Middletown transcript., 1920-10-16

Extension Stations 90. 100 rs
Service Stations $50. rs rs
The multi party rate applies within a
distance of two miles outside the Base
Rate Area. Beyond this there is mile
age charge of Is cents per month for
each two miles, air line distance.
When asked for some information on
the new rates, Mr.. Bardo said:
"The revenue and expense conditions
of The Diamond State Telephone Com.
pany compel an adjustment of its rates
for exchange service in such way as to
provide additional revenue sufficient to
pay the owners of the property fair
return on their investment.
The revised rates are to be made eff
fective December lst next.
mo change in the existing rates for
toll service will be made.
IAN understanding. of the situation
may be most quickly reached by con-
sideration of the following facts:
ION August 81, 1920, The Diamond
State Telephone Company had outstand-
ing capital stock to the amount of
100000. That entire amount was
paid in cash at par for the outstanding
stock.
ION the same date it had interest
bearing Indebtedness to the amount of
$825,OOO, which represented cash which
had been advanced to it from time to
time for plant construction purposes by
The Bell Telephone Company of Penn
sylvania, Bell System corporation.
"As against these obligations the
Diamond State Company has property,
in the form of telephone plant used in
rendering service, which has a book cost
amounting to $2,908OOO.
ION the Indebtedness of $825,OO0 just
referred to, the Company has paid in
terest at the rate of 6 per cent. How
ever, it has not since 1908 paid a divi-
dend to the owners of the 100000 of
capital stock or any part thereof.
TN the latter part of 1919, following
the return of the operation of the prop
erty to its owners by the United States
Federal Government, the Company con-
tinued in effect the rates which had
heretofore been established BY the Fed
eral Government. Those rates, which
are now in effect, have afforded little
if any relief from the constantly increas-
ing cost of furnishing grade of service
which State such as Delaware requires.
"Since January of 1919 the Net Earn
ings of the Company, available for both
interest and dividends, have averaged less
than per cent on the actual cash cost
of the property and, despite the continued
application of the rates originally fixed
Earnings for the year 1920 will, after
only approximately $4,000.
1T will readily be appreciated that
this latter amount is entirely insufficient
to pay a reasonable return to the owners
of the property on their investment.
"As has been said before, no dividend
has been paid to the owners since 1903.
The small amount of Net Earnings,
after payment of interest on indebtness
which have been realized during recent
years, have not been used for divi-
dends; not only have they been entirely
insufficient amounts as related to the in
vestment, but it has been necessary to
put them Immediately back into the bust
ness for plant construction and extern
sion, together with other amounts OF
money which the Company has from
year to year been continually obliged to
borrow.
"The Company has recently had an in
ventory and appraisal made of its prop
erty, which shows a fair present value
of more than so per cent. in excess OF
the figures on the books of the Com
pany. The Balance Sheet as of August
81, 1920, shows assets of $3,756,515, and
indicates, among liabilities, the capital
and other obligations of the Company.
THE present low rate of earnings
constitutes, of course, serious menace
to the credit of the Company. Further
and this is of primary and immediate
importance to the users of the service
it will, if longer continued, prevent the
Company from securing new capital for
the purchase of materials and equip
ment necessary to provide adequate,
comprehensive and extending telephone
service which the needs of the people
of Delaware require. 1t should be
borne in mind that a telephone COM
pany is unlike the average business en-.
terprise in the respect that it can never
stand still-can never con6ne its opera
tons to boundaries and volumes fixed
by itself. In the operation of the aver
age business it is possible at all times
cloth, so to speak. The average BUSH
attempt as much production as his
facilities and purse will permit. The
telephone company, however, in serving
the public demand whenever, wherever
and in whatever volume it may arise.
Again, telephone company cannot
stand still. Growth must be undertaken
wherever the requirement for it arises.
a fhnH
crease in the number of subscribers, new .
and additional plant would be constantly
required to meet the increased and
changed requirements of present sub-
scribers, both at their existing locations
and at points to which they may from
time to time move. This is Just one of TIE
respects in which a telephone company
must be continually on the move towards
plant expansion and improvement. L
will be readily understood BY every user
OF the telephone. There are numerous
other respects in which substantial and
continual expansion and Improvement are
called tor, although time need not Be :
taken. to bring them out here.
In short, new money is required com
stantiy, each year. to keep pace with
public demand. That money has been
secured in the past entirely on the basis
OF the promise of the future. Tie
owners have heretofore been willing to
put their money in the securities OF the
Diamond State Company entirely s.
tne 6asis that some day = proper return
would be made. Not only In IL
coming OF that day BEEN coutf Io,iliv
delayed BY the increased cost u q ~ .
tn.ng wnicn goes 7? maaEe ~ ~