Storm over Kansas
For several years there has been a tense attitude of waiting along the public utility front. Stirrings in Congress and many a local skirmish have hinted that a decisive battle would some day be fought between Private Enterprise and Public Regulation. Last week in the Midwest the sharpest utility conflict of years was in full swing, one with giants as principals.
Leading the forces of regulation was young Governor Harry Woodring of Kansas, backed by the crusading Kansas City Star, in turn reinforced by Missouri's grim fight-loving onetime (1911-29) Senator James A. Reed. In Missouri Governor Henry Stewart Caulfield prepared to jump into action. From Tulsa came the encouraging yells of Governor William Henry ("Alfalfa Bill") Murray, recently victor in a similar but less spectacular fight against Oklahoma Natural Gas Corp.
Attacked, and immediately counterattacking, was the great $1,282,000,000 Cities Service Co.. led into battle by its wily, picturesque generalissimo Henry Latham Doherty. Some 150 companies form the Cities Service group. Butt of the attack last week was Cities Service Gas Co., formed in 1922 as Empire Natural Gas Co., rechristened in 1927. Chief business of this unit is the transportation of natural gas from wells in Kansas. Oklahoma and the Texas Panhandle. The gas is piped and sold to local companies in some 175 Kansas, Oklahoma and Missouri communities. Most of these, including the distributors in such important centres as the two Kansas Cities, St. Joseph, Joplin, Leavenworth, Atchison, Topeka and Wichita, are also owned by Cities Service Gas Co. Governor Woodring contends that the wholesale rate of gas sold to Kansas City Gas Co. is 10-c- too high at the present rate of 40-c- per 1,000-cu. ft., that lower commodity prices all around should find reflection in lower rates, that industrial consumers get gas cheaper from Cities Service than the city does. The company maintains that the Kansas and Missouri Public Service Commissions have no power to regulate pipelines since they do an interstate business. The courts seemed to have upheld this but it has not been entirely clarified and last week the Kansas Public Service Commission had investigators ready to go over the Doherty system. A bitter point with Governor Woodring is that in Oklahoma, Cities Service's retail rate is around 50-c- per 1,000-cu. ft., that it jumps to 85-c- a few hundred miles across the Kansas border, then to $1 at Kansas City.
Since October the argument has been warming up. Mindful that Cities Service Gas Co. caters to a population of 1,300.000 people, mindful also of the Kansas City Star's reputation for crusading which was built up by its late great founder William Rockhill Nelson, the Star's present publisher George Baker Longan has made a big issue out of the controversy. Quiet and magnetic, Publisher Longan is fond of history, art and the cattle and horses raised on his model farm in Jackson County, Kans., where he buys gas from the Cities Service system. Strong-minded to the point of eccentricity (he will not permit the word "snake,'' or snake pictures, in his newspapers), having decided to fight Cities Service he proceeded to do so with smash and persistence. His paper began its campaign last September, has run articles almost daily. The Kansas legislature voted $100,000 for an investigation, and since Governor Woodring's election in January the fight has passed from the Press into Politics.
Unable to deal with Cities Service by other means, Governor Woodring last fortnight made a swift move. Without warning, the Kansas Banking Commission ordered the sale of Cities Service stocks (except for the first preferred) to be halted in the State. Mr. Doherty at once obtained a temporary injunction against this, sought to make it permanent. But utility men throughout the land shuddered at the thought of what the suspension-weapon would mean if widely used. Governor Woodring hinted that he might throw the Cities Service companies into receivership for having "perverted and abused their power." The fight was on.
Wrapped in a dressing gown and basking in the sun at the Westchester Country Club near White Plains, N. Y.. Oilman Doherty banged the table when he heard Kansas had proscribed his stock. "They think I'm a sick man," he cried. "I'll show them how sick I am! When I get into a fight I never let go until it's over and I'm on top."
Far healthier than he was when in 1927 he went to Battle Creek, 61-year-old Mr. Doherty continued: "I've been in fights like this before. I've had to fight bear raids when I was on my back, with my wife holding the telephone to my ear-- and I've always won out. . . . I'll show them what fighting really is."
The first Doherty counterattack was a heavy barrage of telegrams. Whipped to fury by having his stock suspended he turned from the central issue of gas rates to assail the Kansas City Star, which he pictured as a wicked newspaper dictating to a puppet Governor, hurting the welfare of 1,000,000 Cities Service securities-owners by its action. Strength was added to his punches by the fact that in Kansas alone are several thousand Cities Service investors. Big shells in the first telegraphic attack included:
To Postmaster General Walter Folger Brown: IT HAS BEEN MY MISFORTUNE TO DEAL WITH A GOOD MANY DIRTY NEWSPAPERS. . . . THE KANSAS CITY STAR DOESN'T HESITATE TO COLOR THE NEWS AS IT SEES FIT. ... I THINK THEIR PAPER SHOULD BE SUPPRESSED FROM THE MAILS.
To Associated Press: I HAVE GREAT RESPECT FOR THE ASSOCIATED PRESS BUT I THINK THEY SHOULD MAKE IT AN INFLEXIBLE RULE TO STRIKE FROM THEIR MEMBERSHIP ANY PAPER THAT RESORTS TO DELIBERATE MISREPRESENTATION OF NEWS AND IF THEY DO THIS ONE OF THE PAPERS THEY SHOULD STRIKE FROM THEIR LIST IS THE KANSAS CITY STAR.
To U. S. Chamber of Commerce: YOUR ORGANIZATION COULD DO NO BETTER WORK THAN TO DISCIPLINE NEWSPAPERS THAT RESORT TO CORRUPT PRACTICES.
Lengthiest and most vindictive telegram was to Governor Woodring. In several thousand bitter words eloquent Mr. Doherty explained that he had liked the Governor at first, but suspects him of being "under the evil influence of the men who control the Kansas City Star." He went on to say that when his company first went to Kansas 15 years ago many of the local gas companies had been bankrupted by the Star's crusading, that he had brought heat and light to suffering communities. The consumers, he said, had not been consulted in the present fight, nor had the facts been considered. WE ARE READY TO GO TO A HEARING WITHOUT A SINGLE DAY'S DELAY, concluded Mr.
Doherty. WE ARE SURE OUR CUSTOMERS WILL WANT NO MORE THAN WE ARE WILLING TO GIVE IF THEY ARE NOT MISLED BY DELIBERATE FALSEHOODS.
Not content with merely expressing his opinion of the Star, Tycoon Doherty has his attorneys file a libel suit against it for $12,000,000 damages on six articles. The tenor of the challenged articles was that Mr. Doherty collects 1 3/4% of the gross revenue of his companies for his technical advice and management. In addition to denying this, Mr. Doherty claimed the articles had been printed to hurt his business in order that the Star's management might promote a competing pipeline. Publisher Longan retorted: "If it were true ... it would be no one's damned business, but it isn't true."
Regular counsel for the Star is Watson, Gage, Ess, Groner & Barnett. Senior Partner I. N. Watson is the firm's authority on libel. He defended Henry Ford against Aaron Sapiro, Associated with him in that case was Senator Reed, and last week hard-hitting Lawyer Reed was again called in. White-crested, choleric of complexion, a cigar clamped in the corner of his axe-mark mouth, he will glory in fighting once more "for the People." For whatever the merits of the two sides may be, with Lawyer Reed's party's reputation at slake locally (Governor Woodring is a Democrat in Republican Kansas) and with presidential nominations nearing, the $12,000,000 damage suits will ultimately be overshadowed by the larger issue of the fight--between the People and Monopoly.
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