growth in total capitalization from $4,100,000,000 as of January 1, 1920, to $6,600,000,000 as of January 1, 1925, with an estimated growth to $10,000,000,000 in 1930. Similarly, the total electrical energy generated has risen from 37,000,000,000 kilowatt hours in 1919 to 54,000,000,000 in 1924. The total number of homes served in 1919 was 5,000,000 and in 1924, 12,000,000. The total number of employes in 1919 was 130,000 and in 1924 was 170,000. The total installed capacity in 1919 was 19,400,000 horsepower and in 1924, 26,800,000 h.p. The total gross revenue in 1919 was $774,000,000 and in 1924, $1,300,000,000. The total amount of energy generated by fuel burning plants was 23,000,000,000 kilowatt hours in 1919, and 34,000,000,000 in 1924. The total amount of energy generated by hydroelectric plants in 1919 was 14,000,000,000 and in 1925 was 20,000,000,000 kilowatt hours. In 1919 the total taxes paid by public utilities were $30,000,000 and in 1924, $67,000,000.

The position of the Central Station has become one of the greatest forces in the economic world. The source of wealth is production. The Central Station is not only a producer, but enables the multiplication of production by others. The use of abundant electric power has increased production, not only as a whole in manufacturing, but also the production per man, tbus enabling the manufacturing industry to cheapen its product and also to divide its profit with the employe in the form of higher wages. What is true of production per man is equally true of production per dollar invested. Economically, these are vastly greater factors than the cost of power itself. In a large proportion of manufacturing processes the cost of power is 2% to 10% of the total cost of the product. Labor and investment charges constitute the greater proportion of the remainder. To multiply the production relative to labor and investment thus produced an effect which greatly outweighs the intrinsic value of the power.

It was mentioned that there are 170,000 men employed in the Central Station industry and this number, while large, is not particularly impressive in a way, when compared with, say the railroads with ten times as many, but there are vast numbers employed in the industries completely dependent upon the electric power business and additional numbers employed in related industries which, if it were possible to estimate, would bring the

the total to an impressive figure. One manufacturing company with its 75,000 men produces nothing but equipment used by the electrical industry. It is a fair example of scores of similar concerns. Then, too, there are steel and copper production, coal mining, lumber production and building construction, a large proportion of which is consumed directly in the electric. power business. On the distribution side may be considered the manufacture of appliances for the consumption of power, the wiring of buildings, electric transportation and kindred industries which depend if not solely, in large measure, directly on the power industry. If we include in our category the indirect contact of the transportation of electrical equipment, the insurance of central station property, the rentals and the numerous other activities which obtain their profit in smaller or greater part indirectly as a result of the existence of the power industry, it can be seen what a factor the business has become in the employment of labor and in the world's commerce.

The invention of the water wheel took place before recorded history. The force of steam was known to the early Egyptians. Electricity was first known 600 B. C., but no real advancement was made in the application of Nature's forces up to comparatively modern times. They were used but for the smallest proportion of human needs. Animal power to a certain degree assisted hand work and such conditions existed, generally speaking, to the time of the industrial revolution. Boulton and Watt put their engines on the market about 1775 and that action introduced the industrial revolution, as it is called in the science of economics, which lasted until approximately 1840. This period marked the change from the production of goods by the handicraft of individuals to its production in mass in factories. Since then, industry has continued to develop and perfect itself. It appears that we are now going through what might be called a power revolution. This is particularly true in America though it applies in a lesser degree to other countries. It is marked by the concentration of power production in large central stations and the elimination of innumerable small plants.

Twenty or more years ago if a small power consumer, such as a miller, needed power, he had about an equal choice between purchasing it from a power company or making it himself. There was not a great difference between the efficiency

and production cost in his own small plant and that of the larger central station. Unless conditions were quite favorable, any difference in production cost might readily be offset by the investment necessary to bring the power to him. Today the miller can buy equipment of perhaps slightly better efficiency than he could twenty years ago, but it will cost him twice as much. Also, fuel will cost him twice as much today as it did then. Material and labor cost twice as much for the central station as it did twenty years ago, and fuel has increased in the same proportion as it has for the small power user, but the central station has so developed in efficiency that its cost of production of a unit of energy even with the increase in cost of commodities, is much lower today than it was twenty years ago, so that the power company can now afford to carry the power to the miller and sell it to him for less than he can make it himself. This has resulted from an improvement in all parts of the station and not just in engines and boilers, for if the latter were the case, the miller would have benefitted by the same improvement. Some of the things that have gone to make up the difference are: Increased efficiency of the large size of units, resulting in space and weight economy as well as fuel economy; the concentration of power development in huge centers, permitting the use of economizing devices which are not feasible for the small plant; the advantage of theoretic and scientific application of technical and thermodynamic principles outside of the scope of engineering talent available for the small power user; the advantageous location of plants relative to fuel, water and transportation. This increased efficiency results in another great economic benefit, the conservation of fuel. It has placed the cost of central station power within reach of everyone and has made possible the change from man-power to machine-power and has increased the invested dollars' power.

The merging of numerous small concerns into large groups under the dominance of holding companies has become especially prominent in the recent past, more so, perhaps on account of the magnitude of some of these movements. In the development of the power plant business probably nothing is of greater moment than this system of bringing a large number of identical small units into a single organization. The holding company has really been the device which has made development possible, principally through its ability to finance the necessary

projects. The utility business is peculiar in that it probably has a lower capital turnover than any other sort of business. The type of equipment and property necessary to return a given income is very expensive in proportion to the value of the product turned out. The annual gross revenue averages approximately 20% of the investment. The small margin available must be used for interest instead of principal. The result is that the utility business more than any other, must continually look for outside sources of funds for carrying on improvements and extensions. The small property with its limited means and apparently small outlook, can not obtain funds in sufficient amount for any ambitious plans of expansion and must pay for such funds at a high rate, commensurate with its limited credit. The holding company is able to eliminate many of the disadvantages incident to the small property. Its holdings are large when measured in dollars and they cover a large territory and the possibilities of expansion become evident upon inspection. The promise of future growth is apparent to the investigator. Furthermore, the diversity of commercial activity in the different portions of a given region and in widely separated districts, produces an assurance of earnings which a local property would not enjoy. The result is easier and cheaper financing. The holding company has two other functions besides that of financing-its ability to furnish a management organization and also to employ a technical staff productive of economic improvement, neither of which the small local organization could support. These three factors are what bring about the justification of the syndicate or holding company, and make possible the accomplishment of super-power and the promise of rural electrification.

The concentration of power into large units, the combination of small factories into large ones, and the greater productiveness of industrial institutions as a result of the universal use of power, resulted in a movement of workers from the country to the city. Whether the power used were electrical or of another sort the result would have been the same, but it is the universal use of electric power and its cheapness that directly brought it about. The change is going forward to another step, however. Electric service is being distributed over wider and wider territory. The small town and country village are receiving the benefits of electric service and it seems as though

the movement of workers is being checked. The automobile, hard roads, the radio and telephone, all have their share as influences but without doubt electric service is the most potent factor. There are many districts now which are very well covered by rural lines and the increased number of transmission lines being installed in the country is bringing the smaller villages and towns and a greater number of farms within the range of central station service. The problem of serving the farm home has not been worked out to an entirely satisfactory conclusion. Without doubt it will be eventually, and it is hoped very soon. In these electrified districts, the country villages has become metropolitanized. Electric service not only furnishes domestic and street lighting and cheap power for the garage and mill, but also enables the installation of water works in towns that otherwise could not afford them. It makes possible the establishment of moving picture theatres, and makes the small town more attractive in many ways. With modern conveniences and quick transportation, retired farmers in most instances are moving to the country village where they will be surrounded by their friends and where the conditions are more attractive to them in other ways, rather than to the city. The result is that many of the small villages and towns are being adorned with large modern residences instead of the more humble type which we used to see, and these small towns are receiving a growth which at one time went to the city.

The

The city, likewise, has received the benefit of improved living conditions. The greater production per man does not only cheapen commodities, but has increased wages, the combined result being a greater buying power for the wage earners. use of electric power in factories has decreased accidents and improved working conditions. The free use of electric service in the homes has lightened labor and improved domestic conditions in many other ways. Closely allied with the improvement in living conditions and social activities, are the aesthetic results from the general use of electric power. Better lighting and the elimination of smoke and dirt improves conditions and health, but they also eliminate a disadvantage which caused opposition to the construction of factories in certain districts. The elimination of smoke stacks, coal piles and cinders takes away the ugliness of the factory. Nowadays, factory buildings are