Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1911-09-30

eleven and thirteen hundredths
years, as the life of the plant, it is
found that an actual depreciation re-
serve allowance Of eight and ninety
eight hundredths per cent Ia required,
provided no interest earning is figured
on the depreciation reserve, and that
commission in a case before it where
in a depreciation charge of 10 per
cent per annum, was made, held that
charge reasonable, because of the
uncertainty of the business and the
great risks to which it is subject"
1t is fair to presume, that COM
mission in Wisconsin, the state of
La Toilette, and the home of insurg-
ency, where attacks upon public serv-
ice corporations take the place of
moving picture shows for the pleas
ure loving public, that the commits
sion would not and did not yield any
favors to the telephone company, or
render any decision adverse to the
public interests, and they having ap-
proved of the laying aside each year
of 10 per cent of the value of the
plant as a reserve fund to care for
depreciation, We may take that as a
COu0C1 VdCAtC OSIAuldCC oAu ACOl Cu0I
without that much laid aside tele-
phone company is bound to find itself
in a few years with impaired and
diminished resources. Depreciation
has been defined as the allowance
that must be made for the replacing
Of apparatus on account of wear and
tear. on account of unforeseen changes
in the state of art, on account of
increase in the traffic, which out
grows the equipment and necessi-
tates it's replacement by larger and
more adequate apparatus; and the
Wisconsin commission after consider
ing the many improvements of the
past few years in all character of
equipment, says that the telephone
| business in the present state of the
art, nevertheless remains business
subject to great risks and uncertain
ties. 1t must therefore he patent to
every one who takes time to think,
that the continued solvency Of tele-
phone company requires as one of it's
supports, the laying aside each year
of an amount equal to 10 per cent
of it's property value, as deprecia-
ton fund.
The question of repairs is one that
in the first year or two OF the life
of the plant, barring storms or other
unforeseen accidents, seems unimport-
ant. and many company has been
obliged to levy assessments begin
ming with the fourth year for its ex-
istence and sometimes with the third,
to pay for necessary repairs, because
resting in the security Of new equip
ment, the company had paid all OF its
earnings over and above its imme-
date demands to its stockholders in
dividends. This is disastrous plan
to pursue. 1t dscourages the stock
holder, and disheartens the officers,
creates general discussion and breeds
distrust among the stockholders, criti-
cism and complaint from the public.
It is a truth that human nature Is
such, that money paid back by a
aDckholder is always in his mind, a
more valuable commodity, then when
/ It is paid to him. For instance, II
you pay a stakeholder an annual 10
per cent dividend for three years and
Law aside per- cent each year for
current repairs, besides the depre-
citation fund, and interest charge, he
will at the end Of three years. speak
boastingly of the fact that a COM
pany of which he is a stockholder
had for three years paid 10 per cent
dividend and in addition laid aside all
that was necessary for depreciation.
current repairs. and interest, and had
! paid ell bills, but if you should for
| get to lay aside the current repair
of 5 per cent and should pay your
stakeholder Is per cent per annum for
three years, and some time during
the fourth year ask him to repay into
the company's treasury Is per cent.
to be used as repair fund, although
the ultimate result would be the same
as in the first example, with the
added benefit to the stakeholder that
he had had the use Of the extra
Is per cent that had been paid. it
would be found that nine out of every
| ten stockholders would grumble, and