Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1914-03-19

at five per cent on the classes of prop
erty shown. excepting that six per cent.
for engineering and supervision is figured
on buildings of the better class and three
per cent on plain construction.
The evidence showed that the plant OF
these companies was of gradual growth
as their business expanded. The subscribe
ers' station were installed from time to
time as demands for service were made
upon the companies and the exchanges
were installed at different periods OF the
companies history. The pole lines were
erected from time to time as the COM
panies expanded
The commission has allowed interest
during construction as follows:
Two per cent. on land.
Two per cent. on buildings,
Two per cent. on central office equip
ment.
One per cent on sub-stat,on equipment.
Two and one-half per cent. on pole line.
Two and one-half per cent. on wire.
Five per cent. on rights CT way,
Two per cent. on aerial and underground
cable,
Two per cent. on conduits.
The commission is OF the opinion that
these are fair interest allowances in view
Of the fact that this construction was
done from time to time as the business OF
the companies expanded without any OK
tensive interruption OF service
The last column Of the table shows the
total value of the plants, including engi-
neerins and interest, as arrived at by tho
commission.
DEPRECIATION.
ing Into consideration the extent and
varying ages of It's parts has reached a
point whore extraordinary reconstruction
will not be periodic and reconstruction
row Is and will continue to be distributed
80 that tho annual charge therefore will
be quito regular and a depreciation per-
centage quite little less than that used
by the New England COMPANY and IS and
will be sufficient.
I. was testified that the rA.lnt of the
New England company is in better condi-
ton to-day than IT was ten years ago and
tina should be so in view of the progress
of the telephone business 1t was tcsti-
fed that the subsidiary companies requir-
ed n higher depreciation percentage than
the New England company because the
ratio of different kinds OF depreclable
that OF the New England company and
because the plants of the subsidiary COM
panies contain a larger percentage Of
short lived units OF property. Although
the New England company and the subsi-
diary companies claim that the deprecia-
ton percentage of the subsidiary compa
MES should be two per cent. larger than
that of the New England, the practice of
one of the subsidiary companies, indicated
by It's plant values and earnings report
does not coincide with this claim. 1t was
claimed at the hearing that the deprecia-
ton percentage of the Franklin County
company should be S:is per cent. This
company, in 1912, get aside five per cent.
for depreciation reserve and at the sa me
time was paying six per cent. dividends on
its common stock. Such a proceeding, If
an S.4S per cent. depreciation reserve were
actually required, could not be character
ICED as good business.
The commission Is of the opinion that
) per cent. annual depreciation percentage
for the subsidiary companies and a four
per cent. depreciation percentage for the
New England company are sufficient.
In certain financial statements of the
companies which were filed at the hear
ings there was Incorporated an item for
going concern value which item was not
carried upon the books OF the companies
as an asset
| All the subsidiary companies, with the
possible exception OF the Vermont COM
pany, were organized for the purpose OF
| suppressing competition and large sums
were used by these companies in the pur-
chase of competing plants at hign valu-
atoms and some of these plants when
acquired We're scrapped. The New Eng
land company has been active in the
suppression OF competition and in finance
ing the subsidiary companies for that
purpose. AS a result of these activities
and expenditures. some of which are
detailed more at length elsewhere in this
report. the New England company and
the subsidiaries monopolize the territory
in which they operate within the State,
and are as much OF monopoly, although
on n smaller scale, as is the Consolidat-
ed Gas company In the city Of New York
The commission is of the opinion that
the items of going concern value above
! referred to should be disregarded. The
auditor Of tho companies testified at tho
hearing that the accumulated deprecia.
ton reserve invested in plant should be
| deducted in computing the plant value
upon which the company was entitled to
| earn. Consequently we have deducted
these reserves from the inventory plant
values OF the several companies as de.
;erndned by the commission, before COM
putting tho amounts which the companies
are entitled 20 earn upon said plant valuea
| In view or the fact that these COM
panies have n virtual monopoly of the
telephone business within their respective
territories, we have determined that they
are entitled TO earn six per cent. upon the
value OF thar respective plants and upon
their other assets used In the business
| The New England company and its fo,,
subsidiaries are five different corpora.
tons. The majority of the stock Of each
subsidiary company Is owned by the New
| England company and the majority of
the directorates OF the subsidiary COM
panies are New England company off,
cials but tho business OF the companies
is carried on separately and the compan-
tons. Consequently. the commission has
treated them az separate organizations in
this report.
| Following Is an extract from the
statement Of the growth of the plant
and reserve book accounts of the New
England Telephone & Telegraph com
pany. compiled from the annual re-
ports TO the stockholders:
Year. Plant Value Net Reserve.
| 1884 s & go6 a29 81 & 1Oebb a3