Evening star., 1934-05-16

lOWeIcQ TdUcS, IL ID Luy JudehhChe SiaS
the present holding company system
must be subjected to thorough Fed
eral supervision and regulation.
Through holding company control
of the operating companies which
generate and sell you electricity, and
through holding company control Of
system service companies, many oper-
ating companies are carrying an un-
Just burden through payment Of ex-
cessive management, supervision, con-
struction, purchasing, engineering, le-
gal, accounting and other fees. Some
holding companies in this way are
taking the cream of the profits COL
lected by the operating companies
from the consumers. If this siphon-
ing Of profits from operating COM
panies into great pools Of profits in
distant financial centers Is stopped;
If this Old Man of the Sea Is thrown
from the back of the operating COM
pany, this needed reform would tend
to reduce the cost Of electricity. am
glad to say that some operating COM
panies have no holding company DOM
nance and pay no tribute through
such fees.
Further reforms which would JUS
tify lower rates in many instances
are the disqualification Of those in
vestment structures which are inflated
and include unreal and fictitious ele-
ments Of so-called value. These in
fated capital structures should be
stripped of all except that which
represents real money prudently in
vested.
Obsolete Machinery Items.
In some capital structures there
are still to be found large items repre-
senting cost Of machinery and equip
ment which are now either obsolete or
inefficient. 1t Is neither fair nor right
for the public to continue to pay a
return on such values. Depreciation
reserves have been set up to take care
| OF these items, and 1t Is OF course un-
fair for company to continue to base
rates on such property when in fact
1t has in its depreciation reserve fund
| collected from the consumers, the
money which represents these depre-
ciated values
Lower rates would follow the simple
process of hanging these watered
capital structures in the sunlight to
/ dry, and shrink to their true size, in
actual cost or deprecated value.
Recent official investigations have
shown that the salaries Of executives
and directors of some companies are
excessive and that many of these high
salaries were not reduced during the
nnnF0CCfn1N tyN E1vrx d.
they were actually increased, at q
time when reduced purchasing or pay
ing capacity Of the consumers should
have prompted these companies to re-
duce these top salaries and to other
wise economic in every practical way.
This problem of cheaper electricity
Is a challenge to the far-seeing leaders
OF the industry. The Nation Is now
waiting to see whether the responsible
officers and directors of this industry
have the vision, the courage and
craftsmanship to readjust their
policies and methods to the de-
mands OF a new public opinion which
Is demanding new deal In power. II
this industry will recognize that a
public utility is public trust, to be
| e~~HAAAAA49bcACA PA Ay III tile l11ISTeSL
OF the consuming public, 1t will find
that there is no war between the in
vestor's dollar and the consumer s
dollar. but that the two working to-
gether can benefit the producer and
consumer alike. They will find in
such policy no threat to the legiti-
mate profit system, but only a denial
OF any right to exploit the consumers.
Notwithstanding the wrongs and
abuses Of some false leaders in the
past, and which created suspicion and
hostility toward the industry, there Is
evidence Of the presence of some lead
ers in the industry who are thinking
in terms Of public service. 1t is hoped
these men, like the saving remnant"
Of Isaiah, may become the new leaven
which will transform the leadership
OF this great industry, and win for
1t the confidence and the esteem of
the American people through CO.
operation Of a new deal and a fair
deal In electricity.