The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1920-12-18
TELLS OF RATES
Manager Of Bell Company Re-
Iates Phone Troubles.
Explains Recent Increase of
Twenty Per Cent.
BEFORE COOPERATIVE CLUB
Telephone Business in State No
Profitable.
Company Never Made More
Than z Per Cent-BenzeL

who heard r. ]. Benzel, general man
ager of the Southwestern Telephone
company present the woefu1 condition
of the company's finances and affairs
profiteering and excessive charges
which have been heaped upon it in
the past few weekS-Since the court
of industrial relations granted it a 20
per cent increase in rates. are still
wondering how the concern manages
to keep on its feet, financially, at all.
Business Not Profitable,
Benzel said that the Bell business in
Kansas has never been profitable, tho
from its very inception honestly
financed and managed; its securities
at all times issued for cash at par;
that in its entire history, from 1852
to 1916, dividends earned and PAID
had averaged 1.57 per cent on the cap
ital stock actually paid up in cash;
that at no time did the company earn
or pay more than per cent In any
one year, and only once did 1t do that.
He declared that the reason the
company does not have proper earn
ings is that the rates were too low IN
past years and at the present time.
These low rates, he said, were due TO
i'll advised and ignorant competlt1oh'
which has been recognized by all COM
rnunities as an economic waste The
teIenhone business is a natural monop-
DIV. and in lieu of competition, mas
hecorne one system regulated by the
state and federal commissions rms
regulation safeguards the pubic from
unreasonably high rates.
paid Out in Increased Wages
Pencil stated that all the revenue
derived from the socalled "Burlesoh
rates was more than paid out IN m
creased wages to the employees IN tne
state of Kansas during the time the
rates were effective, and since snen
further increases in wages nave
-nade further increases in costs OF ma
teriaI freight and taxes have been met
aud these latter increases are per.iio
inant-''therefore the necessity lot iui
Their increased rates 1ooos
ON an investment OF ABOUT -
many was not earning per S9'
terest by about $S5O,OO
ExpIains Reasonable Rate.
ga reasonable rate" he stated rs
ono which would produce sufrlclenI
return to attract the necessary capltai
For the business to meet additions anu
extensions to its plants. In APErL U
this year. the Southwestern Ben Ieie-
phone company, which operates ~
Kansas. Oklahoma, Texas, Arkansas
and Missouri and a small portion OF
Illinois, issued $25,00O,000 in notes
which cost the company ABOUT per
cent. Many of these notes were OF
fered for sale in Kansas towns ny Ran
sas banks. Anyone desiring 10 pur-
chase these notes. or STOCK IN .Ile tha+
pany, has had, and still possesses. that
privilege. Phe stock of the parent
company. the American Telephone and
TeIeRraph company. pays per cent
dividends and is selling below par.
Will Not Pay More Than Per Cent.
In speaking of Topeka rates. Benzel
stated that the rates in Topeka with
possibly one exception, were not raised
between 1902 and 1919, and the rates
RECENTLY approved by the court OF in
dustrial relations will not pay more
than per cent upon the money actu-
alIy invested and used in Topeka; that
wages and other expenses IN the 10
peka exchanges had increased more
than 100 per cent, and the rates, IN
Guiding the recent advances, had In
creased only 40 per cent.
From the facts which he had stated,
Benzel drew the conclusion that the
Southwestern company not only mas
not been profiteering, but has never
made a sufficient earning on its in
vested capital.
No Price Reduction, BenZel says. :
He stated that the company had
made application for the increases
just granted, last June, and altho the
prices of foods and clothing had de-
creased since that time, such de-
/ creases had not reduced the prices
which the telephone company was
compelled to pay for it's labor and sup
plies.
ION the contrary" he declared,
1.-THE prices on telephone labor and
material have steadily increased, and
! any decrease which has occurred in
J some few materials has been more
than offset by increase due to re-
i cent freight and tax advances"
J Benzel declared that he did not be-
, lieve that any decline in prices would
ever reach the pre-war leval on tele-
/ phone materials and labor, and GER
| tainly not within the next five or ten
years, tho pre-war prices were used In
determining the company's original
cost on which the industrial court
| had based it's recent grant of increased
rates.
. To Spend Million Dollars.
Defending the telephone service In
| Topeka, BenZel declared that 1t is not
excelled in any city in the United
States, and that the Southwestern
company, in order to keep pace with
the rapid growth of the city. and to
continue to furnish first class service
will spend approximately 100000 II
Topeka during the next year. The
money win be expended for centra
office building, equipment. and cables
The company must obtain about
| state of Kansas during the coming
year, and that this cannot be done
unless the company is permitted t6
earn a fair return upon its present
| investment.
If the basis of reproduction cost
new, less depreciation, for the physi
cal property valuation, with a fair al