Evening star. [volume] (Washington, D.C.) 1854-1972, 1901-05-22

owner. On the books 40 per cent of the
bonds issued is charged against the District
plant, and the latter is likewise charged
with forty per cent of the general expenses
of the company, as well as with its proper
ton of annual interest and sinking fund i4p-
preparations
The evidence does not show that 40 per
cent of the bond sales was actually ex,
pended in betterments in the District nor
does it show that 40 per cent of general ex-
penses is the real and just proportion to be
borne by the Washington plant. Baltimore
is considerably larger city than Washing
ton, and has in operation about - per cent
more telephones. with toll line connections
with nearby towns and villages.
Then there are local exchanges in Mary
land at Cumberland, Hagerstown, Fred
erick. Westminster, Annapolis, Mt Wash
ington, Luthervflle and in West Virginia
at MartinSburg. Besides, all of these points
are connected with each other by toll lines
and each has additional lines to smaller adj
jacent villages where no exchange is main
tanned.
Washington is connected with Baltimore
and also. 1t seems. with Alexandria and
Waterloo, Va. The general officers of de-
PENDANT, including superintendent Of con-
struction and Of inside and outside main
tenance, live In Washington, and considera-
bic items Of general expenses consist in
travelling expenses caused by the wide dis
persion Of the business under their charge.
Expense of Plant.
Turning now to the annual expense of
the Washington plant, including the fore
going proportion Of general expenses, we
find that Haskins. the expert accountant
who testified for the defendant. estimates
them for the six years from 1892 to 1897,
inclusive, as averaging Se657 per telephone.
In estimating annual expenses, as for
maintenance and the like, he includes large
annual rentals for receivers and transmit
tiers paid to the American Bell Telephone
Company, which appears to own ma
jority Of defendants capital stock under
the old contracts of 1883 and confirma-
tions 40 per cent of annual interest upon
bonds and some miscellaneous interest and
40 per cent of annual appropriations to the
sinking fund. In addition he charges a
| great proportion of the cost of additional
underground construction and the substi-
tuition of improved appliances and SO forth,
| together with all cost of subscribers con-
nections.
| The most of these inclusions as charges
to current expenses of maintenance we re-
| gard as inadmissible. Whether these may
be admissible as between stockhoile and
corporation is not the question
| The interests of the public are here in
volved and a very different question is PRE-
| scented when they are relied upon as a
| public regulation.
| 1t is plain that interest and sinking furd
| items are not chargeable as expenses and
we understand this is virtually conceded
| of the annual rentals to the parent Bell
| company. Patents existing when the 1888
contracts Were made have necessarily ex-
pired, and the evidence shows that instru-
| mentS Of equal efficiency can be purchased
in open market for a sum aligntly in ex-
| cess OF one year s rental charge. The right
| to charge certain improvements to main
tenance is more doubtful. Probably the
| cost of connecting new subscribers may be
charged to expenses, because when discon-
| tlnuances are made the connections be-
| n ~ 1rIa1a \
majority are practically permanent and
| productive of revenue, some division of
| charge between construction ard main
tenance would seem equitable. Whatever is
| necessary through ordinary wear or acct
dent to keep the plant in good, service
able condition is properly chargeable to ex-
| penses. On the other hand substitutions Of
| improved appliances for others ir service
| able order in order to obtain increased eff
cheney, as well as increase of plant would
seem to be properly chargeable to con-
| struction. 1t appears that the defendant
had. some years ago, laid certain cables
In the underground conduit after a plan
called the solid system" at an expense
| Of about $4,000. An objection to this sys-
| tenn was that cables could not be drawn
out and repaired substituted. and an
| other, that additional cables could not be
added. Underground construction is ex-
pensive. and particularly SO where asphalt
pavement must be removed and relaid.
The Old Cable.
his OlQ CdDio was not abandoned because
worn out or incapable of working efficient
| ly. It was not torn up, but a new excava-
ton was made alongside, In which Sec
| lions Of terra Gotta conduits were laid
| These separate conduits would admit cables
composed Of So 100 and $50 wires as were
| then manufactured. Expensive manholes
were constructed at intervals so that the
| lead-covered cables could be drawn through
| the conduits as required for construction
| repair The Elhwavs
| vided with a considerable amount of extra
conduit, to permit the growth Of the
exchange to about double its then number
| Of subscribers.
| Under the conditions stated this new
| subway, with its extra conduits, should
have been charged to construction. This
we think Is IN acceptance with the doc
| trine enounced by the Supreme Court of
the United States in the only case in which
| the question seems to have been consid-
| ered-U. P. r. R. Co. VS.. U. s. 80, U. s.
| 400, 40.
The rule, in our opinion, as between cor
| poration and the public, would be the
same that seems to apply In the case Of
| the conversion Of a horse railway into one
operated by cable or underground cleo
| trio current. or the erection Of extra tracks
| by steam railway companies.
| The defendant also claims the right to
| charge against annual expenses from 10 to
Is per cent Of value Of plant on account of
| depreciation, although this item does not
appear In the figures Of the expert, Has
| kins.
| We cannot agree to this proposition 1t
| Is covered by the regular annual charge of
| maintenance, which includes ala repairs and
substitutions Of defective and worn-out
materials in order to maintain efficiency Of
| operation.
1t is impracticable from the evidence to
| say just what reductions may be made for
| any one Of the years given, on account of
| the cost Of the new underground construc-
| ton.
Averaging it, with considerable uncer-
| tainty, and making the other deductions
mentioned, the average annual expense per
| year, for the six years. would be less than
$50 per telephone subscriber, leaving a pos
| sible margin for dividends of from to 3
| per cent upon the actual cost Of the plant
| which Is estimated at from S42S, 600 to
| $450,0O0
Average Expenditure.
The expenses varied considerably during
the years embraced in the statement,
showing a very great excess for 1897 over
the average. This has been ascribed
largely to extraordinary repairs made that
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