524
THE GREEN BAG
profits, or providing for a sliding scale of charges, or other financial device that may be practicable and advantageous to the parties in interest. No such arrangement or device shall be lawful until it shall be found by the Commission, after investiga tion, to be reasonable and just, and not inconsistent with the purposes of this Act. Such arrangement shall be under the super vision and regulation of the Commission. 2. The Commission shall ascertain, deter mine and order such rates, charges and regulations as may' be necessary to give effect to such arrangement, but the right and power to make such other and further changes in rates, charges and regulations as the Commission may ascertain and determine to be necessary and reasonable, and the right to revoke its approval and amend or rescind all orders relative thereto is reserved and vested in the Commission notwithstanding any such arrangement and mutual agreement." While this section is permissive only and leaves the matter optional with the public service corporations, it opens the way for the adoption in all forms of public service of what is known as the "London Sliding Scale," which has worked so successfully in England, with the gas companies, and which in 1906 was adopted in Massachusetts. The principle of the sliding scale is an auto matic adjustment of the rate of the dividend to the price of the commodity supplied. Its application involves four features: 1. An ascertained capitalization. 2. A standard dividend. 3. Initial price of the commodity concerned. 4. A fixed ratio of increase in net earnings to decrease in price of ser vice. For example, in Masssachusetts, in regulating the gas companies, the standard dividend or net earning was fixed at 7% on an ascertained capitalization. The ini tial price of gas was fixed at 90 cents per thousand cubic feet. The ratio was 1% increase in dividends for every 5 cent decrease in the price of gas per thousand feet. In England the standard dividend
for gas companies is 10 % and the ratio is one to one and half per cent, increase to every 6 cents decrease in the price per thousand feet. It is entirely feasible to apply the same principle of regulation to other forms of public service. The sliding scale has had fifty years of practical test in England, and has had excellent effect in promoting efficient and economic opera tion of the gas business, so that these corporations have enjoyed liberal dividends, and the consumers, corespondingly cheap gas. Fully two-thirds of the gas sold in England to-day is under a sliding scale arrangement. The Wisconsin law leaves the working out of such arrangement with the corporations subject to the approval of the Commission. The division of surplus profits among employees, contemplated in the above sec tion, is a profit sharing device, already in successful operation in a number of English gas companies. It is an application of the sliding scale principle. The standard price of gas being fixed, for every decrease in this price, the officers and employees receive an annual bonus of a fixed percent age' on their salaries or wages. This may be drawn in cash or left with the company on interest, or invested in the stock of the company. In some cases the right to the bonus is conditioned on leaving one-half of it for investment in the company's stock. The right to participate in this bonus is extended only to employees and officers showing an interest in the company, thus giving to such persons an incentive to promote efficient and progressive managment. MUNICIPAL CONTROL. For the successful realization of a strong centralized commission control, the prin ciple of local self government must neces sarily suffer considerable restriction. The Wisconsin Act, however, seeks to avoid undue restriction and leaves many matters with the local community. The granting
