Political Utilities

The first Governor of New York to secure regulation of public utilities was a brilliant young reformer named Charles Evans Hughes. To get it, the man who one day was to become Chief Justice of the U. S. went directly to the voters. Alfred E. Smith used the same tactics in his long dogged fight for more drastic regulation. While at Albany Franklin D. Roosevelt set up a Power Authority to distribute State power, but in Washington last month his plan was shelved when the U. S. Senate refused to ratify a treaty which would permit hydro-electric development of the St. Lawrence River (TIME, March 26). Governor Herbert H. Lehman has seen his utility program killed in two sessions of the Legislature. Last January he sent it to the Legislature for the third time. Last week in a desperate effort to get his nine bills enacted Governor Lehman, like his predecessors, went directly to the citizens of the State.

In a radio broadcast the Governor explained his program, called attention to the power lobby always on guard in Albany. ''But apparently this year the officials of the large companies have felt that this usual method of killing legislation looking to more efficient and expeditious protection of the consumer will not be enough," said the Governor. "New and additional means of destruction must be called in. . . . And so they are carrying on a concerted effort to frighten the small and frequently uninformed investor."

In a radio broadcast the Governor explained his program, which includes measures to bring holding companies under full control of the Public Service Commission. But what has attracted the most fire from the power companies are three bills to: 1) authorize the Public Service Commission to fix emergency rates which will return not less than 5% on the company's investment instead of the traditional 8%; 2) permit the Commission to assess costs of valuations and investigations against the companies, and 3) permit a municipality to enter the utilities business after a referendum.

Leader of the opposition is Floyd Leslie Carlisle, not only board chairman of Consolidated Gas Co., which serves some 8,000,000 persons in & around New York City, but also of Niagara Hudson Power Corp., which serves nearly one-half the rest of the state. Having personally led the fight in the open committee hearings in Albany, Utilitarian Carlisle last week hopped to a microphone to reply to Governor Lehman's appeal for support. Mr. Carlisle attacked the Constitutionality of the 5% emergency rate bill, defended the holding company and challenged, as all good power men do, the economics of municipal ownership. As an alternative he pleaded for an amendment requiring a municipality to take over existing properties if the citizens insisted on public ownership. The Governor, however, would rather see his bill killed than have it saddled with an amendment which would throw the purchase price of the properties into the courts.

Governor Lehman was thinking of broadcasting a rebuttal to the Carlisle attack last week when the Federal Trade Commission, busy in Washington on its endless investigation of utility holding companies, dropped a big fat present into his lap. Staged or spontaneous, the present served to dramatize the hoary old charge that the "power trust" bought its way to political power. The Trade Commission turned up four letters written by a New York State Senator to officials of Associated Gas & Electric Co., an involved holding company at which many of the Governor's bills are directly aimed. Republican Warren T. Thayer had been chairman of the State Senate's potent Public Service Committee when he wrote the letters about six years ago. Today he is a minority member and Republican whip on the Senate floor. Excerpt from one of his letters:

"In keeping with your instructions of March 22 regarding my expense account for the month of March in connection with the village election, I herewith hand you bill. . . . If at any time I can be of further service to you, please do not hesitate to call upon me. I hope my work during the past session was satisfactory to your company, not so much for the new legislation enacted but from the fact that many detrimental bills which were introduced we were able to kill in my committee."

Excerpt from another:

"During our village election just passed, I spent $457 in an effort to win the election. We had many loyal supporters, but with the propaganda spread by our opponents, along with the influence of the bank, we were unable to win, but we are not discouraged. We will beat them yet. . . ."

In his home in Chateaugay, N. Y. (pop.: 1,100), Warren T. Thayer was amazed to find himself suddenly the object of large public interest. Day after the letters were published, the hearty old Republican was interviewed in his dingy office above a cigar store. "I had about 50 telephone calls last night but I couldn't make out exactly what it was all about," he chuckled. "If I wrote the letters, they certainly have slipped my mind.'' Asked if they might be forgeries, he declared: "Well, now, I don't think anybody would do a thing like that."*

Now owner of an excelsior mill, a cold-storage plant and a road building firm, Senator Thayer maintains he is "just a simple farmer." But: "I did a lot of wandering when I was a young fellow." Shortly after the century's turn, he helped found a small local power company in Chateaugay. About 1925 he and his fellow Chateaugayans sold out to Associated Gas & Electric. "And here's the funny thing," he explained last week. "After we sold out . . . we found that the 20-year franchise had ended in 1923, and we had forgotten all about it, the way people do. So the big dispute began here in the village." It was "the big dispute" over the franchise that had necessitated his sending Associated an expense account.

The village of Chateaugay was vastly excited last week, but like the aging Senator, not quite sure what it was all about. The Senator is a popular citizen whose only recognized failing is a love of his own voice. "He would argue with a signboard and win," said a fellow citizen last week. Stoutly the Senator insisted that he had done no wrong. But Democrats, elated at tagging one of their opponents with the "power trust" label, thought otherwise and in Albany a tempest was awaiting Senator Thayer's return.

Net political effect was to up enormously the odds on the passage of Governor Lehman's utility program.

*Associated Gas denied that it paid Mr. Thayer money to influence legislation but Vice President Fred Burroughs ruefully added: "The letters were sort of unwise. They were written back in a time when you could send chatty, friendly letters.''

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