Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1919-03-10
VAIL URGES UNIFIED
TELEPHONE SERVICE
He Says Regulated Monopoly
Is Better Than Unregulated
Government Ownership

d
American Telephone and Telegraph
Company. in his annual report for the
! Bell system which was made public to-
DAY. makes another strong appeal for
nationwide universal telephone serv-
ice and appeals strongly for regulated
| monopoly rather than government own
ership. Attention is called to the pres
ent operation of the telephone lines by
the government but Mr. Vail explains
to the stockholders that the control is
not permanent.
Regarding the uniformed plan he says
| that 1t would be extremely unfortunate
if, with a pronounced public sentiment
In favor of II. wire system with ma
tion-wide. universal, comprehensive serv-
ice and complete utilization OF all the
facilities cannot be evolved from the
existing conditions. It seems paradox
cal that the Interpretation and applica-
tion of existing laws against restraint
| or trade should be an obstacle in the
way"
There Is little doubt" he says, "re-
| naming in the minds of the public but
that regulated monopoly is better than
unregulated government ownership, and
there IL no longer any extensive con-
viction that there can be effective COM
petition in the electric transmission of
intelligence"
Changes in the existing laws concern
ing control and regulation. competition
and combination are held to be neces-
sary, and Mr.. Vail closes with few
basic principles upon which such changes
should be built. The conclusion is that
similar utilities in territories economt-
cally determined, should he combined !;
should have an operating organization
shown to be efficient and economical.
and with their administration there
should be somehow combined by legsla-
tion the power. freed AZ far as possible
from political and class influence and
subject to reasonable review, Ito equlli-
brate capital charges, operating costs
and revenues"
The net earnings OF the American
Telephone and Telegraph Company for
the year were $54.293,016. Interest
charges were s1O.39i, ,694, and the divi-
dends at the regular rate of per cent
per annum were s35,229.69S. OF the re-
sulting balance $4,000, 900 were appro-
priated for contingencies and s3,67l,622
added to surplus.
The number of stockholders increased
more than $4,000 during 1918, and now
exceeds $4,000, the majority being
women. The average holding is thirty
nine shares.
The terms Of the contract with the
government are presented for the in
formation of the stockholders. The pro-
visions include emergency compensation,
efficient operation. full provision for
maintenance, depreciation and obsoles-
cence. the investment of unexpended
balances in the plant continuance of
employees pensions. disability and death
benefits and of contracts with the as
ISOLATED companies.
These provisions are for the protec-
ton OF the property. the service and the
art. The security holders are assured
OF the payment Of interest and divi-
dends on existing securities and securi-
ties hereafter authorized. and cSmpen-
sation by the Postmaster General for
such extensions as ne may require to
meet abnormal conditions.
Mr.. Vail describes the permanent
character of the Bell system and ex-
plains the gradual growth OF its trained
organization, Its methods and its plant,
and how It fifty embodies the develop
ment of the art and how II is unique
in extent and comprehensiveness,
For these reasons. he explains. the
first consideration in the arrangement
with the government was the preser-
walton and conservation of the property
pensation was quite a secondary matter.
He also emphasizes the "superinterest'
OF the public above the interests of either
the government or the Bell system Both
parties to the agreement were working
for common object. the maintenance
and continuance of an essential service.
hence the terry OF the agreement were
substantially ed by existing condi-
tions.
II Is shown that the extraordinary
rapidity of the increase in wages and in
cost OF material could not be met by
economies in operation. To provide rev.
enue against them a campaign of re.
adjustment OF rates had been started
during 1917 which was well under way
when the properties were taken over,
the total increase deemed necessary to
meet abnormal increase In expenses be-
ing sonnet thing under 10 per cent. The
necessity OF continuing this campaign
was fully set forth to the Postmaster
General The business policy of the Bell
system was eXhaustively discussed and
recommendation for compensation as
submitted to the President by the Post
master General was substantially in
accord with the Bell SYSTEMS proposal"
There is an absolute and immutable
relation between the total cost OF produc-
ton OF any cOmmOulty or service ana
the total costs of the factors or elements
which contribute to production" he as
serts. This sounds so commonplace that
II seems useless to state II. II would also
seem unnecessary to state that the price
at which any service can be continu-
ously sold is governed by tine cost at
which II can be continuously produced,
and yet the public have, without any
consistency with their individual prac-
tce in their other activities, persistently
dlsregarded these truisms and resisted
the application of them to charges for
the service of public utilities of neces-
sity."
Mr.. Vail presents diagram which
shows the rise in commodity costs and
wages, while telephone rates have re-
mained almost stationary, and relatively
10 prices OF commodities in general they
have decreased 80 per cent. About 12 per
cent increase in rates Is needed, which
appears almost negligible when COM
pared with advances in the cdst of other
commodities" he claims.