Light Mischief

Overcharge: How Electric Utilities Exploit and Mislead the Public, and What You Can Do About It

by US Senator Lee Metcalf and Vic Reinemer
David McKay, 338 pp., $5.95

This book is a blockbuster, and it should be read by every user of electric light and power. It describes and documents how the privately owned public electric utilities charge the consumer excessively, and by erecting and subsidizing an elaborate public relations structure, deceive their victims. This book renders a valuable public service, revealing that American families pay excessive electric light bills and have been kept in ignorance of this. It is a sequel and thoroughgoing elaboration and enlargement of the reviewer’s book, The Public Pays—A Study of Power Propaganda published a quarter of a century ago and republished, updated, three years ago, with an addition to its original title—And Still Pays.

Metcalf and Reinemer make abundantly clear that the vicious practices revealed in the investigation by the Federal Trade Commission from 1928 to 1935 and later published in eightyfour closely printed volumes (their findings were summarized in The Public Pays), not only have not abated, but have become more skillful and, hence, more predatory. The Federal Trade Commission investigation, which followed from a Senate resolution sponsored by Senator Thomas J. Walsh of Montana, was directed not so much at the rates charged by the electric utilities as at their financing. For it was their financing that Walsh feared would bring disaster to the investors in public utility securities. This apprehension was fully justified. The great utility empire of Samuel Insull, who had originated the propaganda campaign of deception and corruption, and the holding-company empires of his fellow electric utility magnates collapsed early in the Great Depression, with a loss to the trusting investing public of billions of dollars.

A brief interlude of apparent repentance and reform followed, in which certain utility leaders publicly abjured their past malpractices. But not for long. While the same propaganda practices are again being used, no longer do they conceal unsound “frenzied finance” such as characterized the utilities before the crash. Corrective legislation enacted during the Roosevelt administration following the electric utilities debacle—the Holding Company Act of 1935, which outlawed the pyramiding of holding companies, and the Securities and Exchange Act—has obviated the particular fiscal skulduggery which victimized so many innocent investors. Indeed the “Investor-Owned Utilities,” as these privately owned utilities have rechristened themselves, now constitute the most prosperous segment of our economy. To maintain their position in the economy and to conceal their inflated profits and the excessive tolls levied on the consumer is the present aim of their propaganda.

APART FROM THE DIFFERENCE in aim mentioned earlier, the practices of the IOU’S are repetitions and amplifications of those of the 1920s. These privately owned utilities distribute 76 per cent of the electricity of the nation, or more than three times that of all the other power systems (the federal government distributes only 13 per cent, local publicly owned systems, 10 per cent, and the cooperatives 1 per cent). Yet their propaganda uses the same old methods as prescribed forty years ago by the Assistant Director of Insull’s Illinois Committee on Public…

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