Evening star., 1898-03-12
RATES FOR PHONES
KA1ES FUK PHUNES
Resumption Of Inquiry by a House
Subcommittee.
Is--.lH
ARGUMENT Of Mr.. HEhPHILL /
President Bryan Objects to Certain
Statements.
AN EXPERT TO BE CALLED

The inquiry into the telephone system OF
the District was resumed today by the
House subcommittee on appropriations.
Mr.. Hemphfll, of counsel for the citizens
VINO use the telephones, went on with his
arguments. Before he began, however, Mr..
Jere Wilson. counsel for the telephone COM
pany, called attention to the evidence sub
mitted yesterday by Mr. Birney, wherein an
official of the Treasury Department had
told of an alleged leak in departmental
secrets over the long-distance telephone.
Mr. Wilson demanded that the name of the
official be given. and that he be called be-
fore the committee to give his testimony.
Mr.. Hemphill, then proceeding. described
the stock transactions of the Bell Telephone
| Company and the Chesapeake and Potomac
| Telephone Company, i'll the course of which
| he said that the Bell Telephone Company
lad received $950,OOO in stock. for which it
| did not pay cent. The only thing the
Chesapeake and Potomac Company had re-
| ceived was the permission to pay rent for
the use of telephone instruments
Mr.. Bryan of the telephone company said
| this was hardly fair statement. The
| company had received the business which
had been built up in the District, and
| which was valuable consideration. More
than that the company supposed 1t pos
sessed franchise rights in the District.
| The company then was doing 40 per cent
of the business 1t now transacts.
Mr.. Hemphill said the original company
| was capitalized at 100000. Upon this 1t
| had built up business of 40 per cent of
the present volume. Why. then. should it
| nave been necessary to take $7oO,OOO to
| build up the 60 per cent.
Mr.. Bryan said the company was not
willing to admit that the original capital
| ization was 100000.
Profits of the Business.
Mr.. Hempbill, continuing, said the COM
pany had been atle to pay the Bell Tele-
| prone Company a large rental: to pay the
interest on the bends; to pay dividends on
| 81, ,65OOo0, and to spend a large amount Of
| money in construction and maintenance.
| Mr.. Hemphill contended that the business
can be done in this city for a great deal
| less money than is now charged. He read
| Maryland legislature by the company and
| the report of New York telephone inveS-
tigating committee. In the first case the
profit to the telephone company was stated
| to be about SIS on each telephone, while
the New York company made a profit of
| S6O to $50. The net profits of that company
in six years were 474 per cent. The Lon
don, England company, with an average
| rate of $2 per Subscriber acknowledged
that they made 55 per cent net profit
Mr.. Bryan doubted the correctness of the
report 1t was the report Of Simon Stern
to the Ainsworth Investigation, and was a
| out
Mr.. Hemphil1 said the London company
confessed to gross revenue of $500. 900.
| While 30 per cent upon this would not be
| S2,2oO,OOO. the amount of profit the COM
| pany was alleged to have cleared. there
| might be conditions of the business which
would account for the discrepancy.
Referring toathe report of the local COM
pany. S1r. HelhphiH said that two-thrds of
all the wires Of the company, according to
| PRESIDENT Bryanss statement, had been
| placed underground at cost of S1s6 900
| and the whole system could be placed nm
| derprOlnd for hale
| amount. r .-E ''-
Mr.. Bryan said that while the argument
| sounded fair enough, 1t was not Overhead
| lines were added to only as needed and
| became revenue producers, whereas it is
| necessary to anticipate business in laying
| conduits, and not more than SO per C mt of
| the underground wires are in use
Expert Evidence to he Obtained.
Mr.. Hemphill said he had been Informed
by Mr. Hill, an electrical expert, that an
| underground system for $500 subscribers
could be constructed for $463 600
Mr.. Wilson protested against this kind of
| evidence. He demanded that Mr. Hill
4 should be required to testify before the
| committee and be subject to cross-examtna-
| ton.
| The committee decided to allow Mr.
Hemphill to proceed, but suggested that he
should ask Mr.. Hill to come in person and
! submit his evidence. Mr.. HemphiH SAID he
would ask Mr.. Hill to appear before the
| committee.
Summing up his remarks, Mr. Hemphill
said 1t had been shown that this company
| was charging rates in excess of those pre-
| vailing in other cities and was making
large profits. Therefore it was prayed that
Congress would regulate the rates and If
this company would not submit to reduc-
| ton, then to authorize another company to
come here and do business upon reasona Bile
| rates.
President Bryan addressed the commit
tee briefly. He said there was a competing
| telephone company in Baltimore but it was
! at a standstill, in the hands of receivers
| On the other hand, the Chesapeake and
| Potomac Telephone Company was steadily
growing and had not reduced it's rates.
Mr.. Pitney's Suggestion.
Mr.. Bryan told Of the law in Maryland
which limited the charges to $7S for tele-
phones in Baltimore. The company had
| answered that law by taking out the
metallic. circuit instruments of subscribers
and relegating them to the use of grounded
circuits. The latter were unsatisfactory to
| subscribers, and the succeeding legislature
authorized the making of contracts at
! higher rates.
Then you may meet the action of Con-
| g1ess in the same way" said Mr.. Pitney
You may respond to the reduction in rates
here by taking out the metallic circuit in
struments and putting in the grounded
| circuit Instruments"
| Mr.. Bryan said he had not had time to
| consider this thought.
However" he added. you could hardly
expect to buy French loaf sugar at the
price of black Manila nor feel aeerieved
at the man who refused to sell it,
Mr.. Bryan explained that the grounded
circuit instruments were unsatisfactory, by
reason of the indnStion from trolley lines
and electric ligpe wires. 1t would pay
the company to take out metallic circuit
instruments and put in the other kind, if
the rate were e1feddced.
The Contemplated Profits.
In resoorse to a question, Mr. Byran
said he contemplated making a profit of
35 per cent OCT d the gross receipts of
the company. The conservative railroads
of the country were operated on that idea.
Mr.. Pitney suggested that the power of
such corporation to earn depended upon
| Of IL