Los Angeles herald., 1908-03-22

INDUSTRIES
VASTGROWTH
IS SHOWN BY BELL c0MPANY'S
ANNUAL REPORT
THOUSANDS OF MILES OF WIRE
ARE ADDED
First Statement Ever Issued by corpo-
ration Reveals Facts of Huge
Magnitude - Describes
Value of Service

Telephone and Telegraph company, of
which the Pacific Telephone and Tele-
graph company is the western branch,
which has just been issued, President
Theodore N. Vail gives some interest
ing figures and discusses at length
several features of the telephone busi-
ness
The business has shown constant gain
and there are 3,S39000 stations con-
nected to the system, with total of 81,
610592 miles of wire. The total number
of exchange and toll calls for the year
was about 5,997,0000O0. During the year
$52, ,921, 400 was added to construction,
and in the past eight years 1851, 1896, $50
has been so added.
At the present time there are out
standing 1,525,2S0 shares of stock of the
company, 1,312,502 of which are held by
%, 3,453 stockholders, an average of less
than fifty-six shares each, the balance,
212,778 shares, being held by sixteen
shareholders, each with 5000 shares or
over.
At the close of the year a valuation
based on the replacement cost of the
existing plant, without any allowance
for franchises, or for unearned incre-
ment, showed $48S, ,296, ,000 Against this
there were outstanding Obligations OF
the American Telephone and Telegraph
company and it's associated companies,
including capital stock at par in the
hands of the public of S554939,o00.
These companies also had cash on hand,
quick assets and investments OF $101,-
074O0O SO that the obligations against
the plant were only $45S, 600, or 1884,
431 900 less than its appraised value.
The book value of the exchange cort-
struction Is $114 per exchange station,
and the book value of all the property,
including the long distance lines, Is $162
per station.
Gross Earninqs
For the first time a statement of the
operating companies Chat is, those
companies which directly furnish the
telephone service) is given, with gross
earnings for the whole country OF $l2o,-
1853, 200 operating and general expense
of $53,242, 800, and maintenance of plant
s34, ,665, 700. The balance available for
dividends was $2b, S19,7 700, out of which
dividends amounting to SIS, zoe, 100 were
declared, which seems reasonable when
the value of the plant is considered.
The problem of rates and rate reguia-
tion is discussed at length, and 1t Is
shown that the policy of the Bell COM
panies In any controversy as to rates is
to make complete showing of the cost
and value OF plant and service, and
that there is nothing to conceal. FAR
rates are all that is asked for, ana the
belief is expressed that with full knoWl-
edge of all the circumstances the public
will readily acquiesce in. such rates
Fair rates are defined as those which
maintain the plant in state or hign
efficiency, ppOvide fair wages Tor en-
pIoyes. give fair return on money IN
vested and promise a fair return on
new money needed Any revenue be-
vond these requirements could, after
allowing for proper reserve, be used Tor
the benefit of the public, but the COM
pany should be allowed to retain a part
sufficient to stimulate the most emcient
and economical management.
AS regards public control in the abb
sence of competition the report says:
at is not believed that there is any
serious objection to such control, pro-
yided 1t Is independent intelligent, con-
siderate, thorough and just, recognize
inp as does the interstate commerce
commission in its report recently IS
sued, that capital is entitled to It's 1alr
return and good management or enter
prise to it's reward
Value of Service
The value of telephone service to the
subscriber is analyzed, and 1t is SHOWN
that while connection with the eX-
change may be termed a conVenience
for that subscriber IL is necessity TOT
, all other subscribers. 1t is the ability
to communicate with others Which
makes the exchange valuable. 1t is the
use of other circuits than your own
rho value of any exchange depends on
the area covered and the maximum
i, number of desired individuals who can
be reached, and the measure OF the
value depends upon the use OF the ex-
change system as whole Rates must
be SO adjusted that no rate snall pear
uniustly on particular individuals or
classes. and that at some rate cQnnec-
tion with the exchange is within reach
of anyone who can add to the Value 10
others of the service, and that, as
whole. the revenue shall be enough to
operate and maintain the plant er-
fieiently and give sufficient return on
the capital
the report calls attention TO the tact
that during each conversation the CIR
cult is devoted exclusively TO the ser
vice of the user. Long distance COM
n,rnications require the presence OIL
two individuals concerned at the ends
of the line. and they are therefore con-
fined largely to the hours when 1t Is
certain that each can be definitely To-
Gated The result of this is that the
long distance business is crowded into
a very small part of the day, and that
much of the time the facilities provided
are lying idle. There is no way or
crowding the business during the times
of heavy demand, as but one message
can mass at q time. Diagrams are
given showing how irregularly the ousi-
ness is distributed throughout the DAY,
and the statement is made that II busi-
ness could be subjected to half hour
delay the facilities required could pc
reduced one-third at least.
o<er