According to the board no single uniform rate of income return to be allowed on invest ment can be set. It says (1909) : — To assume that some single rate of dividend can be applied to such investments would not infrequently put a premium on managerial inef ficiency, invite a failure to regard properly the company's obligations to the public, and thus imperil the public's interests. In fixing a fair rate of return for individual companies, certain fea tures of local history and condition should not be overlooked. It would be short-sighted policy which would overlook the relation of the actual investments of the shareholders to the total in vestment in the business, of which the value of the company's plant may afford the best indication. When the plant value is high compared to the capital stock, along with a high grade of service and a relatively low price, it affords a convincing indication of high efficiency in the management and a commendable regard of the public's inter est. Under such a management, the public inter ests will not be prejudiced, but may rather be con served by a moderate increase in dividends over what might be claimed under other conditions.
The board defines pretty distinctly what shall constitute a proper surplus to contrib ute to the charge upon consumers. It shall be sufficient to enable the company to meet extraordinary accidents and to conduct its business with the highest economy.
Again quoting the commission: The board believes that the policy of creating a surplus should be commended rather than con demned. The history of the business shows the lowest prices where this policy has been pursued, as it allows an increase of facilities without a cor responding increase of dividend-demanding cap ital. The surplus in this case cannot be considered
the exclusive property of either the shareholders or the consumers. It would seem that the com pany is under obligation to use this in order that substantial advantages will accrue to the public. From an examination of the works it is apparent that there is an immediate demand for investment in the plant of a portion of this surplus. This policy should be continued. Thus the surplus will act as an insurance against loss if prices are re duced and consumption is not increased.
In justification of the idea of the joint own ership of surplus by the company and the pub lie, the board's argument in the case of the Worcester petition of 1902 is to the point: — But it must not be forgotten that however skill ful and wise may have been the management, the company has been able to acquire its present ac cumulations only by the exercise of a monopoly, which it has enjoyed by the favor of the state, and which is in a measure assured to it by law. This is certainly a most important contribution by the public to the company's prosperity, for which the public is entitled to a special consideration. When both parties have so clearly contributed to these results, neither ought to claim the exclusive rights to the benefits they confer.
In the case of J. A. Gale and other con sumers of the Haverhill Gas Company, the board calls attention to the debt owed by the present consumers to those of the future, and at the same time to the fact that when the surplus exceeds certain limits, it should re vert to the present consumers in the form of reduced prices.