Eagle River review. [volume] (Eagle River, Wis.) 1890-1927, 1919-05-16
Next Step in Price Reduction.


The time has arrived for the read
justment of telephone rates. Price re-
adjustment is the absorbing and COM
polling problem of the day. At the
outbreak of the European war the
prices of commodities had main
tanned a relatively fixed relation to
each other and to the wages of labor.
The price system was normal.
The events of the last four years
have torn prices from their moorings,
until the present system is widely
different from the one to which we
were accustomed in prewar days.
The price of cloth and clothing in
September, 1918, stood at PSI per cent
of 1913 prices; farm products at 236
per cent; and lumber and building
materials at 15S per cent. The prices
of commodities which were fixed by
the government in July, 1917, and
thereafter were 185 per cent of 1913
prices. During the same period gen.
eral wages rose 70 per cent.
Curiously enough, the index num-
bers which showed these price
changes do not include the prices
which public utility companies re-
ceived for the services which they
render to the public. These indus
tries had their prices fixed, even in
the preWar period, a, fact which
seems to have been overlooked in the
public excitement over price fixing.
A comparison OF the movement of
public utility rates with other prices
which were fixed by public authority
will show at once that here is a set of
prices which are sadly out of joint
and which must be readjusted up
ward before the situation can become
normal and stable. No price system
is stable unless the price Of products
maintains a certain relation to the
prices of the labor and material used
in producing them. No price can
long endure which does not cover the
costs of production including a reas
enable return on capital invested.
The necessity for increasing rail-
road rates was realized soon after our
entrance into the war-and they were
increased by 25 per cent. Street rail-
way fares have pretty generally been
raised by at least 20 per cent. The
Postmaster General has made an in
crease of 20 per cent in telegraph
rates. Telephone rates, however,
have been increased by less than 10
per cent since the preWar period.
While public regulation has fixed
the prices which the telephone
companies may charge for their seryi-
ces, it has not limited the prices
which they must pay for labor and
material. 1t requires only common
sense to see that an increase of less
than 10 per cent in rates and of IS
per cent in operating expenses can
result in nothing but bankruptcy.
This is the condition which is actual
ly confronting the telephone compan-
les today.
The cost of materials used by tele-
phone companies will remain high.
The index number stood at 200 in
March, 1919. AS long as commodity
prices remain high, the cost of living
and wages will also remain high. A
raise in rates which would yield an
increase of 20 per cent in gross reve-
nue. is necessary to remove the gross
injustice of the present situation as
regards the telephone business.
The net increase of the industrial,
mercantile and miscellaneous corpora
tions reported to the Commissioner OF
Internal Revenue of the United
States increased from So, 1877, 618, 900 in
1913 to S6, 697, 100000 in 1916; to 49,
300, 600, 900 in 1917; to 81, 500, 900, 900 in
1918; and it is estimated will not fall
below S. 900, Oo0, 900 in 1919.
During this period, u national
dividend, which represents the in
come of all the people, including
wage earners, has increased from
s35, 600, 900, 900 to s72, 900, 600, 900. The
number of people reporting incomes
of So, 900 or more increased from $751;
598 to 697, O55, while their incomes
amounted to ST, 0,000,0 900 in 1917 as
against SO, 900, oOo, 900 in 1913.
In view of the fact that Is per cent
of all telephone revenues are paid by
the people who have made these pro-
fits, it is neither just nor reasonable