THE GREATEST STEAL IN HISTORY
The Greatest Steal in History Public Utilities Playing For Billions of Dollars in Case Now Before Supreme Court ¦KATIOX of billions of dollars in valuation of public Ipgities is now the trend of...
...James G. Harbord, President of the Radio Corporation of America ; David F. Houston, President, Mutual Life Irsuranca Company...
...Those employers fully appreciate the great work the unions are doing in combating the Red menace in this country and want to find a way to deal with them, as they say, 'not to have their business interfered with by autocratic union rules.' They point to the building trades, where both sides are organized, as the best place to test the soundness of trade union principles and where, they say, the public interest is wholly ignored...
...If the courts become reasonable about this matter Professor Ryan believes that regulation will be accepted as a compromise between public ownership and the greed of the great corporations...
...Then the Commission on Industrial Inquiry set up three committees...
...There is also a merger of street railway companies in the air...
...William T. Grant, Jr., Chairman of Board, W. T« Grant Chain of Department Stores...
...A Plan tq Bridge the, Chasm, between Capital and Labor...
...existing types of formal arrangements between employees and employers, their purposes, the ways in which they function, the methods or practices used, and so far as possible, to determine the effectiveness of results obtained through these forms and methods...
...George B. Cortelyou, President of tha Consolidated Gas Company of N*w York...
...Ryan, in discusing the Indianapolis Water Works case in which the United States Supreme Court, Justice Pierce Butler writing the decision, permitted a valuation of $19,000.000 on a property which cost $10,434,254, and on which the State Public Service Commission had allowed a valuation of $15,260,000, points out that "to say that the company is allowed seven per cent on the valuation of its property is to tell only a part of the story...
...Ryan quotes from this ¦ialso from the defending opinion of Commissioner WoodUt who favored the reproduction cost theory...
...Men who hold this concept believe that capital ought to bring unlimited returns...
...The author attacks the "reproduction Hftfceaiy of valuation, as "a sort of gamblers' argument" hp|—'mijmt that victory for utility companies in this matter ¦I cause suck general resentment that they will turn to ¦lie ownership and operation for relief...
...WOLL AT HEAD OF COMMIT* t...
...Fifteen of the 67 members of the Commission are also representatives of labor...
...Woll of March 3, 1927...
...Sack figures are not definitive—they cannot be—but they ¦Mjeative and conservative, especially in the light of Dr...
...He is in favor of "just interest," a rate that would be "pronounced fair by competent and fairminded men," or "the rate at which men are generally witling to invest their money...
...Easley calls attention to his Labor Day address, in which he said: "In my last Labor Day address, after reciting the fine achievements of the trade unions and the vicious attacks being made upon them by certain anti-union employers' organizations, there was proposed the holding of a conference with a view to finding a modus vivendi between the bona fide unions and the so-called "Right Wing" employers who, while maintaining company unions in their plants, do appreciate the splendid stand taken by the American labor leaders in contract with that of the leaders of the radical English Labor Party...
...Company unions are organized by represenatives of corfSatioos, controlled by corporation agents and serve the apHtatiODS...
...Sjp Ryan points out that the issue is much broader tlian ah-oad valuation...
...His main objection it opposition to the idea that "capital ought to bring unlimited returns...
...This position has long since been abandoned and the entire question of valuation methods and rate making taken under court jurisdiction...
...We now direct attention to a letter by Mr...
...Anyhow, 7 per cent profit on $50,000,000 valuationwould require an income of $3,500,000...
...The committee appointed by you to study a method for promoting the cooperative principles of that plan has already begun its work...
...Here we have a collection of open shoppers and company union advocates who far outnumber the labor representatives and whose influence with the National Chic Federation counts most because they contribute the funds...
...Commissioner Eastman's comment upon the economic J—'rfilj and social injustice of the new scheme of valuation ¦(fat was especially caustic...
...We prefer the position of the American Federation of Labor on this issue...
...Many other employers deal with unions in their own plants which are termed by the regular union leaders as 'company unions.' Between such employers and the trade union leaders, is it not possible to work out a modus vivendi...
...They are now collecting around $2,000,000...
...WILL END PUBUC CONFIDENCE IN REGULATION After pointing out that the trend of court decisions has been toward this reproduction cost theory, he says...
...We find it impossible to reconcile the above proceeding* with the action of the American Federation of Labor in 1926 in favor of removing these company unions from our in* dustrial life...
...Ryan calls this "hokus-pokus" theory of valuation would require the gas users and street-car riders of Washington to dig down for an extra $2,480,000 annually...
...one to study anti-trust legislation, another injunctions in industrial disputes, and a third on forms of employee organization and of employment contracts, with special reference to company unions and what labor men call "yellow dog contracts...
...P FEDERATION COMMISSION ESTABLISHED pie National Civic Federation has sought to accomplish EMfeaose by creating a Commission on Industrial Inquiry BPtJun is to develop a working agreement between comTgjiDttS and open shoppers on the one hand and the trade Bjfron the other...
...They will realize that the only remedy is in public ownership and operation...
...The 1926 convention of the A. F. of L. voted in favor of an assessment in order to raise a fund to wage a "campaign designed to remove these employer-controlled unions and shop representation plans out of our industrial life...
...Company Unionism Vs...
...We think that every labor man will heartily approve this sentiment and action...
...Otto H. Kahn of Kuhn, Loeb and Company...
...Sheer desperation would drive us to public ownership...
...The employer "may bring Mb being" and he "may keep the veto power" in such or»MHns...
...He also believed that company unions are Hfttt of Bolshevism, For all these reasons he was oplf*i to company unions...
...The Commission of Industrial Inquiry is giaded by a Committee on Plan and Scope...
...George M. Reynolds, Chairman of the Board, Continental and Commercial National Bank, Chicago, I1L...
...In part it reads: "While there are organizations of employers frankly combatting the trade union movement as such and-while there are large employers so pronounced in their opposition to the unions that they insist that their employes shall sign an agreement never to join a trade union, there are other employers who, although not dealing with the unions, are not hostile to them jn principle, but object to certain rules and policies of the union which they would like to have modified...
...So the issue is drawn between the measureless greed of the owners of great utilities and the welfare of millions of people...
...UNJUST CAPITALIZATION OF LAND VALUES Another thing to which the author objects is the capitalization of the increase of land values owned by utility companies and compelling people to pay dividends thereon...
...It appears that the -application of what Dr...
...Ryan gives a succinct historical survey1 of Supreme Court decisions dealing with utility rate making ah4 valuation...
...Milo R. Maltbie, distinguished New York consulting engineer employed by the government, estimates that their properties are worth around $30,000,000, or $35,000,000 at the outside...
...Wgknm GREATEST LAWSUIT IN HISTORY" Tits (facussion of the valuation issue is of special interest jataoir when the so-called O'Fallon railroad case is before kooontry...
...and Owen D. Young, Chairman of the Board, General Electric Co...
...If this condition obtains only to a slight extent of utilities at large, which it doubtless does, it indicates the billions at stake in this decision...
...Darwin P. Kingsley, President, New York Iifa Insurance Company...
...Tha committee, therefore, appears to be packed against labor...
...Under the heading of "Modus Vivendi for Capital and Labor Proposed," Mr...
...If exceptional business efficiency has already brought exceptional profits to the company, they had had their reward in increased dividends...
...Woll is chairman and only four other labor men are members of it...
...pMiOBgh we doubt that labor men in general share the jP»pat company unions will hatch Bolshevism we agree Wtba other opinions regarding company unions...
...2,480,000 ESTIMATED EXTRA PRIVATE TAX FOR VOTELESS WASHINGTON Voteless Washington, D. C, is at this moment faced with a demand from the Washington Gas light Company that this new rule be applied to it and an added $14,000000 of phantom valuation be placed on top of the $16,000,000 allowed by the District Public Utility Commission...
...We doubt whether labor men desire to admit this practical triumph of company unioniua...
...John J. Mitchell, Jr., banker, Chicago, III...
...Going value" is another phrase which receives severe treatment at the hands of this distinguished scholar...
...In his ¦Up in the O'Fallon case decision, Commissioner East'm lUli,: "In the case of privately owned railroads and JBpB the current cost of reproduction doctrine would probjfcipcwaae the public burden by upwards of $30,000,If we allow the very modest estimate of 6 per Mil "on THIRTY BILLIONS OF DOLLARS of ip-created 'valuation, it means that the electric light users Mfnwer users, gas consumers, street-car riders, railroad ¦Mgers and shippers would have piled on them an added I** tax of $1,800,000,00...
...He proposes recognition of the company unions or the company-unionizing of the trade unions...
...a||bB conflict between the two types of organization is twainii hi j1...
...This proposal, we beHs a source of grave danger to the trade unions and if ¦pi would mean their complete extinction...
...These are the conclusions ilk...
...This- capitalization of the increase in land values—dui almost wholly to social growth and the labor of an entire community—is ably discussed by Commissioner Eastman in a recent decision on the Chicago Junction case...
...When that day comes it will witness such deep and widespread resentment that the people will not tolerate a proposal to buy out the utilities at the inflated valuation...
...Collective bargaining in principle, they say, is all right but they allege that it does not always work out satisfactorily for the reasons suggested...
...He discusses an item of $1,500,000 added by the Indiana State Utilities Commission to the valuation of the Indianapolis Water Works under the head of "going value...
...They desire excessive and indefinite rates of interest...
...Woll appointed a committee "for promoting the cooperative principles of that plan" and that the committee had "begun its work...
...First Vice President, Merchants' Association of Newj York...
...It appears that higher rentals were asked on the basis of a daimed increased valuation of property...
...Daniel Willard and O. S. Beyer, Jr., the engineer author of the plan and Representative of the Shop Crafts Union...
...At any rate, it should be possible for such employers and labor leaders to bridge any chasm when the two sides are in that attitude of mind...
...If the present trend is continued and becomes a practice he has little hope of ownership surviving...
...Easley to Mr...
...Hence the added tax would be $1,500,000...
...Hia whole argument is based on the justice and desirability of private property in public utilities...
...REAL PROFITS 32 PER CENT Dr...
...Our surmise is that it would be a scheme whereby company unions will be recognized by organized labor aa functioning bodies representing working people instead of remoring these company unions "from our industrial life...
...The public conference, as you will recall, was held to discuss the so-called B. & O. Labor Plan which was described on that occasion by Messrs...
...jljfe Matthew WoD, whose views on this issue we are IJNUBing, wrote ia the "American Photo-Engraver" for Hft 1925, that company unions cannot be controlled by Bjgpfeie trade union officials...
...THREE CONFERENCES HELD "Growing out of that article, as you know, there have been held three very important conferences which you have attended, two executive and the other public, and which will, we hope, go far toward eventually achieving the aim sought...
...It has taken up, through suS-committees, four questions which cause much trouble today, to wit: the Sherman Anti-Trust Act, Injunctions in Industrial Disputes, Forms of Employe Organization, involving company, unions, and Employment Contracts," Thus, Mr...
...R. L. Winchell, President, Remington Typrewriter Co...
...It would Wf't...
...The Civic Federation, however, does not share our com¦ftn...
...The best proof lies in its efforts to establish Knftapany unions and the trade unions on the basis of -recognition and cooperation...
...Ralph M. Easley, Chairman of the jpt Council of the N. C F., revealed this proposal in *¦« Day address to his members last year...
...Trade Unionism THIS is the third of a series of articles in *which The New Leader is considering the ¦•fides of Matthew Woll, vice president of fc American Federation of Labor, and their nations to the policies of the American pile union movement...
...The function of the last committee is defined as follows: "For the advancement of harmony between employers and employees, it is the purpose of this, study to anab-ie...
...Robert P. La Mont, President, American Steel Foundries...
...Ryan says: "Ever since the Munn case (1876), it has been the theory of the law that regulation of rates for utility services is an ethical process...
...It is surprising to find that the Supreme Court in its first decision on this subject (Munn vs...
...The opposite view i$ that all the uses of property are subject to the moral law, to the precepts of charity and justice...
...This case, called "the greatest lawsuit in hisfc£*au just been argued before the United States Supreme Gait The Interstate Commerce Commission on February ft 1927, repudiated the reproduction cost theory, claimed wit raifroads at the conclusion of a 15-year intensive camafB, in court and out...
...The above excerpt from the Easley letter states that Mr...
...Ha notes that the Indianapolis company is allowed a valuation of $2,750,000 on this item alone...
...John A. Ryan, nationally known Professor of InIpU Ethics at the Catholic University of America, Wash'tfpn, in a pamphlet published by the National Popular fitimvtf »t League...
...A LEGISLATIVE NOT A JUDICIAL QUESTION" In his chapter on "The Judicial Theory of Valuation," Dr...
...Among the other members ~ra such representatives of big business as Samuel Insull of the Insull Public Utilities...
...Labor men have always fought company un¦pExperience has shown that such organizations are irtiiiliul to prevent organization of the working people BgtipM of their own...
...Easley...
...The only bit of silver lining to the cloud is the hope that if the rule of the Indianapolis case receives general application to the public utilities, the people will be compelled to recognize definitely that the policy of regulation has failed...
...Our Labor Movement the Bulwark of American Institutions...
...The difference between the theory of original cost and that of reproduction cost is likewise an ethical issue," He declares that "two diametrically opposed doctrines of property rights" are implied...
...Lincoln Cromwell...
...By keen analysis of the financial set-up, he asserts that as a matter of fact "The owners of the company are due to get the astounding rate of more than 32 per cent on their actual investment and also on the increase in the value of their land...
...1ADE UNIONS are organized by working men and ¦ vomen and are controlled by the members and officers...
...that the principle of reproduction cost, ifataklished, will be universal, will apply to street railways, B%aad electric light and power companies and that all urilta wiS doubtless apply the rule as far as is practically Vjm#00,000 EXTRA ANNUAL PRIVATE TAX ¦Mpt this abstruse economic and legal question of valutm at reproduction cost means in dollars and cents to •BttkaBy every man, woman and child in the United States, if earned to its limit, a brief computation will show...
...Charles H. Boynton, Chairman of the Cement Information Bureau...
...Easley makes a startling statement...
...The Federal Department of Justice Padlocked (because state anti-syndicalist laws are enforcible only by the states) .. . Short-Sided Businessmen Intriguing for Recognition of Soviet Russia...
...The promoters proclaim a $50,000 valuation...
...Union men frankly admit that their policies and regulations do not always spell success and say they are willing to sit down with the fair American employers and undertake to develop a policy that will work...
...What sort of plan can come out of such a commissioa...
...There are twenty-four members of this leading committee of which Mr...
...He adds: "To sanction this inflation under the mystifying phrase 'going vahic' is to practice fraud upon the public...
...E. K. Hall, Vice President, American Telephone and Telegraph Company...
...WANTS tO "BRLOGE TEE CHASM** "To try to find the bridge to cross this chasm, the National Civic Federation has organized a Commission on Industrial Inquiry composed of one hundred leaders of labor, agriculture, manufacturing, finance and commerce...
...Professor Ryan rightly states that this is the most important economic question facing the American people today, but he implies a second reason for its importance...
...But if this sum is added to the capitalization of the company, it receives two payments—one through savings in operating expenses and another, in interest upon the excess capitalization...
...Percy S. Straus, Vice President, R. H. Macy & Co...
...Ijts'j analysis hereafter quoted...
...Perhaps many people will have to face something like this situation to awaken them to the need of this solution...
...He entitled niferb, "Unde Sam's Labor Problem" and under this Hpmeat these subheads...
...Of this the Commissioner said: "The valuation evidence is of more consequence, but inalysis shows that the reason why the tentative valuation is High enough to be used in justification of the amount of the rental is because it is based largely on estimates of land values which have increased very greatly since the land was originally purchased or leased...
...Illinois, decided in 1876) declared it to be "a legislative and not a judicial question...
...This appears to us surprising...
...The Greatest Steal in History Public Utilities Playing For Billions of Dollars in Case Now Before Supreme Court ¦KATIOX of billions of dollars in valuation of public Ipgities is now the trend of judicial decisions and upon fOE staggering totals the people of this country are likely to IHtoed by great corporations...
...TWO THEORIES OF PROPERTY Summing up in his chapter on "The Just Measure of Valuation," Dr...
...he wrote, so that it becomes "useless for conPttiw work...
...For centuries the chief function of property has been to provide tools whereby men could exercise their labor power, but that "In recent years, a conception of property has arisen which exceeds all the bounds of custom and decency and justice...
...This raises a question of vital public importance...
...The Trade Unions of Europe Captured by the Reds...
...Nathan L. Miller, General Counsel, United States Steel Corporation...
...Single decisions of the courts, if the present trend is followed, may judicially create corporation values and enormously enhance the income of owners...
...A 7 per cent profit on $14,000,000 would require the extraction of nearly a million dollars annually from Washington gas consumers—$980,000 to be exact...
...end of all hopes of democracy in industry and inWHcnce of labor itself...
Vol. 8 • January 1929 • No. 2
