Evening star., 1937-11-06

v
Bankers ASsocia- %$
ton by Frank r. n.v,a I.~r....
McNinch is of
extraordinary interest and may be the
forerunner of change of front on
the part of the Roosevelt adminiStra-
tion, designed, for the time being at
least, to force upward public utility
stocks, to cause utility operating COM
panies to borrow money and spend it
for expansion, and to minimize, for a
while at least, the threat of Govern
ment competition in the power
business.
Has Confidence of Roosevelt.
Mr. McNinch until recently was
chairman Of the Federal Power Com
mission, from which agency he has
been temporarily detached to help
straighten out the mess and radio
scandals in the Federal Communica-
tions Commission. He has the conf
dence of Mr.. Roosevelt and would not
make the kind of speech he did on
Thursday without the White House
knowing its general purport.
Ninch revealed was not in his pre-
pared speech, but in what he told the
newspaper men afterwards, namely,
that the utility industry should be
spending S1,500000,000 q year in con-
struction for the next five years to
take care OF the country's electric
power requirements.
TI,iS f,ooonc Ct SQ0 nm nm r,rn-
gram, and only the other day this
correspondent pointed out that the
Federal Reserve Board had trans
mitted to President Roosevelt re-
port saying the utilities were spend
ing only 40 per cent of what they
ought to spend annually.
But why aren't the utilities engag-
Ing in this vast building program,
which would no doubt give the dur
able goods industries quite an i'm
petus in employment and in the pur-
chase of raw materials?
The utilities say the public-mean-
Ing the investors-have become scared
by threats of Government competi-
tion. Mr.. McNinch undertook in his
speech TO allay their fears with this
statement:
Il am not unmindful that there
are some who feel that Federal prof.
scts either now authorized, in process
OF construction or completed and in
operation constitute some sort of threat
to the private power industry. This
Is said to account in part for the
timidity Of certain leaders in the
power industry TO respond TO the de-
mand for construction of additional
generating facilities to meet the ris-
ing requirements of the consumers.
These ill-founded fears and fore
bodings find answer in the recital of
the factuaI history of constantly
rising tide of private company reve-
nue., gross and net, during the last
few years. 1t sums up that the in
dustry is experiencing unparalleled
prosperity, and that there is ahead of
1t an immediate and increasing
demand for meeting the Nations re-
quirements of electric power This
is a challenge to put aside skepticism
now diScredited by facts and go for
ward to the duty and great oppor-
tunity of responding to the demand
of the consuming public"
Case of Tennessee Co.
But how about the facts? The
Tennessee Electric Power Co., for ex-
ample, is paying its dividends. Its
earnings are very satisfactory in
deed, and yet its preferred stock is
selling at a. and its bonds are selling
at a discount. The reason is that
the Federal Government, in order to
power, has agreed through the P. w.
A. to give free TO the city of Chatta-
Dooga As per cent of the cost of dupli-
eating the plant and facilities of the
Tennessee Electric Power Co. in that
city and to lend the SIS per cent
balance of the money at rates of in
terest lower than the private COM
pany could obtain anywhere today.
But it was recently announced by
the President that there are TO be
no more P. W. A. loans beyond ex-
listing commitmentS-at least not for
the present. If Mr.. McNinch's speech
Is to be read as q sequel to the Presi-
dents statement it might we'll be
that the threat OF competition is to
be confined hereafter to projects al
ready existent, and that Mr. Roose-
velt is really not in earnest at all
about his seven r. ". AS as en-
bodied in bills pending in Congress.
Should such an inference be war
ranted it would mean that the ad-
ministration has indeed turned about
face in the power controversy, and
that Mr.. McNinch's address consti-
tutes a real assurance.
With q Dr-Jekyll- Land Mr.. Hyde
Hpe OF administrat ton which reas-
ssrss conservatives when the stock
market goes down and soaks them
with new burdens when business en-
ters = period of oonvalescence, there
b really no way to tell how long the
assurances" will last But the OPEN
ing words OF Mr.. McNinch's address
are worth noting. He said to the
bankers, who, after all, must float
the loans needed by the utilities:
Il bring you q message of optimism
based upon realism. My address deals
with a new era of hope and vision,
yet it is not visionary. 1t is indeed
realistic"
The realism" is perhaps not in
any way diminished by the conclud-
ing paragraph. wherein Mr.. McNinch
confesses that he makes his appeal
'tsolely on my own responsibility
For that's the cautious and devious
way by which the New Deal permits