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Mr. Sdward C. Berwick -3- November 23» 1951 2 . P u b lic a cce p ta n ce o f th e w a t e r company and h ig h e r r a t e s would be g r e a t l y enhanced as i t s o p e r a t io n would be vie w e d as more a p a r t o f th e c i t y . 3. Due t o th e is s u e o f bonds and s t o c k s , th e W ater Company would have d e f i n i t e f i n a n c i a l o b lig a t io n s to m eet. T h ese co u ld be used e f f e c t i v e l y as p o in t in g to e a rn in g s and r e t u r n r e q u ir e d , kt th e p r e s e n t tim e w it h p r a c t i c a l l y no f i n a n c i a l s t r u c t u r e s , as t h a t I s n o rm a lly lo o k e d upon, t h e r e i s n o th in g t h a t can be p o in te d t o in s e t t i n g up th e e a r n in g req u irem e n ts o f th e W ater Company. Sven on th e open a c c o u n t, no i n t e r e s t i s p a id . Where th e s it u a t io n e x i s t s , in w h ich th e funds o f th e w a te r company become in te r m in g le d w ith th e p a ren t company, i t la y s th e p a re n t company open t o c r i t i c i s m . I t i s o n ly n e c e s s a r y f o r th e ''ch am p ion ” o f th e p u b lic t o p o in t to th e " in n e r w o rk in g s " o f th e to p company and i t s c r e a t u r e t o c r e a t e in th e minds o f th e p u b lic t h a t th e w a te r company i s b e in g b le d f o r th e b e n e f i t o f th e b ig c o r p o r a t io n . I f th e banking i s done l o c a l l y and a l l d o l ­l a r s a re accou n ted f o r and r e p o r te d to th e Commission, t h is s it u a t io n w i l l in la r g e measure be c le a r e d up, even though th e s e c u r i t i e s a re h e ld by th e U nion P a c i f i c . 4 . The R e g u la to r y Commission w i l l lo o k n o t o n ly w it h f a v o r on the ch an ge, s in c e i t p la c e s a l l o p e r a tio n s under i t s c o n t r o l, but lik e w is e i t w i l l ta k e c r e d i t f o r b r in g in g th e change a b ou t. I n a s t a t e w here p o l i t i c a l in flu e n c e w it h th e p a r t y in c o n t r o l i s n o t t o be d is r e g a r d e d , t h e r e should be i n d i r e c t b e n e f it s t h a t would f o l l o w any such m erg er. ? ’ The n e t r e s u lt should be th e e v e n tu a l o b t a in in g o f re a s o n a b le e a r n in g s and w it h s e r v ic e to th e p u b lic a t minimum c o s t s . $. Due to im proved and re a s o n a b le e a rn in g s th e com­pany w i l l be in a b e t t e r p o s it io n to ( a ) F in a n ce and r a i s e a d d it io n a l c a p i t a l th rou gh a l o c a l p u b lio o f f e r i n g . (b ) Command a h ig h e r p r ic e f o r th e p r o p e r t ie s on s a l e . ( o ) Work ou t a le a s e agreem ent w ith th e c i t y and r e c e i v e a re a s o n a b le income from th e p r o p e r t ie s I f such should be d e s ir e d .