Evening star., 1934-08-18
T. v. A. Yardstick Most Commendable
Economic Action of u. s. Government

According to D. L. the T. v. A. paid
SO per cent for the Commonwealth
Southern in Alabama and a little
better for the Knoxville plant This
is probably considerably more than the
real value of either plant, for without
doubt they have been capitalized in
excess and have taken or per cent
or more In earnings upon this capital
when the whole country produces
lass than 4 per cent. Instead of being
an oppression this is a generous set
tlement, and the preferred stock
holders should be glad to recover any
thing and the common stockholders
glad that they escaped personal ha-
bllity.
BY a strange impossibility of mathe-
matics he first figures that these
owners got only 68 per cent in one
case and a little better in the other,
and therefore they will get only so
per cent in the whole country. And
then Congress will be called upon to
pay $1,000, ,000, 900 in damages. How
ever, the Congress has perfectly
good counterclaim to this fantastic
statement If it will demand return
Of the excessive profits the utilities
have charged the people of the country.
Fuel and light are costing the Ameri-
can people $4,000, 100000 q year, and
nearly half of this is occasioned by
watered capital and earnings above
per cent.
The "yardstick" of the T. v. A. is
the most commendable economic
action of the American Government
In all its history. 1t was started by
Woodrow Wilson when he built the
Muscle Shoals dam. 1t was continued
by Senator Norris in the greatest
fight in the history of the United
States Senate when he stood for
Government operation. And it has
now been brought to conclusion as the
strongest element in the new deal by
President Roosevelt.
AS I write this there lies before me
chart by Col Leonard P. Ayres Of
the Cleveland Trust Co. This chart
shows that since the gold standard was
established in 1878 there have been
10 major depressions in this country.
That is, each lasted more than one
year. The first was the longest, being
six years in duration, and the last two
have been the deepest, the present
one being much the deepest. There
have been 379 months of prosperity
and 321 months Of depression, and
only 20 months normal. Over 80 per
cent of American business enterprises
have failed. In a country with the
greatest resources, the most intelli-
gent mass of people and the greatest
natural opportunities this result is
an indictment of business manage
ment in the strongest terms. No
brain trust could do worse than this.
One of the most potent elements in
this indictment is the excess profits
of corporate capital. The railroads,
with a market value of less than IL
billion dollars, carry their capital in
vestment on the books as over Is
billion and seek to charge rates high
enough for return on that vast sum;
this return is in excess Of the ability
Of the American people to produce.
The public utilities are almost equally
overcapitalization and seek and usually
get an even higher rate of return.
Then we find IS per cent of American
business in big corporations and in
interstate and foreign commerce, and
everywhere fighting for a capital
return much greater than the per
cent which our country is able to
produce. This keeps us in constant
economic warfare, builds giant bubbles
to sustain these fictitious values,
which the American public is unable
to carry. The bubbles burst and we
fall down deep into depression.
The Tennessee Valley Authority is
the first governmental organization
with ample power and genuine pur-
pose to correct these evils Of imitation
and depression.
SMITH w. HROOKHART.