Evening star., 1934-11-22
To the Editor Of The Star:

To the Editor Of The Star:
Among any crowd of observers there
will always be few up front able to
get a detailed view of the attraction.
have had a close view looking in
from the outside Of the utility struc-
lures. So their present yelps Of Be
ware, beware" to the public, which is
now moving in on them through the
administration. can be discerned as
not gurgles of suffocation. but cal
culated method of retaining a sure
thing. No doubt. those who held water
rights for distribution to communities
in the not so distant past put up the
same yelp as such services were taken
over by the communities.
The electric and telephone utilities
are allowed to charge rates that in
clude provision against depreciation
of the original investment and addt-
tions and betterments, or of the
prudent value Of the properties. By
now most companies have accumu-
lated depreciation reserves that are
conceded to amount TO around go per
cent of the cost or prudent values of
the properties. This mas been collected
from the public in what is, in fact,
a contract with the public that they
who created the properties shall be
reimbursed by the public for their
capital expenditures. However, the
public leaves the depreciation or
liquidating reserve in the hands OF
the companies, perhaps with the as
surance that it will be more safely
saved. So the management of the
utilities have gradually been forced
to be capable and conservative in
vestors for the public. as well as able
managers of the properties. If they
invested the billions of cash deprecia-
tion reserve, why not ask, What has
happened to those investments during
the depression?"
Some will say that they reinvested
the depreciation reserve in the prop
erty, building expansion. If so, those
enlargements belong to the public.
Yet, the public is charged rates that
include a return to the stockholders as
well as another depreciation reserve,
on its own depreciation reserve. AS
for the rest of it, that is undoubtedly
lost in bad investments, but what's
the difference? The properties are in
better shape as to physical and work.
ing order than ever. You understand
the public is charged the cost of up
keep, replacement and renewal Of the
properties as well as depreciation and
profit.
Who owns the depreciation reserve,
II any? Since the public paid it in as
guaranty against loss of capital to
the instigators Of the service, and it
now should amount to just over 80 per
cent of the prudent value or original
cost of the properties, and since the
instigators are allowed to keep that
money in their hands against the time
when the public wishes to call for a
settlement, let us admit openly that
the public now owns at least so per
cent of all utility properties, or its
equivalent in cash.
If the situation was turned around,
so that the investors had to place in
the hands Of the public a fund COM
parable to accumulating depreciation,
it is extremely likely that they would
forever keep the point to the forefront
that they own those reserves, and
eventually expect q settlement.
So now, I conclude that we, the pub
lie. own over go per cent of the util-
tiles first named in this amble Of
thoughts, or that the utilities owe us
sum equal to go per cent Of their
properties. From both sides of the
looking-glass I see myself, but try and
shake hands with my reflection!