Los Angeles herald. [microfilm reel] (Los Angeles [Calif.]) 1900-1911, 1908-02-18
SEND HURRY
GALL FOR
ATTORNEYS
PACIFIC PHONE PEOPLE CUT
RATE INQUIRY SHORT
COUNCILS LINE OF PROBING
TOO MUCH
Officials Vince When Asked Why
Los Angeles Branch Is Forced to
Bear Burdens Of $3e,ooo,ooo
Concern

Because cross questioning was get
ting too severe, E. C. Bradley, vice
| president and general manager of the
Pacific States Telephone & Telegram
company, and T. q. Sherwin, auditor,
on the first day of the public utilities
! rates hearing in the city council cham
Der brought matters to an abrupt end
Yesterday by deciding that they
wanted counsel before proceeding.
City Attorney Leslie r. Hewitt and
sundry councilmen were willing that
| attorneys should be present for the
company and granted delay until
next Tuesday.
| The line OF inquiry took an unex-
| pected turn, Mr.. Bradley said, and
neither he nor his aides were prepared
to go into details which, to his sur
prise, the council wanted to know.
| These inquiries had to do particu-
larly with why the Los Angeles office
| of the company was expected to pay
| dividends on its share (13 per cent? of
| all the expenses of the $36,000,00O cor
| poration which controls the telephone
| field in California, Oregon, Washing
| ton. Nevada and Arizona.
sesatIonai Discoveries
City Auditor w. C. Mushet's report,
| read earlier, paved the way for the
sensational discoveries as to the
| methods of making statements for the
councils consumption-stateme that
| on the face showed a loss to the COM
| pany in maintaining and operating its
| Los Angeles branch.
| The books are kept in San Fran
cisco, even the bills being made out
there, and 1t was necessary for a dele
| cation of high officials to make the
| trip to Los Angeles to be present at
the rate hearing.
Manager Bradley, after some pre-
| liminary Questioning, admitted that
the company fixed an arbitrary charge
| of 10 per cent to cover the share of the
Los Angeles office of the gross general
expense. San Francisco is charged Is
| per cent.
Auditor Sherwin admitted that when
the Sunset and Pacific states COM
panies merged, the capitalization of
the Sunset company was $3,O00,000, and
of the Pacific States company, $17,000,-
900. This accounted for but $20,000,000
of the 100000 stock on which the
branches must bear earning expenses.
Incidentally, the reha bilitating Of the
San Francisco plant after the fire was
charged to the general fund.
The report to the finance committee
by Auditor Mushet which opened the
councilmen's eyes was as follows:
Mushet TO Finance Committee
In accordance with your instructions
| and a resolution of the city council, l
| have, with the assistance of w. j.
Palethorpe, made an investigation of
the statements filed by the Pacific
Telephone & Telegraph company, and
have also examined such dat. as was
available at the office of this company
| in Los Angeles.
The officers of the company offered
us every facilit' for examining such
records as they have in this city. We
| find, however that all accounting is
done in San Francisco, the Los An
| geles office being merely a branch.
and rendering daily, weekly and
monthly statements to the head office.
| Even the local monthly bills are made
up in San Francisco and sent here for
| collection.
From the foregoing it will be seen
| that in order to make a satisfactory
statement a visit to San Francisco
would have to be made and that even
| then, owing to the fact that the ac-
| counts of all the branches in five states
operated by the company are included
in these books, the task of eliminating
| those items not pertinent to this in
| uuiry would be a very lengthy one.
The investigation, however, which we
| have been able to make, has furnished
us with some data which will be OF
| some assistance 10 yOu AL lliohii6 SOui
report to the council.
Omit Construction item
The ordinance of the city specifying
the statements to be made by the pub
lie utility corporations requires them
to file statement of expenditures Tor
construction made during the previous
| twelve months. This 1t has neglected
to file
| The ordinance requires also an item
| lied inventory of all works, pole lines,
conduits, plant and all other property,
real and personal, owned or used by
such corporation, said statement to set
forth separately all of said property in
the city of Los Angeles in the county
of Los Angeles outside of the city and
| all property outside of the state OF
California showing the actual cost and
| the present cash value OF each item
thereof. This 1t has neglected to file.
| In the statement of receipts and ex-
penditures which it has filed we would
call your attention to the following:
1t shows a revenue from long dis
lance service of $13, 473.37.
Figure Too Small
| On investigation the fact was de-
veloped that this figure represents 10
per cent of the actual receipts from long
distance service, it being the practice
| Of the company to allow all of its ex-
| changes to retain 10 per cent OF their
gross long distance tolls to cover the
expenses of long distance operating
That this arbitrary figure is not suta-
Gent to pay the expenses of long dis
tance operating is demonstrated by the
fact that the payroll for long distance
| operators amounted to $40, 1890 and
that repairs to the long distance trunk
| lines amount to $3S28.15.
| These two items alone amount to
nearly double the arbitrary credit of Is
per cent, and If the other expenses
could be Diet ermined the disparity would
be still more marked. 1t seems to us
| that the amount shown as revenue from
long distance is entirely inadequate.
The item Of ST., 1896. appearing under
the heading of general expense, Is not
supported by any documents which
were available in Los Angeles. On in
qyiry from the general manager we
learned that this charge is made to
cover the share of the Los Angeles
Office in the expenses OF the general
Office and the management In San Fran
cisco.
We learned that an arbitrary charge
of 10 per cent of the gross general ex-
pense was made against the Los An
geles branch. We are unable to say IL
this arbitrary charge of IS per cent is
just proportion which the Los An
geies branch should bear. as no details
or documents are on file In this office to
substantiate the same.
No Record Of Prices
The item of 800, 31s.79 charged against