Evening star., 1938-02-26

to lend money to $
utility companies ssS@
Is long as the T. ~
v. A. sword of o"'' L@"fshce'
Damocles Is hanging over the private
power companies. President Roosevelt
talks about settling the problem, but
actually does nothing about it. Either
he Is afraid Of the public ownership
crowd In Congress, or he Is too busy
on other things to get at this, his
most eaective way to prime the
pump"
Meanwhile. strange as it may seem.
there Is looming a power shortage
IN America Of serious proportions.
This information is derived from some
OF the Governments own economic
studies, so 1t can hardly be attributed
TO any source involved In the present
controversy.
Thus. it is set forth that. for the
year 1895 as whole, the average
output per unit Of installed generating
capacity was only about 4 per cent
short Of 1929. During q large part of
1887. the power production ran as
much as 10 per cent above 1886, and
there were times when the capacity
use factor was estimated at ~ per
cent above the 1929 high
There are, of course, power reserves
and wide differences among indi-
vidual systems, so that actual power
shortages can for while be averted
by some interconnection. This
method, however, is useless when
power shortage becomes general. II
business should pick up again to
1896 levels during 1898 or 1899, the
danger OF power shortage will be
very great indeed, for power plants
cannot be built overnight. It takes
about two years to plan. build and
equip . present-day generating plant
OF the steam type, and about three
years TO construct new stations on
the vater-power basis. Some addi.
tionl generating units can be at
tached to existing equipment, but, un-
less there Is . resumption Of capital
spending for more plant capacity,
American industry will face q short
age of power at time when it will
most need electrical energy in order
to expand factory employment.
Need for Expenditures.
Prior to the depression, the utility
industry averaged about $500, 900 900
year in spending for new plants and
equipment, and, due to the stagnation
OF the capital markets and the lack of
construction during depression years,
the electric power industry is so tar
behind that even an expenditure of
$1,000, 100000 Is by no means high and
merely represents minimum Of what
ought to be spent simply to aysrt q
power shortage and to assure the con-
tinuance OF low rates to consumers.
Electric power companies are faced
-apart from Government COMPETE
tlon'-with rising costs Of coal and
labor and other maintenance items, so
that anybody who is getting ready to
lend any of his precious savings to q
utility company will naturally want to
have some clearing of the air on lot
OF things before the utilities can hope
to borrow 1.O00,O00,OO0 q year from
the American people.
These sums cannot be raised en-
tirely through bonds or what is known
as first mortgage or senior securities.
what has to happen Is that the pub
nc must feel the urge to supply money
Tor what are known q junior securi-
ties. that Is, preferred stocks or COM
mon stocks. During the last five years
that the utilities have been under at
tack, hardly a dollar of common stock
money has been raised for utilities.
Roosevelt's Contention.
Mr.. Roosevelt has been insisting that
this Is all imaginary and that the
utilities have nothing to fear because
the area Of Government competition
10 restricted to about IS per cent of
the country But this is per cent is
being carefully watched by the in
weston to determine when and how it
viii spread and what kind OF an ap-
praiser Of property values Uncle Sam
v going to be when he buys out ex-
1sttng utility systems In that selfsame
is per cent area.
The simple sol .tion proposed some
time ago by Wendell Willkie, presi-
dent Of the Commonwealth A.
Southern system. and perhaps the
most realistic Of all the utility men,
u that the Federal Government either
buy outright the utility systems in
the 7. V. A. area or that 1t begin at
once the negotiation Of an agreement
70 pool Government power and pri.
vats power systems for common use
ut . fair rental It isn't generally
known. but engineering experts esti-
mate that about $2.00o,000 to 3S,0o0,-
600 OF electric power from the T. v. A.
Is going to waste annually in the
southern area because the Govern
ment and the private power companies
DO not get together on contracts for
use Of the power.
Every day that Mr.. Roosevelt de-
lays IN adjustment Of the whole
problem, the taxpayers lose money.
Amsrtcan industry loses IN oppor-
tunity for . private pump prining"
Of colossal proportions-$l ,o0o, ,ooo, 900
. year may Be enough to get the whole
country started out Of the "reces-
sion"-and, besides, there Is actual
danger Of power shortage from .
long-range point Of view.
Surely the price Of politics ana
the price Of pride Il high. The VIC
tins are the poor people now out
Of jobs, who, in bewilderment, won.
der why Government of{icials in warm
rooms and comfortable ofices can
pun their pipes nonchalantly while
millions Of honest. law-ahiding and
eager.to-work American citizens drag
their weary bodies and minds along
from day to day In search Of the
employment that never seems to come.
(copyrisht. l93B.)
Gill Evnn,.<s nrnn