Evening star., 1938-05-24

made by the P. David Lawrence.
w. A. to mu-
inequalities and States shall permit
public funds to be used in competition
with private business. The Senate
committee which reported the lend
ing-spending' bill places ban on
such use of public money but
the Roosevelt administration, speaking
through Majority Leader Barkley, is
not ready to let it go at that
For several months the admins
tration has been indicating to the
country that it wants to make peace
with the utilities and that the in
vestors in utility securities really have
nothing to fear. Public addresses to
that effect have been made by such
prominent spokesmen as Frank Nc
Ninch. chairman of the Federal Power
Commission, and the President him.
self has told his press conference that
the geographical area of Government
competition with utilities was to be
very small.
Now, however, with the blanket use
of funds for projects anywhere in the
United States where municipal gov
ernments wish to go into private
business, competition as against the
utilities can become Nationwide The
utilities, of course, cannot expect to
be protected against competition by
the cities if the municipal govern
ments enjoy good credit and can
finance their own plants But the
Federal Government Is undertaking
In many instances to grant subsidies
or their equivalent to municipalities
which might not otherwise be able,
because of their poor credit, to bor-
row in the open market.
Loss in Tax Revenue.
Municipalities do not pay any taxes
to the Federal Government as do the
private companies and likewise there
are other tax exemptions within a
State so there is a distinct loss in
revenue to government from taxes
involved in the expansion of munich
Daily operated businesses.
The administrations amendment to
the "lending-spending" bill has not
says he wants to have the bill written
30 that Federal loans can be made
wherever q city has made an offer of
"fair value" to an existing electric
light and power company for a plant
and the offer has been refused. But
who Is to judge what is or is not a
"fair value" offer and if the Federal
Government is to make loans or SUBJ
sides available, what difference does
1t make whether the city buys out the
existing plant, since the principle of
Government competition still remains?
Wherever the Federal Government
destroys a private business, by so
much is the opportunity for citizens
to engage in businesses actually cur
tailed. A policy in which the Federal
Government lends money to munich
palities to enable them to go into
business for themselves is form Of
public ownership which the American
people may or may not wish to sane
ton. Up to now there has been no
chance for the people to pass specif1-
cally on this question Indeed, here
tofore all loans to municipalities
which have created so much friction
and litigation have been an exercise
by the P. w. A. of broad powers to
lend money to cities and States. Con-
gress never undertook to earmark the
funds or to specify that the money
could or could not be used in relation
to competition with private businesses.
The constitutional right of the Federal
Government to make such loans has
been upheld. State socialism could
probably be accomplished by con.
formity to constitutional requirements
but the wisdom of the State engaging
in business or lending money to its
subdivisions for such purposes is some
thing on which the peoples repre-
sentatives will shortly be able to vote
"aye" or may"
Field May Be Broadened.
If money is to be collected from the
taxpayers from one end Of the United
States to the other end then loaned
to municipal governments and other
political agencies to be used in COM
petition with the private businesses
Of the citizen, electric utilities may
be the first to feel this competition,
but the same principle permits the
Government to enter the food business
and its retail outlets. department store
business and any other line of en-
deavor in which necessities of life
may be sold.
There have been small number of
cities in the business of producing and
distributing electric light and it is
matter of wide controversy whether
they really do the Job any more eco
nomically for the consumer than do
the private companies, because the
cities can, by their bookkeeping and
the levying Of assessments to make up
general deficits, mix up the financial
picture. Certainly private companies,
given a fair chance and an honest
comparison Of costs, ought to be able
10 furnish electric light at lower cost
than the cities and II the Federal
Government would lend private COM
panies the funds they need now, and
which private investors are, in effect,
declining to lend them because of Gov
ernment threats, there seems little
doubt that the public could get lower
rates than are enjoyed today. and even
lower rates than any municipal gov
ernment plants could offer in COM
parable areas.
If the utility industry were to be
given such stimulus, distinct start
toward general economic recovery
might be expected because the utility
expenditures are far below the normal
and their needs for expansion are
above normal. Raw materials, labor
and equipment of all kinds in the heavy
goods industries would be in demand
If the utility problem could be set
tied. The acid test of the admins
tration's sincerity in wishing it settled
will come when the amendment pro-
hibiting Federal competition will come
up for q vote In the Senate.
r. n