The Waterbury Democrat., 1937-12-01

Washington, Dec. l--(UP)--Adop. ton of tho prudent investment" theory of utility evaluation and eyaiuAtion and elimination of cap. ital "Write.ups" were suggested Co President Roosevelt as basis for . reNpproac with the adminiss traEion by wendell l.. Wilikie, Come monwealth and Southern president, it was disclosed today.
 Wilikie's formula for new under Standin. between utilities and tho administrat was presented to MT. Roosevelt by the utility executive At White House conferences last week. A text Of his formula, revealed by an authoritative source, showed that Wiilkie suggested that important concesSoiis Do made by utilities to constitute "a great force for the stimulation of recovery"
 Cut SiS,ooo,ooo,ooe Capital
 WilikieS suggestion for sealing down tho SiS,0o0, 100000 capital structure Of the utilities industry an dadoption of the prudent invest' inent" rather than the cost Of re. production" theory of evaluation was
 outlined in two points:
 "i. That the utilities immediately eliminate from their capital struc. lures oil writeupS heretofore claimed by the federal trade commission.
 "2. That the utility valuation un. der the rule established by the courts apply either up to this date of to the date Of the eornmencemen of your first term As president and that af. ter such date and for the future the prudent investment method be adopted"
 The theory of utility evaluation has becn in controversy between the administration and utility operators. MT. Roosevelt has urged that tho prudent investment" theory be adopted aS the baSis for rate mak- Ing.
 HIS own View
 Willk!e predicAted his formula with the comment that it represents his own views. speaking in behalf of Commonwealth aud Southern and that hc was not speaking for other utilities. He added, however, that he was hopeful that If you find these suggestions agreeable. other utilities may find them 6 workable program"
 "in my judgment. the greatest i'm. mediate requirement. of the utility industry is . large inflow of corn- l mon capital Indispensable for much needed additional construction, the | said. "Withoit Argu. Ing the causes of tho present hesi- lancy of capital to invest in utility coininon stocks, l have certain siig. geatlors which 1 believe will imme. iiately stimulate such investment and mako poSgbile c large construc. bion program with . considerable ins crease in oTnploymnt."
 Certain Suggestions
 The memorandum outlined "cers tAln suggestionb" which W!llk!e told Inc pregldeiit were necessary to an- .wer questions in tho minds of pres. ,ectlve utilities investors. AS olt- lined iii tho memorandum Willkie suggested:
 "i. Clasincation Of the public utility act of ioaS as follows:
 "A retention of all itS regulatory provisions over financing and ace counting practices. issuance of se. ,,lFitlos, r6lAtionShip between opers lting eoinpanies and holding com. panlos, etc.
 "D. Modifcatlcn of section il, Inc soscAlied death sentenco 70 aS 70 eliminate all intermediate hold. ne companies within three years put otherwise Co confirm existing holding companies in their present ,WnerShip os property, requiring ,hAt any future acQuiSition of prop- srty or Becurities shall be subject @ the approval of tho securities and ,xchAngo commission Or the federal power commiSslon."
 elArlflCAtlon oe policies Of the Tennessee Valley Authority, tho memorandum said. is another fac- !