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utilities, such a policy as will halt the Supreme Court from controlling and rewriting legislation against the best interests of all the people in the absence of other legislation, such as Chief Justice Hughes read a decision on validating Ohio's law that the Ohio Legislature passed to limit the Ohio Supreme Court's judicial veto.
Practically all the communities and markets served by utility holding and foreign control corporations have been in existence long before their racketeering and swindling schemes were concocted. Yet these master bandits of boodle, especially the power combine, usurp the right to capitalize the blessings of the multitude into the greatest pyramided pilferings in the history of plutocratic plundering.
Instead of the National Capital's utilities becoming entangled in a League of Nations we are becoming entangled in a league of financial bandits.
To avoid so far as possible utilities' litigation before the United States Supreme Court, now presided over by an outstanding beneficiary (financially) of the Robber Barron system of financial jugglery and dishonestly pyramided rate structures, I beg to submit the following suggestions and convictions.
In legislation framed to control the utilities of the National Capital, subject to court interpretation, we are at this time afforded the greatest opportunity yet presented to Congress to define its attitude toward the public utilities corporations scattered all over the United States.
This occasion is not merely a matter of limited local application, but embraces a means of laying down a broad policy to guide the Supreme Court in its decisions so that we may escape further reactionary tendencies of our courts, such as in the Baltimore rate case, and minimize the ever increasing burdens constantly being saddled upon the consuming public in the absence of protective legislation.
Paragraph 2 of section 2 of Article III of our Constitution vests our Supreme Court with appellate jurisdiction "with such exceptions and under such regulations as the Congress shall make." language lies the way to broadly define what Congress considers a fair return permissible for utilities to charge without opening up endless arguments as to what constitutes confiscation for the Courts to settle.
You gentlemen doubtless have very concrete convictions to embody in legislation covering the public's constitutional rights in charges for monopolistic utility services, based on financing to include net capital investment, economical management, prudent investment, franchise value if any allowable, money spent for lobbying, advertising, propaganda and lawyers' fees, gifts, bonuses, and excessive compensation to officials and employees, costs of equipment and supplies bought from allied corporations, with or without commissions and considerations paid to intervening officials, license fees, management fees, and so forth.
Considering that public utilities are virtually guaranteed a fair return or a rate permitting a fair return and therefore their securities are given a status almost on a par with Government bonds in stability, it is incumbent on Congress to protect the consuming public against excessive charges and not only define but also prescribe punishment for improper charges, piracies, misrepresentations and fraudulent bookkeeping entries by utilities, all of which call for excessive returns
on a fair valuation and in this way impose confiscatory and extortionate charges on the public.
In building up the rates structure where prudent investment is not taken rigidly into account, where any value at all is allowed for franchise or good will and where current reproduction value is countenanced, a return of not over 6 per cent doubtless is justified or 7 per cent where a utility conforms strictly to public commission rulings on actual net prudent investment and exemplary economical operation that benefits the public in reduced charges.
In my opinion no utility can be honestly operated with due consideration to the consuming public and the stockholders who administer the handling of this public business and revenue unless the public tribunal organized to administer a public trust directing public utilities is given control over all disbursements, salaries, lobbying and lawyer charges, fees of all kinds, advertising, propaganda, bids and acceptances for equipment, supplies, and so forth.
After many years of lax control over utilities the consuming public is now entitled to rigid protection by Congress.
As soon as possible all public utilities should be specifically curbed and checkmated from manufacturing debts on the public through the excessive sale of unwarranted stock issues without adequate equities to protect and benefit the entire public. The American Telephone & Telegraph Co. this month has authorized $300,000,000 new common stock to be sold at par to stockholders with the average market price averaging $750,000,000—three-quarters of a billion dollars of new stock exchange paper tokens for money. These utilities should also be prevented from levying exorbitant taxes in the form of rates almost at will partly to feather the nests of private racketeers and employees, many of whom draw stupendous salaries steadily advancing to several times the amount paid to the ablest talent money should be able to buy as represented by Members of Congress who must put forth tremendous efforts comparatively to maintain their pay for even a short period of time.
Inflationist stock-jobbing racketeers from among the boodle-gang highwaymen of the gambling dens of Wall Street have cunningly and trickily nullified the La Follette antiforeign corporation control act of 1913 and are now pounding energetically and brazenly on the doors of Congress for permission to completely undo what Congress expressly and decisively forbid.
Congress passed the La Follette Act to prevent foreign corporation monopoly piracies of our District of Columbia utility highways. After years of maneuvering by the stock jobbers we find the spirit, intent, and ethics of the La Follette Act, as well as the Constitution, have been violated in a shameful manner and technically the bandits of boodle have skinned the law of the cloak of protection provided by the late Senator La Follette to cover our District of Columbia utilities. The La Follette Act explicitly forbids a foreign utility or holding corporation to control more than 20 per cent of any District of Columbia utility corporation. An evasion of law, recently upheld by the courts, was accomplished by the simple device of a new-fangled investment-trust-buying control. Now, these tricksters are asking authority in the gas merger bill, section 2, for the right to sell or vote stock of the gas company by "any corporation or other entity.
This authority would bring about as complete nullification as if the Supreme Court should declare the La Follette Act unconstitutional.
The New York inflationist gang of gas owners ask authority to issue no-par common stock, prohibited by some State utility commissions, and to issue new common and preferred shares to satisfy their proclivities for diluting values and increasing charges to the nth degree. Increase of capital stock would be a blind to cover fraud on the public. Increase of capital stock would help serve as a basis or court excuse for high-jacking rates on the consumers and stockjobbing and unsuspecting public lured into the gambling dens of the pirates of finance. The primary purpose of stock issues surely is not to cheapen rates to consumers. The overpowering purpose is to make money out of the manipulation and sale of the stock to benefit the inside promoters and not the consuming public. Concentrated control logically calls for a retirement of stock issues. Enlarged stock issues of District of Columbia utilities logically would be for stock-jobbing purposes. Bond issues can legitimately take care of every reasonable growth of District of Columbia utilities.
Congress has repeatedly refused authority for all requests made by the gas company for an increase of its capital stock since 1896. In the absence of, and failure to obtain congressional authority to increase capital stock more than two decades ago, and to cover up 100 per cent surplus earnings out of excessive, extortionate, usurious income, upon one occasion the Washington Gas Light Co. issued a hundred per cent dividend in the form of certificates of indebtedness.
Our Potomac Electric Power Co. in the past 14 years has issued 213 per cent dividends, equal to 8 per cent per annum on inflated capital and in addition a full 100 per cent return of all of its inflated capital.
Here we have the spectacle of a few men in control of malicious, avaricious, and conscienceless monopoly corporations using excess surplus money picked from the people's pockets, exceeding 100 per cent of capital, to earn interest and dividends on this excess surplus through nefarious control of the necessities of modern life, overriding Congress and defying a community of over 700,000 inhabitants, nullifying legislation enacted by the chosen representatives of over 100,000,000 people, beseeching Congress for authority to ride away roughshod with legal consent to more swag than they have already grabbed.
Both the gas company and the power company are earning dividends off of surplus profits that have long since replaced every penny of net capital investment ever made in either corporation. They are both earning usurious returns of interest on a full 100 per cent of capital accumulated out of surplus earnings. Their dividends henceforth are nothing more nor less than interest paid by consumers on accumulated interest that has fully replaced capital and from an intrinsic net investment standpoint this capital is now all water, diluted, contaminated, and partly evaporated. If our people's counsel ever took the trouble to carry to court the case of District of Columbia Consumers v. Predatory Gas and Power High-Binding, Hi-Jacking Corporations on charges of extortion, usury, and confiscation, the consumers should get a decision that henceforth any charge except for actual cost of service and maintenance is confiscatory and unconstitutional.
Any new capital needed for improvements, betterments, extensive in the future can easily be raised in excessive amounts on bond issues which heretofore have always been heavily oversubscribed. Therefore, there is no necessity for the issuance of another single share of common stock, but rather is there full justification for charg. ing off every penny of net capital investment as having been returned over 100 per cent in full and thereby wiping the slate clean. The consumers including the United States Government, as equal partners with all the utilities, do not want to be silent partners to any involvement in stock-jobbing schemes.
Without undue delay the people of our National Capital and suburban communities, who produce all the utilities' revenue to pay all the bills, are entitled to know just where they are at and what is what in all of our much muddled utility affairs and entangled partnerships with the gas, power, traction, and telephone corporations after having permitted unreasonable and unjustifiable aggrandizement by these extravagant semipublic corporate entities for decades. Financing of security issues to any degree or extent, all of which have their effect on rate structures, can hardly be justified or contenanced in the absence of a complete, through-going-to-the-bottom valuation of each and every one of all our utilities. This 100 per cent valuation is the essence of any and every action to be taken regarding the utilities.
The purpose of the duplicity that brings this recent request before Congress is transparent. The new gas owners come here with unclean hands after treating the law as a scrap of paper. They were by law barred out of this territory and have jimmied their way in, evidently under false colors and pretenses. But these outlaws are here legally ensconced in the utility preserves of the National Capital by methods akin to crashing through a back door or stealthily climbing a back porch and crashing through a second-story window.
They have sneaked in, these new gas owners. Their request for legalized license to water their capital stock structure is a part and parcel of a Nation-wide campaign by utility owners and holding companies that operate without regulation or restriction, especially the notorious and scandalous power combine racketeers, to hoodwink and bunco the public.
Holding companies are forever seeking more protection to heap up more concentrated wealth, rather than benefit the many. They are the means of ulimited robbery of the public actuated almost solely by their “greed to gain, to get, and to keep."
The crux of the situation that brought disaster to savings-account depositors, men and women in all walks of life, and caused hundreds of bank defalcations, deaths, and suicides throughout the country last October and November was the tricky manipulation of carloads of stocks by the mony-juggling stock jobbers, of the vassalage headquarters in Wall Street, associates of whom, engaged in the same business, are now asking of Congress permission to do as they please with the District of Columbia gas stocks cloaked with ostensible restrictions and to rubber stamp their proposals.
This gas company merger offers a country-wide study of a cross section of Wall Street.
There appears no permanent good to be derived in having Congress at this time sanction what Congress heretofore has always refused since 1896 to sanction, and that is the issuance of new gas company stock, either preferred or common or no par common. Nor is there the slightest justification for Congress to permit a complete nullification of conditions expressly forbidden by an earlier Congress-that there should be no foreign holding corporation control of our local utilities.
The main purpose of all our predatory power and other corporations is to manufacture substitutes for money, until at the present time we have not far from 100,000,000,000 of substitutes for money quoted every stock-exehange day on the blackboards of the gambling houses of Wall Street.
The New York Stock Exchange last year at one time had approximately $115,000,000,000 of listed substitutes for money, and in the October-November clean-up and shake-out of suckers, when the master manipulators found they could not justify another dollar of inflation in the sky-high quotations, due to the Senate coalitionists forcing out into the open and halting the mounting tariff schedules, framed in secret, the quoted values of listed securities shrank to approximately 60 per cent of their highest values, to $70,000,000,000.
The present recovery in the overexpanded quoted values in the Wall Street gambling game of numbers has been coincident with the tariff inflationists again gaining the upper hand.
Congress chartered our local utility corporations to permit groups of men to handle semipublic institutions primarily for the benefit of the public. It was not intended that these semipublic institutions should be the basis of stock-selling schemes any more than any recent lease made by the Post Office Department should be the basis of a stock-selling scheme. And Congress has repeatedly refused to permit the stock printing-press gas advocates to increase their issues of substitute tokens for money.
Mr. Burroughs, representing the new gas owners, has as yet offered nothing in exchange for his Trojan horse, the front feet of which are now within the law through a tricky evasion that is being challenged in the courts by a broker with claims of $78,000 in commissions. The new owners offer no public benefits, but merely a promise that they might gamble $400,000 per year to give Paul in the city a 10 per cent cut in rates presumably by robbing Peter in the suburbs, or in another direction, to offset this $400,000 gamble.
The main purpose of our present gas owners, our absentee landlords, is to promote stock gambling, because that is their business.
I am sure Congress is not interested in the new gas owners' stock schemes. I am sure Congress does not wish to accelerate the concentration of wealth in New York any faster than can be avoided.
Undoubtedly Congress has no desire to validate the gambling price of $125 or $130 per share the new owners paid for $20 gas stock which is unfairly permitted to earn 18 per cent dividends, plus surplus.
This excessive rate of return offers the new owners small comfort in their new gamble, and unless Congress authorizes them to transfer their present gamble on to an unsuspecting public with a substantial