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vious meetings in that, although a number of group. meetings were held, at which subjects of special interest to each group were discussed, one of the two sessions of each group was devoted to discussion of the same subjects, namely, Taxation and Tariff Policy. At the close of the discussion at each of these group meetings a vote was taken on the following subjects:

Taxation

1. Should there be an increase in the Income

Tax?

2. Should there be a Sales Tax?

3. Should there be a resort to loans?

Tariff Policy

1. Should the tariff be framed with due regard to export trade as well as to the protection of manufacturing in the United States?

2. Should the economic needs of foreign countries and the fact that we are now a creditor nation alter our tariff policy with respect to protection?

3. Should the United States offer trading or bargaining possibilities for international commercial treaties to encourage our export trade?

Group sessions were organized around the new departments of the National Chamber, that is, Civic Development, Domestic Distribution, Fabricated Production, Finance, Foreign Commerce, Insurance, Natural Resources Production and Transportation and Communication, which was subdivided into two special groups, one relating to shipping and the other to railroads. At these group meetings matters of special interest were discussed by prominent speakers. At the general sessions addresses were made by eminent authorities on such subjects as Foreign Finance, International Chamber of Commerce What It Can Do for American Business, Taxation, Tariff Policy, The Public Schools and Citizenship, and on Thursday evening the Chamber was addressed by Secretary of Commerce Hoover.

At the final session a number of declarations in addition to those already mentioned were adopted, covering such subjects as International Debts, Railroad Transportation, Waterways, Highways, Commercial Arbitration, Communications Abroad, Disabled Veterans, Treatment of Soldiers, Sailors and Marines, Celebration at Philadelphia in 1926 of the 150th Anniversary of American Independence. Membership

The voting membership of the Chamber made up of commercial organizations numbered 1,432 on April 26, 1921, representing an underlying membership of 809,890 corporations, firms and individuals belonging to member organizations, with one (1) resignation pending. This should be compared with the organization membership on April 26, 1920, just prior to the last annual meeting, numbering 1,321, with five resignations pending.

The individual membership has been incre

from 6,837, at the last annual meeting, to 7,265. The associate membership has been increased from 6,0704 at the last annual meeting to 7,49434. This Association is a member of the United States Chamber of Commerce and is a contributor in the sum of $500 per year.

THE PRESIDENT: Mr. Lieb wants to make a few remarks regarding the map on the blackboard.

JOHN W. LIEB: Mr. President and gentlemen: As has already been stated, we are honored by the presence at our Convention of the Italian Commission on Electrification of Railroads and Hydroelectric Developments. Now, some of the problems which are being solved in Italy are problems similar to those that have been discussed here in connection with the Power Survey. Some of them are of extreme interest, such as the distance of the hydroelectric regional diversity factor, or capacities which exist between the upper regions of Italy and power development from the Alps and the lower regions of Italy and power development from the Apennines. The Alps supply very exhaustive water resources for hydro-electric power in the summer time and in the winter time none, whereas in the Apennines in the southern part of Italy the water resources are available during the winter time and not in the summer; between these two extremes there are important deposits of lignite in the central part of Italy which are being developed, to say nothing of the very interesting scientific work of power development from Vesuvius and subterranean sources of heat, to which I hope Mr. Semenza will refer briefly, as very little time is available.

Another thing that he may be good enough to say a word or two to you about is water storage, and several important water storage plants are operated by some companies under the supervision of some of the gentlemen of the Commission. In order to facilitate Mr. Semenza's discussion a map of Italy has been prepared, and he will show the transmission lines on that map to you that you may get some idea of what is going on.

I want to add one word here, not for the purpose of propaganda, but a statement based on my own personal knowledge, and that is to point out to you the ability of the Italian people to rise up to an occasion, which has been notably exemplified in Italy by their very rapid recovery from their late terrible conditions, under which you must remember that Italy was the greatest sufferer during this World War. Proportionately, she lost more men and more treasure than any of the other of the Allied nations. Her services have been of untold extent and the nation suffered tremendously. We have no idea to what extent Italy suffered, but her rebound has been of equally great importance and most rapid, and we should certainly support Italy in her industrial rehabilitation, so that her industrial relations, which are becoming more and more mportant, may be on a proper footing.

Address of Mr. Guido Semenza on Italian Water Powers

MR. SEMENZA: Only yesterday I became aware of the desire that I should say a few words before this assembly with regard to Italian water power development, so I did not have time to prepare a formal address. I have only put together a few figures and have brought some of my slides I had with me, so as to be able to give you a brief address and tell you something which I hope may be of interest to you.

In my country, engineering problems, fundamentally, are more or less the same as they are the world over, only that they may differ in magnitude; they may differ in their influences on the local conditions and for other reasons, as they are dependent on the kind and quality of natural resources. It is this diversity, I think, that makes a comparison of the conditions in various countries interesting.

of the points in which there is a similarity of problems, and at the same time a diversity, is the one to which Mr. Lieb referred; that is, the interconnection of our water powers.

As you know, Italy has no coal products, only a few deposits of lignite, which are situated in this part of the country (indicating on map). Italy is a small country-about 111,000 square miles of surface, that is, twice the surface of the State of Illinois-and in this little country the statistics give about six million of kilowatts available from water power, which is, for us, a great thing.

We have two hydro-electric systems. We have the system of the Alps around this part of the country (indicating), the Alps being covered by snow and ice in the winter time. That means a great flow of water during the summer and very little flow during the winter. We have this line crossing it across the peninsula, dividing it into two parts, which is of another character, and that part gives us plenty of water in the winter time and very little water in the summer time. Now, it was natural that we should come to the idea of compensating the flows of these sources of power in order to have an even flow all during the year by combining the systems in such a manner that this object would be secured. Before that, each of these systems was operating separately, and as there are in Italy different points of industry, these power houses used to send their power down to this part, as I have marked there (indicating).

In order to overcome the winter lowness of water some steam power plants were put in. Successively, the idea of reservoirs came in, and the first big reservoir system was at this point (indicating), with a capacity of about 100,000 millions of cubic feet, and a fall of 4,420 feet-which is a big storageand can store up water for the region of Milan and Lombardi for nearly all the winter. After that many of these other different power houses were provided with storage capacity, so that the storage. of water in Italy has become the normal thing. I will show a slide of these lakes and basins in which the water is stored.

(At this point several slides were shown, with explanatory comment by Mr. Semenza.)

Well, during the war it was evident that it was necessary to use all the power that was available, so the first interchange of energy has been made between these Apennine plants and those at the Alps. Another interconnection has been made there (indicating), so that all this region has been connected together.

An agreement has been formed between different operating companies in order to get power from Milan down to some points near Palermo on the Apennines.

Another line will be run down to Livveno and Florence. Up here (indicating) we get to the region where the lignite is, and lignite is already used here. This connection will come in here (indicating).

Here there is another connection. That is already existing, and it is planned to take the power from this big power station in construction here (indicating), which is formed of three big lakes, with a fall of 4,500 feet, and to connect this power house with this one and with all this part of Italy.

As you see, there is very little to be done. This connections already planned, so that in the near future all these different big plants that will be located here will form the whole network in Italy. The railway system, which is electrifying in this direction, and also down here (indicating), will be another link in this network.

How is this done? Generally two companies that want to interchange energy divide the expense of the line, or otherwise they make a little company which will build up the line, and this is done for the purpose of keeping the line from the possibility of any municipal or governmental ownership, or anything of that kind. The interchange is made on the basis of so much per kilowatt-hour, and is balanced at the end of the year.

You well know who started the construction of electrical power stations in Italy-it was our good. friend, Mr. John William Lieb, who is in attendance at this Convention. He was in Milan in 1883, and just a year after that the Pearl Street Station in New York was opened, and under Mr. Lieb's direction the current was produced in Milan and distributed for lighting. Since that moment electrical plans and installations were drawn very quickly in Italy and as soon as it was possible to transmit power to certain distances it was done.

In the year 1893 or 1894 the first big power transmission was begun-the Paderno System, of which you perhaps have heard, in which the old alternators at 15,000 volts were used, directly connected with the line. Nowadays you may know that we have developed about 1,200,000 kilowatts-that means kilowatts available for all-the-year-round use, about fifteen hours per day.

We have constructed many new plants, having an

aggregate of 550,000 kilowatts, and franchises have already been granted for about 2,000,000 kilowatts of new power to be developed.

Our plants are of all kinds; we have high falls, low falls and medium falls.

We think we have to keep up the style of our buildings, even if they are for hydro-electric purposes. Our ancestors, when they built a castle or a bridge or something in the nature of a public utility, used to call in the artists to make the designs, and we have our country full of these beautiful things which were designed and erected in past generations. Why should not we keep up to this idea? I think it is quite the right thing and, after all, the cost of doing that is not more than an increase of one per cent in the total expense on any of these plants, compared with what it would cost to erect them in a very plain way.

The plant Vivarone belongs to the company which is managed by my friend, Mr. Ponti, the Societa Ideoelettrica Piemonte & Elettricita Alta Italia. It is a case of an artificial storage of power. The company running this plant had a certain amount of power available, and which was at its disposal, during the night, and they wanted to store this power up in this place for use during the day. They found a place where they had two lakes, Lake Vivarone, and a lake at the top, with a difference of 483 feet in the level between the top and the bottom lake, and they installed a regular station in this plant. (indicating), and also installed a set of highpressure pumps, and during the night the water is sent from the lower lake up to the higher lake, and during the day they discharge the water, and they have the benefit and use of the power which they have in this way stored up.

The thing seems rather peculiar, but it works most satisfactorily. The question was very much discussed whether it would be satisfactory in its operations, and it was decided to make an experiment to see how the thing would work. The thing works very well. From the technical point there is nothing to be said about it, only the efficiency of the whole system is very low.

I do not want to go into the subject of technical particulars. I might say that if there is one feature in connection with our plants that stands out it is the fact, perhaps, that we make a thorough study of all particulars. You know very well that Switzerland and Italy had steam engines of the highest efficiency before England. The reason is very clearit is because Switzerland and Italy did not have any coal, and in the case of England, which had heaps of coal, it was not of importance to consider very greatly the question of economy.

In Italy we have no iron; we have no coal, and we have no copper; and calculations designed to produce economy have been extended very thoroughly to all the different points and details of our plants, so that something interesting can be found. in this phase of the subject. It is not the place to speak of this, and we have not the time. It is one

of the outstanding features of our power plants, and they are technically very much developed.

Mr. Lieb asked me to speak of the question of natural steam. The question of the value of natural steam in Italy has been somewhat exaggerated on this side of the ocean. In some points in Italy, near Florence and near Vesuvius, there is some natural steam underground. All that is necessary is to send down a pipe into the earth, and you secure natural steam at a rather high temperature, and also good pressure. An installation was made here at this point (indicating) to see if it was possible to secure a sufficient supply of this natural steam to make it economical to use it in large volume. At this particular point the steam contains also borax, so that for many years there have been some borax works there. The steam, after it has eliminated the borax, was taken into tubes or boilers, and the water heated and the steam made to run the turbines.

Now, the plant we have there is about 5,000 kilowatts, a small plant; it works very well, but unfortunately the quantity of the steam there is under the ground at that point does not seem to be very large, so that while it is a very interesting installation, we do not look upon it as of very great importance for the economic problem we have to solve. In some other places we are using the steam procured from underground for the purpose of heating hotels or hospitals or similar institutions.

Now, I will say a few words about the Italian laws and then will close my remarks. There may be something about our Italian laws which may, perhaps, be of interest to you. We have a law of the right of eminent domain. Any company which desires to put up a transmission line across the country makes application to the Government, has a franchise issued to it, and then has the right to go over the land in the straightest and shortest way. Everything is arranged for fixing the price that has to be paid to the proprietor of the land, and for all the litigations that may come out of it. plan works very well and has facilitated enormously the distribution of electric power in Italy.

The

Another law has been passed arranging for the issuance of franchises to hydro-electric power companies. All the franchises have been limited to sixty years, and it is provided at the end of that time all of the plants will have to go back to the state. This would give the impression at the end of that time there would necessarily be State ownership of our hydro-electric plants, but we hope that in the course of the next fifty years the world will have recovered from its insanity about the State or Government ownership of such plants.

Now, I will say a word about the load factor. Of course, the load factor is a very important thing; that is, when we do not have reservoirs. It becomes less important when we can store up our water. Still, we are making some effort to introduce consumptions of power which have a very good load factor. For instance, many studies have been made looking toward the introduction of electrically equipped kitchens, with an accumulation of heat;

that is, an electrical kitchen which will absorb one kilowatt for twenty-four hours, we will say, and will be used at the proper moment for cooking.

Another use of power to a very considerable extent is the use for the heating of water for domestic purposes, heating the water and storing up the heat during the twenty-four hours. The companies are trying to facilitate this application by a special rate.

As to the rates, in Italy we are getting more and more to the plain kilowatt rate. Perhaps you have heard about the efforts in Italy to introduce special system of rates, which takes into account the power factor. These systems are rather complicated and generally they are not accepted with great enthusiasm by the customers of the central station. I know in France that things are going on more in that line, but we do not think it is worth while to bother too much on that point, because power factor is only one of the factors entering into the question and it is not of sufficient importance, in our opinion, to justify a company in having a complicated system of rates.

We have some flat rates, but these are dying out gradually, and we keep them up only for certain cases-popular distribution, as we call it, for distributing current to workmen's houses in small quantities, where they have perhaps two or three lamps, and that is done on the flat rate system.

Some people are using the maximum demand system, and, in my opinion, the maximum demand system may be very useful if you apply it properly; that is, the energy consumers ought to be charged for in kilowatt-hours-the maximum demand in kilovoltamperes, and this would take care of the power factor question; but that is a matter I cannot give any more time to considering.

As I said in the beginning, the problems are substantially the same all over the world. Another problem we have, the same as you have here, is to

fight against the enemy, under the guise of the advocate of State interference in our business. We have an association, of which Mr. Ponti is one of the officers, the Societa Idroelettrica Piemonte & Elettricita Alta Italia, to which I have previously referred, and this association corresponds to this National Electric Light Association. The Association is always ready to prevent all the movements of the people who would encourage Government interference in this direction, and they are keeping up their vigilance very steadily.

Lately, one of our ministers, who is a Socialist, was called to arbitrate on a question of the salaries of the power house operators. He made an awful mess of it, so that the Government was obliged to grant to the companies the right of increasing the tariffs.

THE PRESIDENT: I thank Mr. Semenza for his very interesting and instructive statement regarding the conditions surrounding the generating and selling of electric power in Italy, which he has outlined to us in such an interesting manner, both on your behalf, gentlemen, and on mine.

The next subject which we are to consider is "Customer Ownership." We are fortunate to have a gentleman to deal with this subject who has been. through all the executive branches of the electrical industry and has paid particular attention to the merchandising branch. He, therefore, was able to bring to the problem of the sale of securities the experience of several years in the merchandising of electrical appliances and, when you get right down to it, while it is a different form of merchandising, the sale of securities is really a merchandising proposition, and I have great pleasure in calling on Mr. John F. Gilchrist, Vice-president of the Commonwealth Edison Company, who will address us on the subject of "Customer Ownership."

Customer Ownership

By John F. Gilchrist

Mr. President and gentlemen: The paper which has been prepared gives in considerable detail the results which have been obtained by some forty companies, that have done the most in the matter of selling securities in their territories, and also in considerable detail gives the experiences we have had here in Chicago. I hope you will pardon the prominence given to that portion of the story, but I thought those who wished to take up this work might find something of value in it and possibly would like to have it in detail.

The extent of the financial requirements of this business, to those who contemplate them, grow beyond all conception. It is easy to stand here and say we will require for plant extension half a billion dollars a year, or that we will require seven billions of dollars in the course of the next ten years. We have gotten so accustomed to talking billions of dollars that the words fall from our lips quite

easily. But each of us should study the question of the requirements as applied to his own property, and I believe that will give him when the sense of the responsibility of providing this money comes over him a very much better conception of the size of this proposition than we will get in talking figures for the entire industry.

In round figures, let each one of you think of putting into your properties one and a half times what is now in them, in the course of the next ten years. That means a growth of from eight to ten per cent a year, which we have learned to look upon as normal in this business, and which I have no doubt will prevail during the next decade. It is only a few years ago that we had but about ten per cent of the amount of money in the business that we now have. At that time, while the industry was new, while it had not established its earning capacity, and while money was somewhat less difficult

to get, we had other problems in the business which were more absorbing, if anything, at that time than the obtaining of money.

I do not mean in making that statement to indicate in any way that it was easy to get money in those days, but now we are approaching a point where, notwithstanding the good earning powers of our properties, notwithstanding our ability to show a safe investment and a good return, we are beginning to have some concern as to whether all of the resources which we can draw upon will answer our needs. It is a matter that all people in the business should give consideration to.

I want to touch a little on some of the responsibilities which it seems to me are on the shoulders of all of us. In the first place, every man in the business has the responsibility of knowing something regarding the financing of the business, if he expects to be a factor in its affairs; he has the responsibility, not only of knowing about the financial structure and the finances of the business, but also the responsibility of assisting in the financing.

We have a great responsibility to the people of this country, to build up our properties and maintain their resourcefulness to meet the great demand for our product.

But we have another responsibility, which I also consider a real responsibility, and that is the responsibility of providing a proper and satisfactory form of investment for the people who occupy the territory in which we are operating.

A contemplation of the various business investments will lead us to the conclusion that there is no more natural investment for the people of a community than an investment in the public utilities which serve them with the most necessary elements of their everyday life.

Next to Government securities, there is certainly nothing more safe than the securities which are based on these services, without which man in this age cannot live or make his living in the great communities in which we live today. We should therefore consider this responsibility and the fundamental safeness of our securities.

There has been a great change in opinion over the whole world during the last twelve months with regard to the safety of public utility securities. Those who have given the smallest consideration to the matter realize how reassured he is today as to their safety compared with his feeling on the same matter two years ago; but, notwithstanding this, one of the commonest weaknesses which pervades the rank and file of the men in this industry is their lack of faith in the stability of their own business, in their own property, the institutions to the development of which they are devoting their lives and in which they should invest their money; and certainly if they do not appreciate the safety of these investments, if they do not realize where the public utilities securities stand with relation to the great line of investments into which people can put their money, how can they expect their customers and

those who only have an incidental interest in the matter to appreciate them.

So here are some responsibilities which everyone in the industry should assume.

I shall only touch on some of the high spots of this interesting subject.

You will note in referring to the tables-we have figures from companies serving approximately oneeighth of the population of this country, and that these companies have sold approximately one million shares of stock during the last four or five years, since the initiation of the method of financing which we are now so generally using. That gives you some idea of the extent of such financing, but the thing that I want to point out, particularly, from these figures is that as yet we have made stockholders of only about one per cent of the population, and less than five per cent of our customers, and most of these are such small stockholders that they can repeat their purchases every year without straining their ability or without doing more than it is their duty to do in the way of investing their money, so I feel that the surface has only been scratched in the field for this method of financing.

Many companies have tried these sales of stock with little success and have given the thing up as more or less of a failure, but, from what little experience I have had in the matter, I do not believe there is any place in the United States, or anywhere in the world, where, if you go after your customers as purchasers of securities of your utilities in the proper way, you cannot sell them. Human nature is the same the world over, and I never have and never will believe in the story of the fellow who will tell you: "That's all right in your territory, but that won't work in our territory. They are very peculiar people in the section of the country from which I come." The very same elements which make it possible to sell these securities in one place make it possible to sell them everywhere, and if you are not getting the proper results it is because you have not reached the people in the right way or else you have not made sufficient inducements or aroused sufficient interest in your selling force in order to get them to do the work.

This whole thing is a question of work, just as any part of our business is, and if you will not go out and work you will not sell your securities in this way.

A point which was brought out by Mr. Beck in his admirable address last night suggested to me the thought that one of the finest things which has grown out of this form of interest in our business, as I see it, is that we have been able to give our employes a variety of work. Our experience has been that the men in the power houses, the men in the operating departments, the men in the accounting departments, the people who have for their daily tasks more or less routine work, have, as a class, taken a tremendous interest in this movement-I do not know but what they have taken the greatest interest.

In closing my remarks I want to appeal to every

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