Breakfast Deal

I'm a rambling wreck from Georgia Tech and a hell of an engineer, a helluva, helluva, helluva, helluva, a hell of an engineer!

At the stroke of twelve one midnight last week the Los Angeles Bureau of Power & Light acquired twp big generating stations, 7,600 mi. of line, 185,000 new customers and 800 new city employes. Few days before at a large 7 a. m. breakfast in the Los Angeles City Hall cafeteria, the Power Bureau's general manager, Ezra Frederick Scattergood, had handed President Addison Blanchard Day of Los Angeles Gas & Electric Corp. a check for $46,340,000. Private Powerman Day had handed Public Powerman Scattergood a deed to all his company's electric properties free & clear of debt. Los Angeles now had the largest municipally-owned power system in the world.

To Private Powerman Day the official transfer was doubly trying. It occurred on the 42nd anniversary of his entrance into the company as a gas salesman. He still had the gas half of Los Angeles Gas & Electric, which is a subsidiary of Pacific Lighting Corp., but the electric business had been sliced off clean. "It was forced on us," said he bitterly. "There was nothing we could do. It broke my heart."

To Public Powerman Scattergood, the $46,000,000 deal crowned a 35-year-old dream. Born 65 years ago on a New Jersey farm which had been in his Quaker family since 1683, Mr. Scattergood learned about power at Rutgers (Class of 1893), became a Master of Mechanical Engineering at Cornell, went South to teach at the Georgia School of Technology. But the tuneful libel on Georgia Tech could be applied only to Engineer Scattergood's health, which was so badly wrecked after two years that he had to ramble off to Southern California.

While in Georgia, serious Mr. Scattergood got to pondering the spectacle of water power running to waste in a State which was economically top-heavy with agriculture. In the Los Angeles of 1901 he found an ideal spot to check his answer: an area planned and integrated "by the application of engineering knowledge to develop the community for the ultimate good of humanity."

Los Angeles needed water, and agitation started in 1902 culminated a few years later in the construction of the Owens Valley aqueduct, a project which could incidentally develop considerable power. Employed as a consulting engineer on the job, Mr. Scattergood showed the city that it could sell power cheaper than the private utilities and still make enough profit to pay for all construction. Upshot was formation of what is now the potent Los Angeles Power Bureau with Mr. Scattergood as chief electrical engineer & general manager, a job he has held ever since.

Not until 1917 was Mr. Scattergood ready to scatter the good of cheap power. Then, starting with 5,000 customers, he launched a campaign to buy up the private companies, continually forcing the issue with direct competition. The Power Bureau would merely string a line down a street parallel to the private lines, offer lower rates, wait for the rush of customers. The private companies could not meet the price without lowering rates in the whole territory. In 1922, after furious litigation, Southern California Edison had to capitulate, selling out to the city for $11,000,000.

With nearly two-thirds of the Los Angeles power business in his public pocket, Engineer Scattergood then turned his persistent attention to the other one-third, Los Angeles Gas & Electric. Though the company was competing directly with the Power Bureau in important parts of the city, it had no desire whatever to sell out. But having contracted for huge blocks of power from Boulder Dam, Engineer Scattergood began to get tough. He hauled the private power company into the courts, which ordered the company to get a franchise from the city. The Los Angeles Charter limits franchises to ten years, too short a period to give a utility any sense of security, particularly with Mr. Scattergood in town. And two attempts were made to change the charter.

Hemmed in by a flock of condemnation proceedings, Los Angeles Gas & Electric finally gave up. Mr. Scattergood and Mr. Day sat down to haggle, the asking price being $60,000,000, the bid $40,000,000. Only in Southern California would two such opposite characters meet at the council table to talk in tens of millions. A disciplined idealist. Powerman Scattergood has helped keep Los Angeles industries decentralized, cajoling and conniving to locate factories outside congested areas where they might breed slums. And large credit is given him for the 10,000 subsistence homesteads which Los Angeles boasted long before Rexford Guy Tugwell was known off the campus of Columbia University.

Private Powerman Day, now 62, made his name as a conscientious, hard-working operating man in the company he entered after high school. Neither of his sons went to college because, as he explained. ''Like me, they weren't interested in books and studying."

But in California the dreams of the wildest dreamers often come true, and when the dickering was done Mr. Scattergood had the better of the deal with a price of $46,340,000. He also got, in effect, an option on all Mr. Day's $140,000,000 worth of gas properties at a price to be set by the California public service body if the option is ever exercised. Last December, Los Angeles citizens ratified the deal by authorizing the necessary bond issue. The only remaining private power in Los Angeles is a few outlying properties owned by Southern California Edison and doing less than 10% of the city's total power business. With its new acquisition the Los An-geles Power Bureau now has $171,000,000 in assets, 450,000 customers and gross revenues of nearly $25,000.000 per year. On its old properties in the last fiscal year it earned $4.220.000. Its surplus amounts to more than $50.000.000. Its domestic rate starts at 4.4-c- per kwh., and the average domestic rate is 3.54-c-. The national average is 4.86-c-. Apparently the majority of Los Angeles citizens are quite content with Mr. Scattergood's achievements. One who is not is Publisher Harry Chandler of the arch-conservative Los Angeles Times. Though Mr. Scattergood's engineers figure that Publisher Chandler could save himself $12,000 annually by buying city power, the new Times building is served by its own gas-fired steam plant in the basement.

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