
would bind them Gas does water
power license contract under the fed
eral water power act) to accept rate
regulation on the prudent investment
rate base Companies which refused
to make this contract were to lose
certain old privileges like the right TO
condemn property and to be denied
new charters, mergers, and municipal
franchise grants.
1.-The Massachusetts commission now
recommends: legislation which Will Oh
fer to the power companies q like con-
tract. If they refuse to make this
contract with the state they will lose
rioht to take proper - 80 '-----t
domain and will not be allowed to
issue arv new stock or bonds Fur
thermore, the law which makes priv
ileges granted to companies by mu-
inequalities irrcvocable, except for
breach Of condition, will be repealed.
and they will lose their monopoly to
the extent that municipalities in which
they operate will be allowed to supply
electric current to their inhabitants
without first buying the company'S
plant.
"These companies which accept the
contract will be allowed to issue stock
dividends to their stockholders in cases
where that is necessary to make the
par value of all outstanding securities
equal to the actual money investment.
On this actual investment as a rate
base each contracting company may
earn enough TO enable it to pay divi-
dends sufficient to maintain the mar
ket value of it's shares Of capital stock
at their par and no order allowing