davidaulloa/AmericanStories huggingface dataset:
The people's voice., 1958-12-19
POWER INTERPRETATION
VS.. COMPETITION

Power use is closely tied to the
very complex problem of power rates
and experience proves that as rates
private sector of the industry. as we
all know, rates are set by the regu-
latory process, so we had better take
brief look at regulation. Roughly
speaking, the function of regulation
is to provide fair rate of return on
investment. 1t does this by compar-
ing the net investment of the COM
pany in it's facilities with the profit
left over after deducting from gross
revenues the company's depreciation,
replacement and insurance charges,
operating costs, and taxes. If the rate
of return is too high, the regulatory
agency can require cuts in the COM
pany's rates. and if it is inadequate
it can permit rise in those rates. In
short, it can prevent obvious eXploita-
ton of the consumer or an eXorbitant
rate of return on investment.
What regulation cannot, or normal
ly does not, do is: CD Force manage
ment to be more efficient or cut it's
costs; the courts will generally say
the commission cannot substitute its
judgment for that of management;
(2) 1t cannot force management to
provide an abundant supply of cleo
tricity in advance of the need; and
(3) 1t cannot force management to
promote volume sales, especially by
promotional rate structures, cutting
rates rapidly as consumption rises.
Perhaps l should change that last
statement to say that regulation could
at least encourage such promotional
pricing. but to this point at least l
know of no case where it does so.
In short, regulation cannot do
much to push power rates down, be-
cause unless the return on investment
is too high. it has no authority to act.
But rates may be too high. causing
low usage per consumer. resulting
in high unit costs and low level of
return on investment; if rates are
cut the result is often an increase in
use. lower unit costs. and increased
The people's voice., 1958-12-19

ministration in 1885, approximately
one farm in 10 was electrified with
central station service; at the pres
ent time only one farm in 20 is not
receiving such service. 529o of all
farms presently electrified are served
by REA co-operatives. and the other
48%-well. there's that old yard
stick again. The co-ops showed that
farm loads could be good business,
and the private companies took the
hint.
Incidentally, on January 1. 1885,
$50 (1 in 18) of the farms in Mon
tana were electrified; at present
or at least up to June 30, 1957-that
figure had risen TO 87.I%o of all cleo
trified farms in the State. $50 were
served by co-ops.
The people's voice., 1958-12-19
PUBLIC POWER PROVIDES
"BIRCH ROD IN THE CLOSET"

That is the principle of the public
power ''yardstick" which Franklin
D. Roosevelt in 1882 called, very ap-
propriately, "the birch rod in the
closet. and judging from the evil
dence it is a far more effective dis
ciplinary measure than regulation.
We get some idea of how the "birch
rod" works from a reading of Busi-
ness Week for May 80, 1853. Speak
ing of the chairman of the board of
Arkansas Power & Light Company,
it stated: "Ham Moses has been afraid
of something like an Arkansas iva
for 20 years. He has fought it by
pushing rural identification. by sell
ing power to rural co-operatives
cheaper than the governments power
systems could. and by building Ark
ansas."
One major factor in keeping the
birch rod ready and effective has been
the much-maligned preference clause
in federal legislation. This has been
the basic anti-monopoly provision of
federal power policy since the Recla-
nation Act of 1906, and one of it's
major functions has been to keep the
closet door unlocked so that if need
be the people could get to the birch
rod, by setting up their own public
system if they didn't like the kind of
private service they were getting. Far
from setting up privileged class"
of power consumers. as some of the
propaganda would have you believe,
the preference clause has brought
the privilege of better service to mil
lions of rate-payerS who never used
a kilowatt-hour Of public power, by
acting as the conscience of the pri-
vate power companies. Perhaps that
is why it is under such constant at
tack these days-a conscience can be
a pretty uncomfortable thing at times. |
One additional effect of public |
power which should be mentioned is
the rural electrification program.
When FDR signed the executive order
the Rural Electrification Ad- !
The people's voice., 1958-12-19
Wise Resource Conservution--

profits, providing a higher return on
investment and permitting further
rate reductions to consumers. To sum-
Marie this we might say that often
rates are high. because costs are high,
because sales are low, because rates
are high, because costs are high. be-
cause sales are low. because and
how do we get off this merry-go-
round?
The people's voice., 1958-12-19
The Function Of Public Power
In the Electric Industry,
Future Solutions

Thus far l have spoken of electric
energy as the natural resource which
is the most important physical COM
ponent of modern civilization after
water. the land itself, and the air
we breathe, and I have considered
it in terms of Pinchot's general state
ment of the purpose of conservation
1.-THE greatest good of the greatest
number for the longest time" But
the Father of Conservation who was
Teddy Roosevelt's chief forester and
closest advisor also spelled out that
purpose in detail. and l want to hold
in mind his statement as we continue
this analysis of the electric power
aspect of conservation. Pinchot said:
'The rightful use and purpose of
our natural resources is to make all
the people strong and well, able and
wise, we'll taught, well fed, we'll
clothed. we'll housed. full of knowl-
edge and initiative, with equal OPP
portunity for all and special privilege
for none. Whatsoever we would that
men should do to you. do ye even so
to them'.'
So l would move on to discuss the
Importance of public power in our
society in the conservation sense of |
how our energy resources can be used
to produce benefits like that for the
most people. 1t is impossible to dis
cuss public power in this context with
out analyzing the entire structure of |
the electric utility industry, past,
present and future, and when we do
make such full examination, the sig
nificance of the public power sector
of the industry is so plain that it
needs no explanation.
If anyone has any doubt that it
is proper to discuss the entire frame
work of the electric industry as an
extension of the subject of conserva-
tion, should like to refer him to an
other statement of Theodore Roose-
velt's, when he said:
The people's voice., 1958-12-19
POLITICAL AND PROPAGANDA
ORGANIZATION

In discussing the organization OF
the private utility industry for poll
tical activities and propaganda 1 am
required by the pressure of time to
use such a light brush that l am al
most embarrassed. But no coverage
of the subject of electric power can
be complete without some mention of
the activities of the private compa-
nies in this field, so l shall touch 1t
lightly here and in the later discussion
period | can go into as much detail
on it as you wish.
Until 1888 the entire industry was
organized under the National Electric
Light Association for its public rela-
tions, technical and political activi-
ties. Today these functions are split
up between four agencies of the in
dustry: The Edison Electric Insti-
tute, or EEL. was founded in 1888
to handle the purely technical and
statistical activities of the industry;
the Electric Companies Advertising
Program, or ECAP was founded in
1941 to handle the nationwide ad-
vertising and propaganda activities
of the industry; the National Associa-
tion of Electric Companies was found
ed in 1945 in Washington. ID. c.. to
manage the national lobbying activi-
ties of the electric companies; and
the Public Information Program,
known to its friends as "PIP". was
established in 1949 primarily to pro-
vide ADVICE, material and guidance
to the local advertising programs of
the member companies.
Why the change in the organiza-
tional set-up? Well. as a result of the
Investigations of the industry in the
Senate and the Federal Trade Com
mission from 1928 to 1885. public
opinion was so aroused against the
Power Trust" that the NELA simply
felt compelled to disband. so it dis
solved. leaving only the EEL as
strictly honorable trade association.
What caused this wave of public
against the industry?
Well. here again, only summary is
possible. but besides the financial
Continued On Page Eight
The people's voice., 1958-12-19
Continued From Page Three)

NOoHIIHueu TIUII age IHTeeJ
Bow which low-cost power from Hun
cry Horse brought to Montana, and
[ also think you know that Paradise
phosphate deposits. Here public pow
er can play significant part in the
wise use of our agricultural resources
by lowering fertilizer costs from Ohio
to California.
The people's voice., 1958-12-19

grids and tremendous power general
ing station to supply them. The term
''giant power" was first used by
Pinchot to describe the inevitable re-
suit of the tremendous chronological
strides made in the field of electric
generation and transmission. That re-
suit is generating stations of ever
increasing size and both region-wide
and nationwide backbone transmits
sion grids operating at voltages of a
quarter or half million volts or more.
| These systems can provide low-cost
power in fabulous abundance. and
they are already beginning to appear.
The problem they pose is how to con-
troll the political and economic power
they create and keep it responsive to
the general welfare and consistent
with democratic government. | shall
mention this further at the end of
my talk.
The private utilities defeated Gov
ernor Pinchot's Giant Power bill
in the Pennsylvania Legislature,
but they have now adopted his
concept with enthusiasm-and with
the examples of IVA and BPA before
them. They have set up what they
call the "Interconnected Systems
Group. under which the country east
of the Rockies is divided into four
geographical sections, excluding only
New England, which has its own
system.
One of the most important benefits
of public power to the West is the
fact that it retains in the local area
the profits" from the operation-if
profits" is the proper word. The
problem of the West has always been.
as it is in any relatively unindustrial-
lied area. to obtain low-cost money
for investment in its resources and
then to keep that money from flowing
back to the great financial centers of
the east. AS Senator Murray said on
the Senate floor last March 4th dur
ing a speech on Theodore Roosevelt
and Conservation-and | hope you
will all read that speech, for it is a
far better one than | am giving you
,oday:
"for example, Teddy Roosevelt
Knew the real source of agitation for
States rights over water resources de-
yelopment in the public domain. In
1910, he called it fairly comic for
EASTERN capitalists to be bowling about
States rights. He pointed out that
what the people behind the States
lights furor really wanted was the
light to exploit the water power re-
ources of Western States and drain
he profits off to their New York
,anks."
For your information, the President
# your own local utility testified be-
ore the Public Works Committee of
he Senate in June of this year that
My 1870 of the stock of the Mon
ana Power Company is owned by
esidents of the State of Montana.
What this means is that $50 of the
rofits of the business flow out of
he State. This is not intended as
ny criticism of the private power
ompany, but it is one of the facts of
lie which must be considered in any
of public and private
tility operation. or in any discussion
t the present organization of the
tility industry in this country.
The people's voice., 1958-12-19
REGULATORY PROCESS LEAVES
MUCH TO BE DESIRED

The fact is that the much-praised
system of regulation leaves a great
deal to be desired. AS a means of as
suring efficient operations. abundant
supply. or low rate structures de-
signed to promote expanding usage,
it can only be described as extremely
Intellectual. even when the regulatory
commission is dedicated to the
achievement of those goals, and this
may not always be the case.
But what regulation cannot do,
competition-or perhaps l should say
the threat of competition-can do,
and in many areas of the nation has
done. And this is where public power
plays its most important role. The
IVA provides undoubtedly the best
single example of what public compe-
tition can do for the electric indus
try; probably you are familiar with
the map of the United States which
shows power rates at their lowest
level in the IVA area itself and in
creasing in concentric circles all the
way out from Tennessee to the tips
of Maine and Florida and up into
the Dakotas; the exception is the
Pacific Northwest where Bonneville
Power Administration exercises the
same influence on rates. and here
too the costs of power rise the farther
we get from BPA's service area. until
we run into the influence of IVA.
The closer private companies are to
large-scale public competition, the |
lower their rates are.
And lower rates are not the only |
effect of such competition. The fig
ures for increases in generating ca
pacity around the country between
1882 and 1852 run like this: In the
IVA area, 5000; among the private
serving the seven states ad-
Joining the IVA, 2O0@o; among other
private companies in the United
States. 91@o; and among the New
England companies, where rates are
highest, 1870. Now you might think
hat because of that terrible sub
;idized power in IVA the COM
oanies nearby had their rates pushed
iown and suffered losses in their
profits because of it. In fact the
'everse is true; under the lower
ates their sales rose. with the fol-
owing results: Using the years 1887 !
o 1889 as base, the common-stock |
arnings of major private companies s
djacent to the IVA increased 41O% s
y 1852, as compared with an increase
f only 1850 for all privately-owned {
Utilities in the United States. There's I
o suffering there, and there should t
e a lesson for all-that is, that vol G
me sales are just as advantageous S
nd profitable in the utility industry n
S in any other form of financial t
ndeavor. h
The people's voice., 1958-12-19
MUST STOP WASTE OF
HUMAN RESOURCE

LEU us I6IlGIuO0I, dLoO, ClidL COIl-
servation does not stop with the nat
ural resources, but that the principle
of making the best use of all we have
requires with equal or greater insist
ence that we shall stop the waste of
human life in industry and prevent
the waste of human welfare which
flows from the unfair use of concen-
trated power and wealth in the hands
of men whose eagerness for profit
blinds them to the cost of what they
do.''
Having thus established my right
to proceed, | hasten to say that. be-
cause the electric industry is sub
ject so broad and with implications
reaching so deep into the fabric of
our society, it is really impossible to
cover adequately in single discus
sion.
Briefly, this discussion will cover
four aspects of the electric indus
try-past, present and future.
(1) Power supply and usage-a
measure of the size and growth of
the industry;
(2) The. rate structure of the in
dustry. public and private. with a
discussion of the effects of public
power on that structure;
(3) The organization of the indus
try for the generation and distribu-
tion of power; and
(4) The organization of the pri-
vate sector of the industry for propa-
ganda and political purposes.
But first. what is the nature of
this industry?
Well, it is not a business, like run
ming store or manufacturing plant.
1t is a service industry, like water
supply or the postal service or a rail
road. The statement of the United
States Supreme Court in the case of
Olcott v. Supervisors involving rail
road applies to it perfectly; the Court
said:
"Whether the use of railroad is
a public or a private use depends in
no measure upon the question who
or who owns it. 1t has
never been considered matter of
any Importance that the road was
built by the agency of private cor
poration. No matter who is the agent,
the function performed is that of the
State. Though the ownership is pri-
vate. the use is public"
AIO3- nanr or EDEE
The people's voice., 1958-12-19

u
of the State, carrying out a publ,
function under State franchise anc
empowered with the State right O.
eminent domain. 1t is prevented from
making exorbitant profits from it!
monopoly position, but it is practical
ly guaranteed fair rate of return
so it lacks even the profit motive as
a spur to efficiency, for if it cuts
its costs of doing business it will
have to pass on the saving to the
public in lower rates if the regula-
tory system is working at all.
Anyone who tries to convey any
different impression is distorting the
facts and the theory of the public
utility industry as it has developed
under the common law of England
and our own Supreme Court decis-
ions. as well as national and state
legislation. And l think l need not
tell this group that when anyone tries
to put over such distorted view of
things it's good time to ask why
he is doing it.
POWER SUPPLY AND USAGE
Now, as to power supply and usage !:
nothing gives more descriptive pic
ture of the inherently dynamic nature
of the energy supply industry than
look at how it has grown. In 1902
the installed capacity of the industry,
both public and private, in this coun-
try was IL million kilowatts; by
1922 it was up to 14.3 million. by
1887 to 36.5 million, and in 1858
it reached LAG million kilowatts.
What of the future? Two months
ago today Electrical World in it's
annual forecast issue, predicted a
by 1860 of ITO million kilo-
watts, by 1865 of 238 million, by
1870 of 337 million, and by 1876
Of ATT million-nearly one-half bill
ion kilowatts, producing close to
II trillion kilowatt-h of energy
per year. or almost four times 1855 |
And notice the increas-
ng rate of growth by five-year
periods: From go to '65. 68 million
XIV; from '65 to 10, SO million; and |
n the subsequent five years 40 mil
the equivalent of 1855
otal installed capacity! 1t is prob
lbly safe to estimate that by the year
1000 the industry's capacity will
ioNO dudui up1Cu again. Will SOIHe
billion kilowatts producing about 10
rillion kilowatt-hours per year.
Well then. is the industry doing a
inc job in supplying power for our
economy? Gordon Clapp, former
hartman of the Board of IVA, says
No" in the fifth chapter of his book
ntitled 'The TVA", and he gives
Recommendation to his the
is that the private power industry,
t least. has never provided a power
upply really adequate to meet the
of the nations dynamically
Expanding economy and to provide {
with sufficient reserves for emerg-
ncies. Certainly the rush of the pri- {
ate companies to get in on the re- l
ent program of rapid tax amortiza- I
on subsidies for defense industries /
strong evidence that his position I
well taken. a
The people's voice., 1958-12-19
NOT A PART OF FREE,
COMPETITIVE ENTERPRISE

The electric industry is not part
of the free competitive enterprise
system. involving all the risks of do
ing business, with competition in
price and product always spurring it
on to "build a better mousetrap"
cheaper than anyone else. 1t is nat
Evening star. [volume] (Washington, D.C.) 1854-1972, 1958-03-25
TODAY'S WEATHER REPORT

District and vicinity-Rainy
and cool today. Rain possibly
heavy at times tonight, low 38.
Occasional rain and cool to-
morrow.
Virginia - Rain heavy at
times over the north and east
tonight, low 32-42 in the west
and 42-46 in the east. Cloudy
and cool tomorrow with rain
likely. high in the 40s in the
west and north and around
so in the southeast.
Maryland Rain tonight
mixed with snow in some areas,
low 38-45 in the east and in
the 30s in the west. Cloudy
with rain tomorrow mixed with
snow in some areas, high So
43 in the west and 1882 in
the east.
Lower Potomac and Chesa-
peake Bay - Winds east to
northeast at 20-30 miles per
hour and higher today. be-
coming northerly tonight or
tomorrow. Visibility fair to
poor.
Road COnditIons-AAA
West. District of Columbia to Penn
aylvania turnpike. wet; Pennsylvania
Evening star. [volume] (Washington, D.C.) 1854-1972, 1958-03-25
Football Star
Held in Rape

A lS-year-old Coolidge High
School football star, who six
weeks ago helped police in a
purse-snatching case, has been
charged with last Fridays rape
Of a 50-year-old widow.
Inspector Aubrey M. Tolson
said today that Morley Lee
Houween; Of the $500 block OF
Third street NV. at first de-
MED the attack even to the
point Of asking a lie detector
test, but later admitted it.
On February IL, Houween
chased a purse-snatcher, failed
to catch him, but recovered the
pocketbook which the thief hac
dropped.
He was arrested at his home
after police had received in
formation that he might be
the suspect. He was taken by
Detective Sergts. Edwin C. Cop
page and Albert F. Mode as he
returned to his home.
Scene Of the attack is only
nine blocks from his house.
He was linked with the case
by q pair Of gloves found in
the victims home. One oil
them had a rip in the back
which. police say, matched q
cut on his hand.
He was arraigned befort
United States Commissioner
James F. Splain and was Or
dered held without bond FOL
an April . hearing.
Evening star. [volume] (Washington, D.C.) 1854-1972, 1958-03-25
Lawyer Who Posed
As Officer Gets
Suspended Term

Federal Judge Alexander
Holtzoff today gave Washington
Attorney Howard D. Levine a
suspended sentence Of four
months to a year and a day
after the lawyers conviction on
a charge of falsely representing
himself as a police officer.
Levine was convicted by a
District Court jury here yester-
day. He was charged with repre-
senting himself as a policeman
to a 35-year-old woman who
was the complaining witness in
rape case here.
She testified Levine came to
her house last June to question
her about the case. The attor-
ney represented one of four boys
involved in an attack on the
woman in February. 1857.
Judge Holtzoff placed Levine
on probation for two years,
warning him that there are
certain limits beyond which an
attorney can't go" In represent
ing a client. Mr.. Levine lives
in the 100 block of Elmira street
lS.W.
Evening star. [volume] (Washington, D.C.) 1854-1972, 1958-03-25
Stephens Returns
To Job Again as
Presidents Aide

Thomas E. Stephens has come
back to work for President Eli
senhower as his appointments
secretary.
Mr.. Stephens, 54-year-old
Irish-born lawyer, worked with
Mr.. Eisenhower during his 1852
election campaign and served
as his appointments secretary
from soon after his inaugura-
ton until January. 1855.
Since leaving the White
House in 1855, Mr.. Stephens
has been practicing law in
Washington and working fire.
uuently with the President in
formally as q political consult
ant. He served in that capacity
throughout Mr.. Eisenhower's
1856 reelection campaign.
Bernard Stanley, who sue
ceeded Mr.. Stephens as APP
pointments secretary, left the
White House himself last Mo-
vember to seek the Republican
nomination for Senator from
New Jersey this year.
Robert Gray, special assist
ant to the President for patron
age matters. has been acting
in q dual capacity to take care
of the appointments secretary's
work since Mr.. Stanley left.
The White House announce
ment yesterday marked the Sec
ond time Mr.. Stephens has re-
turned as appointments secre-
tary. He served briefly again in
that job in late 1855 when Mr..
Stanley left for a few months,
then was succeeded again by
| Mr.. Stanley.