Public Service Corporations

Mr. W. J. Curtis, of the firm of Sullivan & Cromwell, New York, delivered yesterday afternoon the fifth of a series of lectures on "Corporation Finance," which are being given under the auspices of the Graduate School of Business Ad- ministration. Mr. Curtis took as his subject "Local Public Service Corporations," and will speak again on this topic in Emerson H tomorrow afternoon at 4.30 o'clock.

For the most part, yesterday's lecture was confined to a consideration of the principles that control public service utilities, and an explanation of the origin and development of these principles and their extension and application to modern conditions.

A business or employment which is not per se public in character may in the process of time affect public interest and so justifiably be subject to public control and regulation. The courts have always held that when any business or occupation does affect public interest, the person or corporation engaged in it must serve all alike and shall receive a fair and reasonable return for service rendered.

The wonderful growth of the United States during the last fifty years has been due largely to the investment of enormous sums of money in public service utilities, and this great outlay of capital has made combinations necessary. With the growth of these combinations, states have adopted laws so as properly to regulate the corporations thus formed. In order that this regulation might be fair both to the public service corporation and to the consumer, public service utility commissions have been formed and for the most part have done very commendable work in properly regulating rates and in seeing that efficient service is rendered.

Mr. Curtis expressed it as his opinion that the time is far distant when American cities can profitably own and operate their own public service utilities, with the exception of water supply which in many ways is quite different from the other so-called public service utilities.

In speaking of the returns on capital invested by public service corporations, Mr. Curtis pointed out that it has always been held by the courts that corporations may charge such rates as will enable the investors to realize a fair and reasonable return on the capital invested. The whole question of regulation of rates, however, is far from being settled. One point has been established, namely, that the replacement value of a public service utility should have little to do with the determination of rates, which should depend in the main on the value and character of the service rendered. It is further generally recognized that the rate received should be in fair proportion to the amount of risk involved. In every case it should be taken into consideration by legislatures and public service utility commissions that the rate of return on capital invested should be such as to encourage investment in public service utilities