The Republican. [volume] (Oakland, Md.) 1877-current, 1928-03-15

utilities are entitled to retain and earn
a profit upon excessive earnings which
they may have eXacted from the pub
lie. 1t asserts that the public has no
real control over these utilities other
than an Intellectual method of regu-
latlng rates, Notwithstanding that the
public gives them exclusive rights in
the highways and confers upon them
the sovereign power to take private
property by eminent domain.
Moreover it asserts that the prop,
erty of the utility is increased in value
by improvements in the public high
ways and that the owners of the utiI-
ity are entitled to increased ernings
by reason of these improvements and
OF the enhanced value upon it's prop
erty resulting from the growth of
the communities. 1t also asserts that
the owners of the utility are entitled
to earnings upon the reproduction
value of the property less deprecia-
ton, notwithstanding the service per-
formed by it could be performed as
well, if not BETTER by property that
would cost much less"
To meet like situation in Pennsyl-
vania, the Giant Power Survey Board
proposed state legislation offering to
the power companies a contract, to be
embodied in their charters, which
would bind them las does a water
power license contract under the Fed
eral Water Power Act) to accept rate
regulation on the prudent investment
rate-basis. Companies which refused
to make this contract were to lost GER
tain old privileges like the right to
condemn property and to be denied
new charters, mergers and municipal
franchise grants.
The Massachusetts Commission now
recommends legislation which will Of
fer to the power companies a like
contract. If they refuse to make this
contract with the State they will lose
the right to take property by eminent
domain and will not be allowed to is
sue any new stock or bonds. Further
more, the law which makes privileges
granted to companies by municipali-
ties irrevocable, except for breach of
condition, will be repealed, and they
will lose their monopoly to the extent
that municipalities in which they OPP
crate will be allowed to supply cleo
trio current to their inhabitants with
out first buying the company's plant.
Those companies which accept the
contract will be allowed to issue stock
dividends to their stockholders in
1ses where that is necessary to make
the par value to all outstanding secur-
tiles equal to the actual money in
vestment. On this actual investment
as a rate-base each contracting COM
pany may earn enough 'to enable it to
pay dividends sufficient to maintain
the market value of it's shares of cap
ital stock at their par value, and no
order allowing earnings to that
amount shall be modified, amended or
annulled as unlawful, unjust or confis-
catory."
The Pennsylvania Giant Power pro-
posals were and still are denounced
by hired spokesman of the power COM
panies as radical and dangerous. Their
adoption by the Utilities Commission
of staid old Massachusetts is proof
enough, if proof were needed, that
they are just and conservative.
The Pennsylvania Giant Power
Board and the Massachusetts Public
Utility Commission have blazed the
trail for their own and their sister
Commonwealth.
The principle of fixing rates on the
money actually and prudently invest
ed is obviously fair and reasonable. 1t
can be fully applied to past invest
ments only by States which have held
security issues down to the amount of
the prudent investment, as Massachu-
sets has done, for the inocent inves-
tor must be protected. All States
may apply it to new companies and
to new capital invested in old COM
panies.
The power companies blocked the
trail for Pennsylvania for 1925 and
1926 by defeating the Giant Power
bills. Will they block it for Massa-
chusetts in 1928 by defeating the Com
mission bill? Will the other States
follow it through to the square deal
and to freedom from usurpation by
the Federal Courts of control over
the corporate servants and creatures
of the States?
This momentous issue is now be-
fore the Legislature of Massachusetts.
It should be up in every Legislature
and in the mind of every thoughtful
citizen who loves his country and de-
sires justice. To that end you may
make such use of this letter as you
please. Sincerely yours,
CLIFFORD PINCHOT.
Milford, Pike County, Pa, Feb. II.