REVIEW of REVIEWS

Cost of Power Is Questioned

U. S. Ambassador Creates Sensation With Attack on Utility Magnates.

LITERARY DIGEST August 15 1930
REVIEW of REVIEWS

Cost of Power Is Questioned

U. S. Ambassador Creates Sensation With Attack on Utility Magnates.

LITERARY DIGEST August 15 1930

Cost of Power Is Questioned

U. S. Ambassador Creates Sensation With Attack on Utility Magnates.

LITERARY DIGEST

THERE has been much argument recently concerning the cost of electric power but it remained for Frederic M. Sackett, United States Ambassador at the World Power Conference in Berlin, to fan the controversy into open flame when he told the delegates that the power industry today is the only one which extracts from the consumer “fifteen times the actual cost of production.”

As reported in the Literary Digest, Ambassador Sackett said:

“I know of no other manufacturing industry where the sale price of the product to the great mass of consumers is fifteen times the actual cost of production of the article sold. My purpose is shortly to define its weakness, which calls for the keenest thought in your deliberation.

“Until the power business is brought in line with other industries in the relationship between its costs of production to the prices paid by the consumer, there can be little justification for the thought that this great power industry is rapidly approaching its perfection.”

Later in his address, to which Samúel Insull, American power company magnate, made strong objections, Mr. Sackett declared the time was ripe when “industrial leaders aided by science should strive with renewed effort to conquer the ratio of fifteen to one.” He pressed his point: “You have, by constant improvement, driven down the cost of electricity until it can fairly be said that an economic station produces at from three to four-tenths of a cent a kilowatt.

“In most of the great centres of population, in America at least, the consumers pay for household service around six cents per kilowatt, fifteen to twenty times its cost.

“It is little satisfaction to the great mass of household consumers to point to the high construction costs required to serve the small user or to urge the large reduction in price that is made for quantity service through a single installation.

“The fact remains that there is an extraordinary margin between cost and sales price, to the reduction of which science may apply itself with greatest benefit to the people as a whole.”

Some editorial comment favors the ambassador’s views but anticipates for the man who dropped the power bomb in Berlin a hectic time from the political and power interests he has attacked. According to the St. Louis Star :

“Ambassador Sackett stated that the power companies charged too much.

“The facts are common knowledge. The ambassador might have said these exorbitant profits are the basis of overcapitalization and exploitation in the power .ndustry that threaten to undermine its foundations.”