The Key West citizen. [volume] (Key West, Fla.) 1879-current, 1938-11-12
DEFENSE MATTER
BECOMES EXCUSE
FOR BIG LOANS
NATIONAL MOVEMENT SEEN
BY OBSERVER AS BEING
FAR FROM SOLE PURPOSE
OF OUTLAY
BY PRESTON GROVER
AP Feature Service

WASHINGTON, Nov. IA
back-stage analysis of the ar
rangement by which the public
utilities are to get something
near two billion dollars of gov
crnmcnt money in the next two
years discloses that national de-
Tense is far from the sole purpose
of the outlay, although an import
ant one.
st various times during the
depression "low" it was estimat-
ed that if the utilities could get
credit they would start build
ing boom of their own by putting
up new transmission and distri-
button lines and installing new
generating equipment.
Utilities Had A Slump
Because of the bad odor sur
rounding utilities investments
due TO the insult debacle and a
mass of adverse publicity con-
nected with IVA and the Utility
Holding Company act, utilities
have not been able to get ade-
uuate credit. For years the utili-
ties have fallen behind in their
spending for expansion and bet
tcrmcnt. Just how long and how
much is speculative, but a COM
petent government source has
compiled figures indicating these
things:
Normal annual spending by the
utilities in the mid "twenties" for
plant betterment and expansion
was about $5OO,0O0.O00 a year.
\ From 1923 through 1898 the
utilities speeded up expansion, at
times pouring out $700,000,0O0 a
year.
This was above the average re-
Guircment and left the industry
perhaps "overbuilt" so that dur
ing the next two or three years
tho utilities had to spend only
$500, 000,0 900 to $500, 100000 a year
for plant betterment in order to
keep even
A Government Build-Up
BY 1886 the demand for power
had about caught up with the
expansion but instead of resum-
ing the half billion dollar aver
age. the companies could rake up
only $500, 100000 to $500, 900, 900
a year. AS a result, they fell be-
hind a corresponding amount in
1896. 1887 and 1898.
Now, with the government
supplying the credit, they will be
able to take up this slack of $780,
600, 900 to $500, 100000 year for
three years with a total of outlay
close to a billion Then the
average half-billion dollar re-
quirements each year for 1889
end 1910 could take up another
billion
That is a rough outline of the
why" in regard to the two bill
lion.
The bulk of the building is to
be in the so-callcd "bottle-neck"
of the heavy industries. That is
the industrial quadrangle bound
cd by Massachusetts on the New
England corner. and Chicago. St.
Louis and Birmingham. Ala. as
other corners.
Then. II Trouble Comes
The money will be used to in
stall new generating equipment
in private plants. It also will
build inter-connecting units be-
tween industrial zones. so that if
one source of power is cut off
perhaps by bombs or sabotagel,
an important industrial link can
be kept going with power from
another zone.
Equally important. il will give
power companies the money they
have been unable to get else.
where for the very sort of plant
expansion they would have car
ried on il public confidence had
not been Jared.
Special note: II will be well to
watch il the needs OF national
3efenSe" do not also arise to JUS
tify a large loan to railroads for
euuipnent--as means also Of
easing the present wage contro-