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Tcixpa3^rsr*
lie Service
a azine
Vol. XXIV. No. 1 JANUARY, 1916 Thirteenth Year
•What we wa
for business
the same kir
of liberty v
want for t\
individual.
—Prtaidtnt WUsoit addrts.
tiu Amtriean BUttric S
way Attociation.
Square D
Numbei
le
Copyright. Underwood St Underwood i^^-
^Ldt: u4.4uJtJ^ ii: ^Mte^u:
PUBLIC SERVICE
H. J. GONDEN
Publisher
122 South Michigan Ayenue
CHICAGO, ILLINOIS
20 Cents a Copy
$2.00 Per Year
SQoare Deal
THE time has come for all sane
Americans to say with President
Wilson :
"What we want for business is
the same kind of liberty we want for the individual."
In his famous address to the business interests of
the country last Jnly, the President amplified this
statement to the American Electric Railway Asso-
ciation by saying :
"A just price must, of course, be paid for every-
thing the government buys. By a just price I mean
a price which will sustain the industries concerned
in a high state of efficiency, provide a living for those
who conduct them, enable them to pay good wages
and make possible the expansion of their enterprises
which will from time to time become necessary as
the stupendous undertakings of this great war de-
velop. We could not wisely or reasonably pay less
than such prices. They are necessary for the main-
tenance and development of industry, and the main-
tenance and development of industry are necessary
for the great task we have in hand."
•With that, too, every sane American must feel
himself in perfect accord. No class of business is
more intimately allied with the needs of the nation
today than public utilities. Every one of them stands
in the first line of defense, holds its place of para-
mount importance in the main trench. All alike must
be maintained at the maximum standard of efficiency.
None deserves, none asks for any special privilege.
Indeed, if there is another class of business which
has uniformly thrown itself more freely and gener-
ously into the breach of national service at this time
than the utilities, we have failed to find it out. On
that score, there is no argument. But as the Presi-
dent says, to enable this and other classes of busi-
ness to do what they must do, it is essential that they
must receive a fair rate of return for their service.
They have enormously increased and ever-increasing
costs of operation to meet. They cannot meet them
and keep up with current demands unless they are
permitted to raise their rates in some degree — ^not
to raise their rates in order that they may increase
their profits over and above what is right and neces-
sary.
In short, all that the President suggests, all that
the utilities ask or expect, is a *' square deal" — as
the President has so happily phrased it, ''What we
want for business is the same kind of liberty we want
for the individual.''
To that proposition this ''Square Deal Number"
is dedicated. We are simply enunciating the **Live
and let live" of the Golden Rule, which is the vital
cry of a people united as we are and must remain.
These higher price levels cannot be regarded as tem-
porary expedients for some and not for all.
The most encouraging feature of the situation is
that the public and the public's official representa-
tives are coming to appreciate the force of all these
appeals for the square deal for utilities. For the
fact is rates are being increased by and with the
authority of the public through commissions and
courts. There is abundant evidence of that in the
pages of this magazine. Hundreds of increases in
all kinds of utility rates have been granted through-
out the union and in Canada. But, of course, hun-
dreds of others must be granted. All utilities are in
the same box and all must have the same treatment.
The outlook is hopeful, for the simple reason that
the justice of the utilities' case has impressed itself
on a large proportion of the public. In other words,
despite the camouflage of propaganda misinforma-
tion, the facts are filtering through and facts will
inevitably win their own way.
Railroads
THE railroad case simmers
down to this : The railroads have
been handling more business and
getting less revenue. Obviously
the fault lies with rates, and rates are the making of
the government, not the roads. Give the men trained
and skilled in the art of running railroads the
squarest possible deal, the freest hand compatible
with the general welfare and they will produce re-
sults with which, in our judgment, no government
control or operation could possibly compare. Always,
of course, private operation is to be thought of only
in conjunction with due government regulation. One
cannot think of this railroad case without reverting
to the notorious Adamson law. A dilemma arose.
It had two horns, as have most dilemmas. One was
labor's demand for increased wages. Forthwith,
while labor waited on the doorstep, the government
handed out what labor asked. The other was the
railroads' demand for increased freight rates. The
government took the matter under advisement and,
except for a few sporadic and inconsequential ad-
vances, still has it under advisement. Of course con-
Page 2
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ditions cannot be corrected that way. That method
of procedure was by no means conducive to meeting
the crucial demand for adequate railroad transporta-
tion. Whatever the end of the railroad case may be,
even though the government assumed full charge
and ownership, which, of course, is out of all ques-
tion, it would not mean that the railroads had failed
in their ability to manage, for they have not, in this
crisis, had the freest opportunity of demonstrating
their ability, although by increasing traflSc about 20
percent over 1916, they have accomplished a great
feat under the handicap of inadequate revenue.
Resnlfs
WE are not simply saying that
utility rates can and should be
raised, we are showing that they
have been and are being raised.
In one place in this magazine will be found where
increases have been granted within the last three
years to some eighty odd street railways. This is
food for thought for those who regard the 5-cent fare
as a fixed institution. In another place we present
the records of some 200 or 300 increases in the last
year to various utilities — ^gas, electric, water, etc.
0. B. Wilcox of Bonbright & Co., New York, has
shown that out of 462 applications for larger rates
in 1917, 401 applications were granted, almost 90
percent.
This shows, doesn't it, that the tendency is to in-
crease rates when the facts show they should be in-
creased? Some of the larger utility operators have
advised us that they find no special diflSculty in se-
curing just and reasonable increases when they have
fairly presented their case.
Cash Cost
V
IN considering the enormous in-
creases in the cost of utility op-
eration, let us not lose sight of
the increased cost of money to
the utility company.
''What is worse than all the rest to those who are
called upon to make improvements or refund securi-
ties is the rapidly advancing cost of money; that is
the most serious problem at this time with many,"
says Dow R Gwinn, president of the Terre Haute
Water Works Company, on another page of this
magazine.
Capital is the first and last indispensable factor
in business operation. The selling prices of busi-
ness must be guaged in part by the buying price of
capital. Rates of return cannot be held down while
rates of interest are constantly rising without ruin
to business. As for instance in the state of New
York, where dividend return to the up-state electric
^ CJ^ JAN;;2l9t9
railways for the last few years has ranged from IH
to SH percent, as against a prevailing interest rate
for money borrowed by these companies of 7 to 10
percent. This condition cannot go on without ruin-
ous results. And it is a foolhardy community that
will permit it to go on.
With the government rightly given prior claim to
the investment market at this time, utilities must
have proper support if they are to obtain the neces-
sary capital. They cannot force investors to give up
their money and investors won't give it up unless
they get what they want in return for it. As we have
often said, the state can make a law of any kind to
regulate capital, but it cannot make a law to compel
a capitalist to invest his money. What the state can
do at this crucial time is to make such provisions as
will enable the utilities to borrow money and yet
obtain rates of return that will allow them ade-
quate margins on the right side of the ledger. We
believe this will be done. We see that the tendency is
to raise consumption rates where necessarj^ and we
have suflScient faith in the responsible officials to be-
lieve that they will make the rates of return and the
rates of interest more nearly proportionate, so that
the public may have prosperous utilities, which is the
only kind that is worth having at all.
No Velvet
NOTE this statement by John A.
Britton, vice-president and gen-
eral manager of the Pacific Gas
& Electric Co., elsewhere in this
magazine: *'We do not ask for an increase in our
profits, nor even that the rates be raised by an
amount equal to the actual increase in operating ex-
penses, but are only asking for a partial reimburse-
ment of expenses incurred by reason of abnormal
conditions, realizing that corporations, in common
with the public, must bear their proportion of the
war burdens. '^ We recite that here to emphasize the
position of the public utilities as a whole with rela-
tion to this matter of increased rates.
Justice
AFTEE all, there is nothing
strange in the general movement
toward higher utility rates. It is
simply part of the movement
toward higher prices for everything. It would be
phenomenal if the utilities did not require higher
rates, especially inasmuch as many such rates have
been too low for a long time, even before our en-
trance into war.
By what miraculous combination of circumstances
or magic^ newer could it be supposed that4n-^ltiine
Page 3
ic power could it be supposed that4n-^ltipi€
4U23?(> DigitizecTby Ijgi^
like this one certain class of business could proceed,
apart from all others, on the same standard of rates
that obtained before the abnormal condition set inf
Those who know the facts know that utilities are
naturally beset by certain extra hazards, which when
the simple truth is stated, make it necessary for them
to have a rate of return which appears larger than
the ordinary. Simple interest on investment is not
enough. There is only one rule to apply to the utili-
ties and that is the same rule that is applied to all
other business, the rule of the cost of operation. In
order to make rates fair, they must be made flexible.
That is always done where the inexorable law of
supply and demand is duly considered. We cannot
make fish of one class of business and fowl of an-
other and come anywhere near doing justice to busi-
ness or the public. And the large numbers of utility
rate increases being made all over the country indi-
cates that this view is receiving large consideration
today.
People
IN Seaford, Del., women went to
the city council with a concerted
request that the Sussex Gas Com-
pany be permitted to raise its
rates to the consumer. Evidently the company has
taken the time to present the facts of its case to the
women, who are the real gas users.
In Bock Hill, S, C, voters went to the polls and
by an overwhelming majority, authorized an in-
crease of rates for the Rock Hill Gas Company after
tht company had laid before the community the facts
about its business.
Inform the people and you can generally trust
them to do the square thing. In all these cases where
utility companies are getting increases in their rates,
you will find that as a rule the companies have first
gone to the people with a matter-of-fact statement of
their affairs. Consumers, themselves, can have no
reason for denying a square deal to a utility, for
they know that the utility is necessary to their con-
venience and welfare and that only a prosperous
utility can meet the demands.
Fifty-Fiffy
without asking anybody else about it, the utilities
had and have no such power. They must abide the
permission of public official bodies. Now and then
one hears from some senseless source such a state-
ment as this: ''Why should the public utilities ask
for increased rates in order to help them meet the
demands of the war! Why don't they do as others
are doing, bear their share of the sacrificed Sense-
less, we say. Of course any sensible man knows that
the utilities are more than bearing their share of
burden and sacrifice. All they are asking is to cut
the extra cost of operation 50-50 with the public.
They are not doing what other lines of business have
done — soaking the consumer without let or hin-
drance; they couldn't if they would.
Money Value
ROGEE BABSON, the statisti-
cian, finds that the purchasing
power of the dollar of today is
approximately 30 percent less
than it was in 1914.
''This means, '^ he says, ''that if you are to receive
the same payment for goods as you did three years
ago you must mark up the prices by an amount cor-
responding to the decrease in the value of the money
which you take for them. The product that you sold
three years ago for $1.00 you must now get at least
$1.30 for unless you wish really to reduce the price
of the goods.''
When it comes to the matter of utilities it may be
questioned if Mr. Babson's depreciation of the dollar
is not too conservatively stated. Utilities are pay-
ing, in many cases, from 50 to 250 percent more for
their equipment and materials. But even if the
dollar is worth only 30 percent less, it only serves to
emphasize the justice of the demand for increased
rates.
StabiUty
IT should be clearly understood,
of course, that this somewhat
general movement of utilities to
secure higher rates arises solely
from the pressure of abnormal conditions. The
utilities are not asking for larger profits, but simply
for such increases as will enable them to bear their
share of the extra burdens incident to the war. That
is what every other line of business has done, or is
doing. The only difference between the public utility
and the coalman, packer, the grocer, butcher, clothier,
shoeman and the rest of the commercial and indus-
trial trades, is that while all these advanced before
the government took control, their prices and rates
Page 4
WE should like to call especial
attention to an article on another
page under the title of Henry L.
Doherty & Co. in which appears
the statement that the general stability of public
utilities is well established. Undoubtedly that is
true and we think it needs to be kept in mind as
much by utility operators as the general public. On
the other hand, as the Doherty statement also says,
"increased rates must be proportionate to increased
fuel and other costs'' of operation. The present up-
set in economic conditions, while it calls for unme-
diate rate increases for the utilities, does not, we feel
sure, invite pessimism on the part of anybody: A
thing that is so indispensable to the general welfare
in a time of supreme crisis as is the public utility
is certainly entitled to the fairest possible treatment
by the public and, we believe, will get it, especially
if the utilities see to it that the public understands
their case.
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The life boat of Increased Prices is the onlv means of escane ^iof all alike.
:^
OUT of 462 applications for increased utility rates reported in 1917, increases were
granted in 401 cases. That means that more than 86 per cent of the requests
for rate increases were granted. And that in turn must mean that local and
state commissions have become convinced that utilities in general are entitled to
larger rates of return in order to afford adequate public service.
Hundreds of Increases in Thirty-
six States and Canada
HUNDREDS of rate increases of all public utilities
have been granted within the last year — ^401 out of
462 requests^ — ^by local and state commissions and
large numbers of applications for such increases are now
pending in the various 3tates of the union.
This signifies one thing and that is that the public regulat-
ing bodies, jifter learning the facts, have found that utilities
must have larger rates of service and larger rates of return
if they are to remain in business and that they must remain
in business for the good of the state. But it is not merely
enough that they remain in business; they must be able to
keep up with the demands of growth and progress which
these urgent times force upon them. To do that, as the
regulating bodies evidently perceive, the utilities must have
more nearly adequate rates. They must be treated as all
other classes of business are treated — ^allowed to raise their
prices to meet the rising costs of operation. It is only a
prosperous utility that is a worth while utility.
The following tables comprise increases that have been
granted, for the most part by state or other public bodies, in
thirty-six states and Canada. Some may not yet be con-
firmed. They do not include increases to street railways.
These are presented on other pages to themselves. Nor
do the following tables include by any means all increases
made or granted within the last year, but they do show the
comprehensive scope of the movement toward increasing
the rates for public utilities. This very nation-wideness of
the movement thwarts any invidious attempt to pretend that
the upward tendency is due to anything but a recognition by
public regulating commissions and officials of the justice
and necessity of such increases.
These tables below do not include advances made to
municipal plants. Some of them are given in another article
tp themselves.
One of the most interesting features of these large num-
bers of rate increases is that more have been granted in
Massachusetts than in any other state. Massachusetts has
for thirty years supervised the securities of public utilities.
This is an effectual answer to those who claim that the
demand for rate increases arises from over-capitalization.
Surely there is no talk of "watered stock*' in Massachusetts.
Besides these increases given below — between
200 and 300 — other such increases are monthly being al-
lowed in the various states and Canada and it would be
impossible at the moment to present anything like a com-
plete list. As will appear from the following tables gas
rates have apparently made better progress with increases
than others. This is due to several reasons, one of which
is the diflference in character and classification. When all
the electric rate increases now made and pending are com-
pleted their numbers will show up quite as formidably.
City
Fowler
Huntington Beach
Newport Beach
San Jose
San Francisco
Oakland and San
Francisco
California
Utility Company
Gas Fowler Gas Co.
Gas Huntington Beach Gas Co.
Gas West Coast Gas Co.
Gas Gas & Electric Co.
Gas Pacific Gas & Electric Co.
Electric Great Western Co. and City
Electric Co.
Colorado
Gas
Colorado Springs
Colorado Springs Electric
Colorado Springs Steam Heating
Colorado Springs Light, Heat
& Power Co.
Colorado Springs Light, Heat
& Power Co.
Colorado Springs Light, Heat
& Power Co.
Wallingford
Thompsonville
Middletown
Hartford
Derby
Danbury
Meriden
Hartford
Meriden
Bristol
Wilmington
Gainesville
Atlanta
Boise
Belleville
Princeton
Aurora
Alton
DeKalb
Muncie
Indianapolis
Indianapolis
Princeton
Anderson
Ft. Wayne
Brazil
Noblesville
Connecticut
Gas
Gas
Gas
Gas
Gas
Gas and Electric
Gas
Electric
Electric
Steam Heating
Wallingford Gas Light Co.
No. Conn. Light & Power Co.
Middletown Gas Light Co.
Hartford City Gas Co.
Derby Gas Co.
Danbury & Bethel Gas & Elec-
tric Ljght Co.
Meriden Gas Light Co.
Hartford Electric Light Co.
Meriden Electric Light Co.
Bristol & Plain ville Tramway
Co.
Gas
Delaware
Wilmington Gas Co.
Florida
Gas Co-operative Ice Mfg. Co.
Georgia
Steam Heating Georgia Railway & Power Co.
Idaho
Gas Boise Gas Light & Coke Co.
Illinois
Gas
Gas
Steam Heating
Steam Heating
Steam Heating
Belleville Gas Co.
Princeton Gas Co.
Aurora Electric Co.
Alton Gas & Electric Co.
DeKalb-Sycamore Electric Co,
Indiana
Electric (Power)
Electric
FJectric
Gas
Gas
Gas
Gas
Gas
Page 6
Muncie Electric Light Co.
Indianapolis Light & Heat Co.
Merchants* Heat & Light Co.
Princeton Gas Co.
Central Indiana Gas Co.
Northern Ind. Gas & Elec. Co.
Brazil Gas Co.
Indiana Gas Ligli
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UTILITY companies in general, notably large concerns with many subsidiaries,
testify to the fact that for the most part the public is, whenever informed of the
facts, yielding very readily to requests for reasonable rate increases. It is evident
that the people as a whole appreciate the indispensable services of the utilities, together
with the fact that they must have fair rates of return in order to exist.