The Washington times., 1915-03-22
PHONE co.'s VALUES

.
The Maryland public service COM
mission has been conducting an in
quiry into the valuation Of the
Chesapeake and Potomac Telephone
Company's properties in that State.
The results of this investigation
have a peculiar interest to the tele-
phone users of Washington, because
this towns telephone exchange is
likewise owned by the Chesapeake
and Potomac. In fact the Washing
ton and Baltimore exchanges are the
chief properties of the corporation,
though it has a considerable network
of country lines.
Just what public service author
ity confronts when it tackles the
task of making an appraisal of such
a property as this, is well illustrated
in this Baltimore experience. The
Chesapeake and Potomac Company
is controlled by the Bell Telephone
Company of Pennsylvania, which
owns all or practically all it's stock.
In turn, the Bell of Pennsylvania is
controlled by the New York Tele-
phone Company; which in turn
is controlled by the American
Telephone and Telegraph Company.
There is a fight over telephone
rates in New York, where a
valuation has been made by
the regulatory authorities; another
in Baltimore, where a like valuation
is in progress; and third in Wash
ington, where, also, a valuation is
being made. 1t will be observed that
these valuations are all dealing with
the properties of the same holding
corporation. It is readily understood
that those properties have their
value in large part by reason of their
operation as great unity; yet they
cannot be valued as a unity, because
no State authority can deal with
parts of the property outside the
State.
But the Maryland authorities have
been pushing their fight, and its
present status gives a pretty good
notion Of the situation Washington
will at length confront, when its
valuation shall have progressed far
ther. The Maryland commission find.
that the properties Of this corpora
ton in Maryland are worth $11,250,
900. The corporations attorney.
say they are worth 1s,500,00O. Tha
is to say, the "experts" Of the two
sides, after careful investigation
disagree by only about Ga per cent
The agents of the company take th'
valuation fixed by the State authori
ties, add 64.44 per cent to it, ant
say that is the real valuation!
And yet the telephone corporation
and the State commission were abl'
to agree as to the valuation of tn
physical property and the rights o
way. The differences lay in othe
details. The physical propertie
were agreed to be worth $10,115,OOO
and the rights of way $34s, 200, 900
But after this, the company be
gan to pile up it's figures. 1t wante'
to add 1868 per cent to the physica
value, for "undistributed overhea,
COSTS" which means in a genera
way engineering and manageria
expenses that cannot be assigned t
specific sections of the system. The
the company wants to be allowe
$3,000,000 for the cost of the oil
Maryland Telephone Company
which it bought several years age
1t appears that, in effect, the pun
chase of this concern was by wa
Y of clearing competition out of tn
field. The State insists that its as
sets were not worth more than $500
900, and refuses to allow the $4,000
900 claim. Other claims of the telt
phone company make possible its re
markable claim that it's propertie
are worth Ga per cent in excess {
their physical value.
1t is, of course, perfectly plai
that regulation of vast interstat
properties, covering a whole cont
nent, is never to be achieved throug
regulation and valuation in sue
fashion as this. There is just or
way to settle these huge problem
l and that is for the United States I
do what the governments of otht
countries have almost all done: n;
tionalize the telephone and telegrar
= services, as departments of the pos
} office. That is the only solution tn;
E has proved satisfactory anywhel
r else, it is the one perfectly certai
I at length to he adonted here