April I, 1886] 



NATURE 



509 



in the metropolis the effect of this Act is to foster the gas 

 monopoly by preventing electrical competition. 



It has been said that no other industry was ever 

 burdened as electrical industry has been by the "facilitat- 

 ing" Act. The answer made to this statement before 

 the Committee, and since, has been, " It is not so. Com- 

 pulsory acquisition of a trading concern by the Govern- 

 ment is no new thing." 



There is Mr. Gladstone's Act of 1S44, enabling the 

 Government to purchase the railways ; but what are the 

 terms of purchase in this Act .' At the end of a term of 

 twenty-one years (see Section 2), notice to acquire might 

 be given, but the payment was to be twenty-five years' 

 purchase of the annual divisible profits on the average of 

 the three preceding years, provided that the average 

 rate should be less than 10 per cent ; and further, mark 

 this : " It shall be lawful for the company if they shall be 

 of opinion that the said rate of twenty-five years' purchase 

 of the said average profits is an inadequate rate of 

 purchase of such railway, reference being had to the 

 prospects thereof, to require that it shall be left to arbi- 

 tration, in case of difference, to determine what (if any) 

 additional amount of purchase money shall be paid to 

 the said company." 



In the case of certain of the Indian railways, the 

 Government guaranteed 5 per cent, upon the money from 

 the moment it was paid. 



But the great instance relied on by Mr. Chamberlain 

 was that of the Tramways Act of 1870. By virtue of 

 this Tramways Act a company gets for nothing the actual 

 surface of the road on which to lay its rails, to the great 

 annoyance of all other trafiic. The public require no 

 education to ride in a tramcar ; it appears upon the road, 

 and the traffic begins at once. Although it may not be 

 desirable, there is nothing revolting in the condition that 

 at the end of twenty-one years the surface-soil should 

 revert to the authorities on payment of the then value of 

 the materials ; but the Tramways Act has most carefully 

 provided that the local authorities should not become 

 traders in running tramcars. All that they can do, if 

 they purchase, is to let the tramways on lease to other 

 persons. The temptations, therefore, to acquire are not 

 what they would be in the case of a successful electric 

 light undertaking. 



With respect to the bugbear of monopoly — this bug- 

 bear has been raised no doubt very largely by the mode 

 of charging for water. ( )n sanitary grounds it has been 

 deemed e.xpedient not to charge for water for domestic 

 purposes according to the quantity supplied, but accord- 

 ing to the ratable value of the dwelling in which it is 

 used ; and, under this provision, anomalies have arisen, 

 and dissatisfaction has been felt, and the public, without 

 examining the advantages, and without pausing to dis- 

 criminate between the difficulties inherent to such a 

 mode of charge, and the simplicity attendant upon a 

 charge based on the quantity of the thing supplied, have 

 rushed to the conclusion that every supply by a private 

 company of that which is commonly used is an injurious 

 monopoly involving the payment of more than a fair 

 dividend upon the capital embarked. But recent legisla- 

 tion in respect of gas has entirely removed all reasonable 

 grounds of objections such as these, and it has done so 



by the introduction of two clauses — the sliding scale 

 clause already alluded to, and the auction clause. 



The sliding scale gives a direct incentive to sell the 

 commodity at the lowest possible price consistent with 

 earning the dividend, because it provides that, as the 

 price is diminished below the standard, the statutory 

 dividend may be increased, while, if from any cause, 

 such as a coal famine, the price is raised above the 

 standard, the statutory dividend must be proportionately 

 diminished. This great incentive to economy (bene- 

 fiting alike the consumer and the shareholder) has 

 entirely cured the supineness in the way of improvement 

 that was fostered by the old condition of things, wherein 

 the consumer was facetiously said to be "protected" 

 by the fixing of a maximum dividend and a maximum 

 price. 



The other provision is one that thoroughly prevents the 

 consumer from paying more than the fair market rate of 

 interest needed to cover trade risks. That provision is 

 known as the " auction clause." Under this clause 

 all capital (after the first), instead of being allotted 

 at par among the existing shareholders, must be offered 

 to the public in suitable lots. By this means, if the 

 rate of dividend allowed by the Act is deemed by the 

 public to be more than sufficient to give a return, having 

 regard to the trade risk, the public pay a premium for 

 these shares. That premium goes into the capital of the 

 undertaking, but bears no dividend. Thus the public 

 are thoroughly protected against paying an undue rate of 

 interest. 



Having regard to all the foregoing facts, a Bill has 

 been prepared on this very simple and intelligible basis 

 — that electric lighting should be put on exactly the same 

 footing as gas-supply : obligations to keep the mains 

 always charged, to supply electricity on demand to any 

 person wanting it on similar conditions to those which 

 attend the obligatory supply of gas, the provision of a 

 statutory dividend, a standard price, and a sliding scale, 

 so as to give incentives to improvements benefiting alike 

 the consumer and the shareholder, and the insertion of 

 the auction clause for all future capital, by which the 

 public are secured against paying an undue rate of 

 interest. 



This Bill — one so simple and fair in its character — has 

 met with the thorough approval of Lord Rayleigh, who 

 has now obtained a second reading for it in the House of 

 Lords. No peer probably could with greater propriety 

 take charge of a Bill relating to the practical application 

 of electrical science. Lord Rayleigh's high position as a 

 physicist marks him out as the proper person to bring 

 forward such a Bill. 



At the same time there are two other Bills before the 

 House of Lords for the amendment of the Act of 1882. 

 The first of these is that presented by Lord Ashford 

 (better known as Lord Bury), the important section 

 of which, the 6th, repeals the 27th section of Mr. 

 Chamberlain's Bill of 1882, gives forty-one years as the 

 period before the option of purchase arises, with recur- 

 rent periods of seven years, but provides that the pur- 

 chase, whenever made, shall be upon the terms of paying 

 the then value thereof as a going concern. The words 

 prohibiting the arbitrator from taking profits into account 



