Evening star., 1901-05-17

cidillieo II was only making reasonable
profits and could not manage on $36 a year
ITO return to the Washington items 1t
is probable that the enforcement Of the
congressional rates would double or treble
the business, and bring the real capital
per phone down to 800 or near it, thereby
reducing capital charges from $40 to s. or
$6 per phone.
The $3.50 monopoly tribute to the Bell
and Western Electric is almost wholly an
unjustifiable charge under an agreement
made years ago under pressure of the fact
that the Washington company like those
In most other American cities, are really
subsidiary Bell interests, or branches of
one big monopoly.
An Absurd Claim.
THE claim of ST. per phone for working
expenses is absurd in my Judgment Com
pare it with the working expenses of Sc. 43
reported In this same city of Washington
for the telephones of the widely scattered
buildings connected with the Interior De-
partments exchange above mentioned, and
the difference makes the 81 claim incred-
lble. Remember that this same private
telephone interest which now claims It,
cannot reduce rates, because it's 800 Of
average receipts is only just enough to
cover cost of working and capital charges
maze similar claim when the Depart
ment of the Interior asked for reduction
six years ago and yet when the govern
ment put In it's own phones the service
cost only $1O.25 for maintenance operating
cost, depreciation and interest in place of
the $40 per phone formerly paid The
claim of the company in 1894 that it could
not reduce its charges of $50 to SIPS for
these phones has been conclusvely proved
erroneous, and there can be no doubt in
the mind of anyone familiar with tele-
phone data that its present claim is also
erroneous. In Grand Rapids as l have
said, the Bell interest was charging s36 to
$48, and claimed 1t could not reduce rates,
tanning equally good service for $3 year
residence, and SIS for q business place and
a small surplus is realized even at these
rates. Bell estimates are clearly unrelia-
BILE. Considering the length Of time the Bell
companies have been in operation they
seem to know remarkably little about the
business when 1t comes to reducing rates
with the fine underground system estab-
llshed In Washington, repairs and mamten-
ance should cost comparatively little, ard
the operating expenses are not very heavy
all lines go to the central station, where
one operator manages 100 lines and the
public stations in hotels, &C., are managed
on the slot-machine plan instead Of having
paid attendants, as in Boston and many
other cities. The $71 I believe to be more
than double the fair figure for working ex-
penses. Companies have many ways of
adjusting their accounts so as to show large
expenses and small profits. 1t is a COM
mon thing to charge the cost Of extern
sions and repairs to maintenance and ope-
ration. Sometimes quite ethereal expenses
are put down In the material column For
example, last year in examining the ac-
counts of the Boston gas companies, an
item of $4,000 for gas mains was found
to cover such expenses as 81 200 to Mr.. L. ,
81, 800 to Mr.. M, &c, l.. and M. being gas
lobbyists at the state house. This year it
is stated on the authority Of one of the di-
rectors Of another gas company that 81, =
100000 is charged on the books Of that
company to an account that did not receive
a dollar of the money, which was alb
stracted and used for illegitimate purposes.
Corporation accounts are very unreliabl
affairs. And this Chesapeake and Potomac
Company has had, without any unlawful
abstraction Of money, special opportunities
of enormously accounting. AS to the capi-
talization and expenses in Wasningto on
these special facilities arise from the fact
that Washington Is only part of the terri
tory occupied by the company-the stock
for its whole territory being s2650, 600, and
for Washington alone $750,OOO A small
percentage Of error in apportioning eX-
penditures as between Washington and the
outside territory of the company make
considerable difference in the Washington
results.
A Judicial Blockade.
II believe the Manning decision was
judicial blockade of a just law-there was
no reliable evidence that the congressional
rates were too low, while, as the court ad-
mitted there was evidence that in many
cities in this country ana also In Europe,
telephone service is supplied by the gov
ernment or by corporations at rates which
appear to be less than those fixed by this
act and there Is vast amount Of evil
dence not referred to in the case which
tends to show the unreliability Of the
company's claims and the fairness Of the
law. Nevertheless in view of the we'll
known power Of giant corporations to tam
gle a court with ex parte statistics and
claim protection against possible loss 1t
seems to me 1t would be wise to provide in
such acts that the law shall be enforced
for year or two under guarantee that
the government would make good any de-
ficit resulting from the legislative rates
causing the income to fall below working
expenses, and fair capital charges pro-
viding such defiecit occurs in spite Of rea-
sonable efforts to make the new rates sue
cessful and Is ascertained upon accounts
carefully watched day by day by a public
officer, with full powers of inspection, both
of the accounts and the manner of con-
Quoting the business. In some way the
public must take the risk of such changes
for the benefit of the public, or else the
courts will stand between the corporations
and the law. For while the judges saw
that the law must be unmistakably con-
trary to the constitution to be void. thew
frequently act on the principle that It will
be void If the companies can make it ap-
pear doubtful, whether the new rates will
yield profit. Through some such raodi-
fication as l have just suggested, or by
frequent small reductions, the regulative