a

s, if we don’t do something quick.”

“His fireworks will be the death of u

EMIL. BJARNASON

PUC hearing staged to prepare
_ BCElectric gouge of consumers

A TRAGI-COMEDY is being

acted in the Medical-Dental
Auditorium. The setting is
elaborate, the actors well re-
hearsed, but there is no audi-
~ence. Although the drama

reaches the height of farce and:

ibuffoonery, the outcome for
the absent audience, is pure
tragedy. : .
The comedy is the Public
Utilities Commission hearing on
the BCElectric “fair return.” It

is being staged to prepare a

new phase in BCE exploitation
of the workers and the public.

The problem before the com-
mission is to establish what is
the cost of money to the BC-
Electric — in fixing the com-
pany’s rates and fares, how
much should be allowed for
interest and dividends?

‘To you and me the problem
seems simple—if the company
pays a million dollars in interest
add a million dollars. If $2,-
000,000 dividends keeps the
company’s stock price steady in
the market, fix the companys
revenues to include $2,000,000
for dividends. :

To the high priests of the

Public Utilities Commission it
is somewhat different. To
please the BCElectric and the
‘Coalition government they
must, find the formula that will

give the company the maximum _

profit public opinion will stand
for without precipitating a gen-
eral demand for public owner-
ship. ; me
The public is aware that the
‘BCElectric is allowed to earn
5.8 percent on its total invest-
ment, this being referred to as
the “fair return.” _ But the
company in turn obtains its
capital from insurance com

panies and other investors by —

the sale of bonds and shares.
The 5.8 percent formula was
arrived at in 1941 by taking ‘an
average of the rates of interest
tHat the company was then pay-
ing, including an allowance of
7.5 percent ,on the cCommon
stock equity.

The company now claims that
the cost of money has increas-
ed and that the “fair return”
should be raised to 7.5 percent.

It is in its efforts to prove
that money costs 7.5 percent

- that the BCElectric has reduc-
ed the hearings to pure farce.
‘One fact that is apparent to

everyone concerned—the com- |

pany, the opposition, the PUC

—is that the interest rates, on —

all kinds of securities are lower
mow than they were in 1941
when they averaged 5,8 percent.

BCElectrie experts admitted,
when cross-examined by Elgin
Ruddell, that the market price
of common stock sets a return

-of 6.5 percent, whereas the pre-

sent formula allows 7.5 percent
and the requested formula 12.9
percent.

Similarly the evidence shows
that singe it made its applica-
tion the BCElectric has sold
$20,000,000 worth of bonds pay-
ing 3.75 percent. It is also ad-
mitted that the average in all
elasses of company securities
in 1950 was 4.3 percent.

All of this is unblushingly ad-
mitted-and dismissed with the
repeated assertion that the ac-
tual rates of interest paid by
the company have nothing to
do with its “cost of money.”

° ae
How, then, does the company
justify its demand?

Dr. Purdy, the BCElectric’s
financial expert and chief wit-
ness, presented an elaborate
brief containing the company’s
case. :

Here is the essence of it. Sev-
eral dozen American companies

-are listed and their average in-

terest rates shown, ranging all
the way from 3.0 percent for
bonds of electric companies to
as high as 35 percent for com-
mon shares of certain transit
companies. These are averaged,
then Dr. Purdy adds 24 percent
(because government bonds
pay higher interest in Canada
than in the U.S.). The average

computed in this way is 7.1
percent. :
So what? What have the

rates of interest of the Otter
Tail Power ‘Company, the Dog-
patch Utilities, etc., got to do
with it? Many of them are
companies with a history of
bankruptcy. Several of !/them
are companies that were organ-
ized by the late Sam Insull, his-
tory’s most notorious stock
manipulator. ;

The company’s standard
answer is: the cost of money
thas nothing to do with what
the BCElectric pays.
cerned only with what Dr.
Purdy’s hodge-podge of Ameri-
can public utilities racketeers
have to pay when theye borrow
money.

If this application is granted,
the public is in for another
round of rate increases. Elgin
Ruddell forced an admission

It is con-

from Dr. Purdy that the 7.5
percent formula would boost
profits and income tax to $17,-
000,000. At that, Purdy was
$4,000,000 short of the truth,
since he pretended that income
tax rate was 25 percent instead
of 50 percent.

The actual total of profits
which the company proposes to
add into its rates, therefore} is
$2,000,000. Civic Reform Asso-
ciation has pointed out this is
seven times the interest paid
by the Quebec Hydro on the
same amount of capital. Simi-
larly, the Ontario Hydro pays
$16,000,000 total financial cost
‘on $722,000,000 capital, which is
four times the BCElectric in-
vestment. :

The Quebec and Ontario Hy-
dro systems are publicly own-
ed. Their low interest cost is
attributable to that fact and is
reflected in their rates. Both
Montreal and Toronto house-
holders buy electricity at ap-
proximately ‘half the price paid
by Vancouver citizens.

Vancouver rates will go
higher yet, if the BCElectric is
allowed to get away with the
present proposal.

The only solution to Vancou-
ver’s high utility costs is public
ownership. If the BCElectric
‘persists in its absurd claim that
it cannot finance its operations
for less than 7.5 percent, let’s
turn the operation over to a
publicly-owned hydro commis-
sion which can.

WASHINGTON LETTER

Fight against.

thought

control gains in U.S.

Te fight against the thought-
control. Smith Act, under
which the government of the
United States seeks to outlaw
the Communist party, is ‘pro-
ceeding in a somewhat more
favorable atmosphere as more
Americans realize that enforce-
ment of the act is part of the
drive towards war, according
to Elizabeth Gurley Flynn.

Miss Flynn, a member of the
Communist -party’s national
committee, who thas given 45
years of struggle to the US.
labor movement, is one of the
51 American working class lead-
ers facing trial for alleged vio-
lations of the Smith Act by.
‘teaching and advocating’ Marx-
sm,

—

“There are some signs,” Miss
Flynn said, “of the beginnings
of a wide movement against the
Smith- Act. ‘Yet we cannot in-
dulge in easy optimism while
eight leaders of the Commun-
ist party, including Eugene
Dennis, its general secretary,
are held as victims of the Smith
Act in prison all' over the coun-
try.”

Despite this fact, however,
Miss Flynn said that there is
“a growing possibility of win-
ning this fight for repeal of
the Smith Act and the freeing
of its victims.” She cited as an
example of a gradually chang-
ing American political climate
the directed verdict freeing Dr.
W. E. B. DuBois, elder states-
man of the Negro people of the
United States, on charges grow-
ing out of his fight for world
peace. Declaring that protests
from abroad sent to Secretary
of State Dean Acheson was a
rnajor factor in freeing Dr. Du-
Bois. Miss Flynn said she be-
lieved. similar protest from
Europe and Africa, particularly,
would aid victims of the Smith
AGE. °°

The trial of Gus Hall, national
secretary of. the Communist
party, began November 13 in
New . York on unprecedented
charges of criminal contempt
after he had been kidnapped by
the FBI from Mexico where he
had sought political
The kidnapping aroused wide-
spread protest throughout Lat-
in-America, intellectuals and
trade union leaders declaring it
a contemptuous violation of
Mexico’s national sovereignty.
Hall was tried before Federal |
Judge Sylvester Ryan who may

/

asylum. °

add an additional sentence to
the five years already meted
out to Hall for alleged violation
cf 'the Smithy Act.

Four other Communist lead-
ers, indicted but not tried under
the Smith Act, have been sought

by federal police since last June
20.

Two recent Supreme Court
Gecisions, at least partly the re-
sult of mass protest, can also
be considered as evidence of a
growing sentiment against the
Smith Act and violations of the
Bill of Rights that have follow-
ed Smith Act arrests.

One ordered a new hearing
for the attorneys who thad been
given fines and prison séntences
for contempt of court as a re-
sult of their defense of Eugene
Dennis and the other Commun-
ist leaders now serving five
years each in federal penicen-
tiaries after their convictions
were affirmed by the Supreme
Court on June 4 last.

The second Supreme Court
decision ordered that fifteen
held illegally in jail in Califor-
nia for the past four months
under Smith Act indictments be
granted the reasonable bail pro-
vided for by the Eighth Am-
endment of the Bill of Rights.

This last order, however, was
flouted by the justice depart-
ment which refused to lower
bail of $50,000 each, bail so high
and impossible to raise that it
resulted in the fifteen remain-
ing in jail. One of them, Bern-
adette Doyle, California fighter
for peace who received 600,000
votes in the last California elec-
tion, was only released on No-
vember 30 after she suffered
four heart attacks endangering
her life.

It is probable that five Smith
Act trials will be held during
tthe winter and spring of 1952.
These trials include those of the
seventeen Smith Act victims in
New York; the fifteen in Cali-
fornia; six in Baltimore; six in
Pittsburgh, and. seven in
Hawaii.

A drive for a fund of $250,000
for the defense of Smith Act
victims east of the Mississippi
River is under way as well’ as
a California drive for $150,000
for legal expenses there. The
$250,000 will also be used to
perfect legal moves for the free- —
dom of Eugene Dennis and
‘those eonvicted with him at the
first thought-control trial in
New York.

British floy Truman's ‘peace proposal’

“HE Economist, British finan-

cial weekly, takes sharp is-
sue with the proposals on
disarmament advanced by Presi-
dent Truman and the United
States government.

“The dismal episode of the
President’s ‘broadcast . ....”
The Economist points out, “is
‘but one example, if a rather un-
fortunate one, of the peculiar
ability of American propaganda
to make the simplest truth’ sus-
pect. .The tripartite disarma-
ment proposals themselves,
though by no means ‘as ‘senSa-
tional’ as M. Schuman ‘had Jed
everybody to believe, were, it
seemed at first in Washing-
ton, “an ‘honest program’ as Mr.
Acheson called them next day
in Paris. But, by the time Mr.

Truman had finished explain-
ing them and amplifying them,
‘they ‘had shrunk to little more
than a tactical move in the cold
war — and not a very adroit
one.”

‘Pointing out. the insincerity
of the President’s statements
with regard to the inventory

of armed forces and armaments
to be undertaken by inspectors
in the name of the United Na-
tions, The Economist goes on
to say that “Mr. Truman talked
of ‘preceeding to’ more vital
areas.’ If this means anything,

it. means that atomic energy, -

in which the United States is
strongest, would be the last
thing controlled, and conven-
tional infantry weapons, in

which it can be presumed that

-the Soviet Union is strongest,

the first.”

As to “Mr. Truman’s ideas
about how to decide the event-
ual size of each country’s mili-
tary establishment” The. Econ-
omist continues: “Each country
he said, with an engaging air
of objectivity, ‘might be limited
to using. no more than a fixed
portion of its national produc- -
tion for military purposes.’
Even allowing for the competi-
tive exaggeration in estimating
gross national production which

such a method.would entail it —

is safe to say that the United
States would come out of this
scheme with considerably more
armament than anyone else.”

PACIFIC TRIBUNE — DECEMBER 14, 1951 — PAGE 9 :