Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-09-15
RICHIE FOE OF us.
UTILITY OPERATION
"WouId Make Us Political
Slaves Of Government"
He Tells Lawyers.
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II have more confidence of benef-
icent outcome under enlightened busl-
ness leadership, with minimum OF
governmental interference than / have
of getting very far by making this the
foot ball Of politics and politicians. And
without meaning to question anybodys
sincerity, may be permitted to wonder
whether gentlemen who discourse 50 ex-
travagantly and so paSsionately on the
subject are not really laying down a
barral1 or smoke screen with when
they hope to hide other issues-such,
for eX ample, as prohibition-aoout
which ley may rot think 1t polltlcally
wise TO speak SO boldly"
Gov Richie spoke in part as follows:
Issue Confused by Politics.
II know of no public question in
which law and economics are more IN
timately interviewer than they are in
the public utility question. And l
know of no question which IS being
more confused by politics.
1T has become the fashion in certain
quarters to see monopolistic abuses and
capitalistic exploitation Of natural re-
sources and of consumers and tax
payers in almost everything certain
utilities do, and to demand drastic
governmental action.
Justly or unjustly, the public utilities
seem to be more or less under suspicion.
Perhaps this is due in part at least to
the fact that through natural economic
evolution the utilities are generally
monopolieS, and by tradition monopolieS
are odiouS.
I'VE may as we'll start. however, by
admitting that the utilities have not
frAa f6nir cl1nr Of fot re
The ambition to build up great fortunes
and the concentration of power through
the merger of innumerable independent
concerns, either by consolidation or by
the device of holding companies, has
doubtless led to instances of manipu
lation or exploitation in the utility field,
as the same things have done in other
Tields, and the whole range of public
utility operations is admittedly one call
ing for public scrutiny and supervision.
Opposes Federal Ownership.
THE question. of course. is, What
should society do in order to protect
itself. and to guide and direct utility
operations for the public good? What
is the economic policy or, If you will.
the political philosophy which should
animate Government in its approach to
this question?
mands for drastic action you find that
they generally involve the idea of Gov
eminent ownership. This is true of the
agitation now going on with respect to
the power industry, against which the
attack upon the utilities is at present
concentrated
The national policy, it seems to me,
must not be Government ownership.
The capitalistic system has its defects,
of course-periods of forced unemploy-
ment is perhaps the worst-but it has
centuries of evolutionary growth back
Of it, and under it we have come to
lead the Nations of the world in every
form of progress. I do not believe in
Gripping it.
Our political ideal always has been
to encourage private enterprise, to be-
stow upon it the earned rewards of
brain and labor and to keep open the
door OF opportunity. Here, believe, is
the key to our material success. Here
is political ideal worth guarding and
worth fighting for.
When you come to the extent to
which Government should enter the
domain OF business, and own, manage
or control activities hitherto left to pri-
vate capital and enterprise, you are
confronted by issues that are as revo-
lutionary as they are difficult.
IF Government ownership is so de-
sirable for public utilities, one might ask,
Why not apply it to every business in
which the public has an economic in
terest-and what business is there in
which 1t has not?-from foods, fuels,
clothing, houses, amusements and luxu-
rieS on down the line? If it is eco
nomically advisable in the one case,
why is it not equally so in the others?
Ontario Project Analysed.
Perhaps the instance most fire.
quently cited for the success of public
ownership is Ontario. I venture the
assertion that in Ontaro Sir Adam
Beck built up great political machine
on an economically unsound project,
which sells current to domestic con-
Sumers at less than fixed charges and
the cost of production and distribution,
and that the industrial users and the
taxpayers pay the losses.
Indeed, l would like to sec all Gov
ernment-owned projects subjected to a
simple test. Regard them as if they
mad to stand on their own feet, as If
they had to keep their books as private
~ owned enterprises Of like character
must keep theirs, and pay taxes on the
same basis. Regard them as If the
national, State or municipal credit was
not behind them, and as If their charges
and losses could not be buried in gen.
eral Government accounts. Do that,
and l venture to say that nearly all will
show operating deficits.
l have said that government owrer-
snip OF the power industry would make
lis political slaves of the Federal Gov
eminent. BY that mean that 1t would
result in political machine staggering
in its magnitude. That is what has
happened in Ontario. 1t would just as
surely happen in this country.
In 1880 there were 5000 people
employed in the electric light and power
business, 234, 900 men and Al 900 women
The salaries and wages paid them,
based on the payments actually made
to those employed in 1927 as shown in
the United States Census report of that
year, was S435, 100000.
The taxes paid by the power in
dustry would. of course, be lost in case
OF Government ownership. In 1880
feSe taxes amounted to 100000, 900,
of which over 80 per cent went to the
Federal Government. from 10 to Is per
remainder to the various cities and
counties. These taxes amount to prac-
tically 10 per cent of the gross revenues
of the power companies. If the industry
stops paying this enormous sum toward
the support Of Government, as it would
do if Government took it over, then
the already overburdened taxpayers of
the country would have to dig down in
their pockets and make It up. Thus a
movement whose alleged purpose is to
help the public would tax the public
5000, 100000.
"TheSe are Sone Of the evils which