Three symptoms indicating the unsound attitude of municipal officials call for special mention: First, the habit of jumping at conclusions without knowledge of the facts. Second, the practice of making public assertions without knowledge of the facts. And third, the adoption of a negative attitude upon constructive policies.

On the habit of jumping at conclusions without knowledge of the facts, I cite the official procedure when an application for increased rates is filed, and I wish now to join the good Doctor in saying there is nothing personal in this, but I do say it is a situation which I think should be frankly discussed, and I propose here frankly to discuss it, and I am pointing out to you now the official procedure when an increase in rates is asked or any change in rates is asked.

The city council meets. It forthwith passes a resolution and instructs the city attorney to oppose the application. The city attorney issues his public pronouncement, duly accompanied by photograph, saying: "I will fight to the last ditch," as he raises his eyes to heaven and prays to God to give him strength that justice may triumph and right prevail.

Ladies and gentlemen, never in all my experience, and I have been in the publie utility business a good many years as a lawyer and as an executive, never in all my experience have I ever heard of, read, or seen a resolution by a city council directing a city attorney to investigate the facts and to reason from those facts to a sound conclusion in the public interest. Apparently some public officials are not concerned about the facts, but are stalwart nevertheless in their conclusions.

A rate inquiry ought not to be an

mutual and co-operative investigation of the facts, proceeding upon the theory that either too high or too low a rate is an injury both to the utility and to the public.

In connection with the habit of making public assertions not borne out by the facts, I am reminded of what Abraham Lincoln said in his famous Cooper Union speech in New York City. In substance, it was this: that a charge persisted in without knowledge of the facts was nothing short of slander. Within the terms of that definition, some city officials continually slander the utilities. And I am going to give you a very concrete illustration of that

just a typical illustration. One of the municipal officials in the East Bay region said publicly and persistently that there was a twenty-five per cent leakage in the distribution system of the East Bay Water Company. If that were true, the East Bay Water Company, a sound, thriving utility, would have been on the rocks months ago. It could not have rendered service if that assertion were true. What our friend the city official did was to confuse what is known in the waterworks business as "unaccounted-for water" with leakage. In every metered system there are many uses of water unmetered, and "unaccounted-for water" is the difference between the water produced at sources of supply and the total registration of meters. Now, that difference is made up, in the first place, of water used for fire purposes, for street sprinkling, for sewer flushing; second, water used by house and street contractors, unmetered and measured by the amount of work they are doing, yardage, and the like; the difference is due also to breaks caused by accident such as the backing of a truck against a hydrant and snap

ping it off. It is caused also by underregistration of meters and non-registra tion of meters. And it is a fact that the greatest element in "unaccounted-for water" is non-registration and underregistration of meters. Anyone knowing the mechanics of a water meter will understand that. They must under-register. Records show that our meter registration averages about 99.4 per cent, which illustrates the extent of the one factor of under-registration.

In addition to all these things "unaccounted-for water" represents leakage, but there are many elements in "unaccounted-for water" that are greater than the element of leakage. And I say in connection with that illustration, that that public official owed a duty to the public to be accurate. He owed a duty to the public to know what he was talking about or hold his peace. The public has a right to expect that when a city official stands up to talk about a public utility, he speaks with knowledge of the facts. The obligation goes even further than that. City officials owe to a lawful institution in their midst a duty of protection against misrepresentation. There must be a sense of responsibility in connection. with the public statements made by city officials, and that sense of responsibility must govern their statements.

With relation to the negative attitude on constructive policies, I realize there is play for judgment in this field. There may be, and there frequently should be, difference of opinion as to policies. But I have found, over and over again, a hold-back attitude, not a difference of opinion, but an inclination to oppose a constructive policy, because it may help the utility, which is an unintelligent attitude because a mutuality of interest between the utility and the public is perfectly apparent.

Now, why should the municipal officials, whom my cap fits, change their attitude? Why should they do it! Undoubtedly the change is suggested by justice, and the American spirit of fair play and fair dealing. But there is another compelling reason. The public interest requires the change. It will pay to make the change. The cost of production of service can be reduced by municipal co-operation with the utilities. Co-operation is not due unless it is deserved. But I say that if management is honest and efficient, and has accepted the fundamental principles decreed by public opinion, it is entitled to co-operation and should have it. The point in co-operation lies just here: that the utilities can the better run the race for the public if the obstacles of prejudice. antagonism, and misrepresentation are removed. It costs money to overcome these obstacles, and the utility official who does not overcome them does less than his duty to the public, because the public is entitled to the facts. And the existence of these obstacles means that some part of management, some part of resources, are diverted from their main purpose. Co-operation is of especial importance on the financial side. The money for these great utilities must come from the great body of private investors. You can't go out and drag

them in. You must persuade them in. They are perfectly cold-blooded in their decision. Sentiment does not affect them. The need of the State of California, the future of the State, are tinkling cymbals and sounding brass to them unless they know their principal is safe and the price at which they sell their money in the form of interest and dividends is assured. The attitude of municipal officials is a powerful influence, a very powerful influence, in persuading these investors in or keeping them out, and influences as well the price at which they sell their money. If we could wake up tomorrow with the doctrine of co-operation in full force and cheerfully accorded, the cost of financing our public utilities would be materially reduced, the public would get the benefit, and the development of the future be doubly insured.

I find, my friends, that I am trespassing upon my time, but I want to leave just this one additional thought with you municipal officials, and that is: that the great economic change going on in the State of California presses for solution. Whatever you do, realize that to undertake the great power development which the oil situation requires to be undertaken, is going to require organization. Whatever you do, save the morale of organization, and realize that the big problem in big undertakings which cannot be solved in a moment, is the creation of effective and intelligent organization.

President Butcher: We will now have the pleasure of listening to a cognate subject, The Regulation of Public Utilities, including rate fixing, by Hon. E. O. Edgerton, President of the Railroad Commission of the State of California, whom I now have great pleasure in introducing

to you.

ADDRESS OF HON. E. O. EDGERTON,

President of the Railroad Commission of California.

Mr. Chairman, ladies and gentlemen: Let me say at the outset that I appreciate the good temper and the good nature in which both the preceding speakers have handled their subjects. It is of course true that, in a sense, I am the victim of the remarks of both of them. But they have not offended my feelings in the slightest particular, because I would have insisted, had I had direction of the matter, that this important subject should be discussed wholly impartially.

Now, the worthy Doctor from Riverside made many remarks, and set forth many statements of fact. It is not so much the direct statement of fact that I object to, but some suggestion made here as the result of his remarks, and I would like to clear up some things, not on my own behalf, because, frankly, and without giving offense to you, I would like to say to you at the outset that I don't care a whoop whether I am popular with you or with the rest of the people of the State of California, or not. A public official that will consider popularity or unpopularity is not worthy his position. But I would like to say this to you, and say it very seriously, that, in justice to the organization of which I am president, in justice to the other four Commissioners, in justice to Jack Eshelman, who was once President of the Commission, forgetting entirely myself -in justice to our organization, made up of men and women, I want to say to you that the Government never had, and never will have, a more efficient, loyal, hardworking crowd of people than those people have been and are. I have been in the debates and discussion of that Commission from the beginning. I know every motive moving every single em

ploye of the Commission. I know the motives of every Commissioner. I know every discussion that has gone forward on every important decision that the Commission has made; and I can say to you that, without a single exception, the decisions of employes of the Commission and of the Commission itself have been based, first, upon the facts, and next, upon the best judgment that those Commissioners could bring to bear upon the subject. No political consideration. has entered into any single decision the Commission has ever made, nor has it at any time granted a corporation a single favor or a single privilege because of any friendliness to that corporation, or because of any hope of future reward. I want to say just that much, in justice to the gentlemen and the ladies with whom I am associated, and in fairness. it ought to be said.

In that connection, I think the Doctor from Riverside did not intend to suggest that the Railroad Commission of California had been appointed by the public utilities. I think perhaps you might have gotten that impression. I think he was quoting from some Eastern journal or publication. I don't believe it is true in the East, and perhaps I only need to suggest to you that three members of the present Railroad Commission of California were appointed by Hiram Johnson. If the Doctor cares to suggest to you that Hiram Johnson appointed the Railroad Commission at the dictates of the public. utility corporations, he can have that out with Johnson and I don't envy him his job.

Now, before I speak directly to my subject, and I must generalize-you will appreciate that, after eight years' experience on that Commission, with literally thousands of formal decisions and many thousands more of informal decisions, decisions made daily, hourly, that it would be impossible for me to review

each of those decisions without keeping you here a month. So I insist I must generalize. I am perfectly willing, however, to be asked questions on any detail that you may see fit to inquire about. Before taking up some of the generalizations which I would like to indulge in, I will say this: that the only importance of my presence here tonight, the only purpose I seek to serve, is that you do not base your judgment upon either misstatement of fact made by others, or a misconception which you yourselves may have arrived at in some way. My great anxiety is that you understand, with the greatest possible accuracy, the situation as it exists, and then you are welcome to your own conclusions, based on those facts, and I shall not attempt to force my conclusions upon you.

Now, I want to take up some of the things the Doctor from Riverside said to you, and I want to say to you now that I do not believe he made a single misstatement of facts in the mass of the mis

statements he made, intentionally, and I am only going to take a few of his misstatements to point the error into which the good Doctor has fallen.

Oh, by the way, at this point, appropos of that little club, something that seems to have been floating around this organization for a year: A year ago, when this organization met, I read in the public print that the Railroad Commission of California had been denounced because it had interfered with the City of Los Angeles in acquiring an electric utility property. And the Doctor here tonight, whether he had that particular denouncement in mind or not I do not know, said that we interfered with the acquisition of privately owned utility properties. Let me read you something, and let us settle that question once and for all:

"At a meeting of the Council of the City of Los Angeles held this day" (this is June 11, 1919, before the session of

this body at which this denouncement of us was made) "at a meeting of the Coun cil of the City of Los Angeles held this day, the enclosed resolution, heretofore adopted by the Public Service Commission with reference to an agreement between the City of Los Angeles and the Southern California Edison Company, for the purchase of the said company's electrical distributing system, was concurred in by the Council."

And here is the resolution:

"Be it resolved, that this Board"and, mark you now, this same City of Los Angeles has been presented to this Convention as a city which has developed on a broader scale than any city in the United States a publicly owned and operated electric utility

"Be it resolved, that this Board, on behalf of the City of Los Angeles, extends its thanks and appreciation to the Railroad Commission of the State of California for its co-operation"-and you will pardon this, I have to mention it"and to its President, Mr. E. O. Edgerton, for his untiring efforts and substan tial aid given in bringing about an agreement between the City of Los Angeles

and the Southern California Edison Company for the purchase of the company's electric distributing system, resulting in the solution of an outstanding and difficult problem; and be it further resolved, that a copy of this resolution be forwarded," etc.

Doctor Porter: That is good news.

Mr. Edgerton: I knew it would be good news. Another statement the Doctor made, and by the way, this is a statement frequently made, and it is only about twelve years out of date, is that the Railroad Commission of California is today fixing rates on watered stocks and bonds. Now, I say the Doctor is about twelve years out of date on that score. That is to say, it may have been true prior to the existence of this Railroad Commission. But it has not been true an hour or a day since this Railroad Commission has ex

isted, and I can prove it by every decision the Commission has made. I can prove it by the records of the Railroad Commission, which are open to the inspection of anybody.

The fact of the matter is that the affairs of these utilities and their properties, are examined and scrutinized in the minutest detail, by the Commission's experts, and the only instructions those experts have is to get the facts-get the facts. It would be an astonishing proposition that the Railroad Commissioners, with the facts produced by those unbiased experts, who have not a motive on earth, nothing to gain whatever, no duty except to get the facts-that if, with these unbiased facts the Railroad Commission, for some unknown reason, prob

should distort and twist those facts in