The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1931-06-19
a Correction

William H Hodge of the Byllesby Engineering and
Management Corporation takes exception in public
address to an editorial published in this newspaper
The editorial in question stated that profits OF
electric utility companies increased by nearly $4,000
900 last year Mr. Hodge says and is quite correct
in saying that the $44oooooO increase was in gross
earnings, not profits. We thank him for catching
our error.
In spite OF the error OF terms the editorial
was written on the assumption that the $44oooOoo
was gross earnings, and the logic OF the editorial
stands
The editorial called attention to the fact that this
increase, breaking all utility company records for the
second successive year. occurred during a time OF
depression when most other industries were losing
money or closing their doors
1t pointed out that the prosperity Of the utilities
undoubtedly had prevented additional hardship in re-
lated industries And then stated that the utilities
are concentrating wealth more rapidly than any other
industry
This is the part of the editorial which caused Mr.
Hodge most distress He rejects the idea that wealth
is being concentrated in the utility industry by as
sorting that 100000 people stock in the power
companies and is proud of the fact that mo other
industry perssently and successfully has dihused
both ownership and returns on investment as this one
Even if Mr.. Hodges figures OF 100000 stock
fusion OF wealth So far the public is represented
in that figure the ownership is almost entirely in
stocks OF individual operating companies which
moderate rates of return. Holding company stocks
are not widely distributed among the public And
the wealth is in the holding companies.
Operating utilities are subject to regulations by
state commissions, and that in some cases keeps the
net earnings low. large portion Of the gross earn
ings are transferred rapidly to holding companies in
the form Of fees for service.
No one regulates the holding companies When
the federal trade commission attempted to examine
the books of one of the largest holding companies to
discover its annual earnings and expenditures the
company refused to permit this and sought protection
from the courts
The books never have been obtained though the
trade commission still is attempting to get them.
The commission has secured certain other data,
however 1t found, for instance. that construction
company subsidiary of one Of the big holding COM
panes has been earning g. 80 and SO per cent profit
collecting fees from utility operating companies.
The construction company is of course, not regu-
lated The utilities showed very low rates of return
"A, and per cent-during the same period. The
construction company profits ind their way at once
into the holding company Golfers.
The commission discovered also that the three
million holders Of utility stocks do not always pos
sess exactly what they think they possess
Investigating the affairs OF the Electric Bond
and Share group Of companies alone, it found that
book values of the companies included in this group
have been written up" approximately 100000. In
other words the book values upon which securities are
issued not to the extent of $S25oo00O supported
by finding of economists in the trade commission.
AS our first editorial stated no one wants to see
the utilities impoverished However, still believe
that the fortunate few who receive the bulk of utility
earnings through holding company profits are &C
curing disproportionate and unjustihed share OF
the countrys wealth