Evening star., 1938-12-12
7. Y. A.
(Continued From First Page !

lieve that they refuse to accept the
principles of arbitration. Surely, in
view of the vast national importance
of this problem, we should be willing
to surrender our personal prejudices
on behalf of the simplest and quick
est method of settling a controversy
which has puzzled the American
people and been a handicap to
American industry for nearly five
years"
In statement made public ST.
multaneously with the letter, Mr..
Willkie took the issue with Mr..
,Krugs testimony before the T. v.
A. Investigating Committee. Mr..
KTug had said that an independ-
ent firm Of auditors employed by
T. v. A. had fixed the cost price
OF the Tennessee company's prop
critics at 100000
Krug Was Never Present.
MI. Krug was never present at
any negotiations between myself
and Lilienthal," Mr.. Willkie said.
His testimony therefore is OBJ
viously mere hearsay, and subject
to bis own Interpretation.
MIR. Willkie said the auditors re-
port, contrary TO Mr.. Krug's testi-
mony. showed investments total
ing sso,5s2,o 900 in the electric busi-
ness of the company"
Mr.. Krug told the committee that
Commonwealth & Southern Corp.
had been unwilling to accept the
audit as basis for negotiation of
price for the properties.
Mr.. Krug also asserted that high
salaries paid to private utility ex-
ecutives were partly responsible for
the difference between the Au-
thority's electric rates and those Of
private companies.
Testifying before the congress
sional committee today, Mr. Krug
said other factors which make pri-
vate rates higher than public
included:
Service and management fees,
high construction overhead. "exces-
sive' prices paid to buy out public
plants and watering the capital
structure"
Representatives of power COM
panies and some other wit
nesses have told the committee
during its long hearings that
T. V. AS rates are not fair
measure of the cost of producing
electricity. They have con-
tended there were hidden subsi-
dies" and that too little of r.
v. AS total cost had been
charged to its power producing
functions)
T. v. AS top salaries are $4,000
a year.
High Unit Costs.
ut may be-" Mr.. Krug told the
committee, that utility companies
have grown beyond the size which
yields maximum economies of dis
tribution. And, finally, whatever
other causes may be applicable, it
is clear that. to a large extent this
large difference reflects the high
costs which result from the policy
Of restricting the use of electricity
by charging high rates for service.
"A few private companies have
discovered that low rates are pos
sible without sacrifice Of profits.
In order to demonstrate this fact
on a large scale, the Government,
through T. v. A., has been expert
menting to determine the relation
ship between low price and high
use. That experiment has been con-
Quoted, and its success should re-
move whatever uncertainties may
heretofore have restrained rate re-
ductions by privately owned util-
tiles"
Mr.. Krug contended that T. v. AS
wholesale and retail rates took into
account all cost factors, including
allowances for taxes and interest.
There is more to T. v. AS yard
stick than rates." he said. Stand
ards of public service are also in
volved.
More important yet is the yard
stick of mass production and mass
consumption, and the relation be-
tween electricity rates and use. 1t
is time for publicly and privately
owned electric systems alike to learn
that low rates pay"
It was Mr.. Krug's fifth day Of
testimony. The questions asked him
and other witnesses have given a
hint that a majority of the members
are disposed. on the findings so far,
to give r. v. A. clean bill Of health.
The bulky records Of testimony
show that seven members Of the
committee have been friendly to T.
v. A. with their questions or COM
ments, while three others have been
sharply critical.