Milford chronicle., 1920-10-15

Individual Line ...... S425 $50
4Party Line ......... SIS q
Multi Party .......... S.Z5 -
Extension Stations -. LOO IL
Service Stations .. Is Il
The multi party rate applies within ;
distance of two miles outside the Bas,
Rate Area. Beyond this there is a mile
age charge of 25 cents per month fol
each two miles, air line distance.
/ When asked for some information on
the new rates, Mr.. Gouchcr said
The revenue and expense conditions
/ Of The Diamond State Telephone Com
pany compel an adjustment of its rates
I for exchange service in such a way as 10
provide additional revenue sufficient To
paw the owners of the property fair
return on their investment.
THE revised rates are to be made ef-
fective December lst next.
NO change in the existing rates for
toll service will be made.
An understanding of the situation
may be most quickly reached b. con-
sideration OF the following facts
"On August 81 1920, The Diamond
State Telephone Company had outs,and-
ing capital stock 10 the amount of
S2000.0O0 That entire amount was
paid in cash at par for the outstanding
stock.
"On the same date it had interest
bearing Indebtedness to the amount of
S825,0OO. which represented cash which
had been advanced to it from time 10
time for plant construction purposes by
The Bell Telephone Company of Penn
sylyania, 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 $2,99S090.
"On the Indebtedness of SS25000 Just
referred TO- the Company has paid in
tcrest at the rate Of per cent. How
ever, it has not since 1908 paid a divi-
dcUd to the owners of the S2,O00,000 of
can'tal stock or any part thereof
In 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-
tipued 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-ilcrcas-
ing cost of furnishing p 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
by the Federal Government. the Net
Earnings for the year 1920 will, after
payment Of interest charges, amount to
only Approximately $4,000
1T will readily be appreciated that
this latter amount is entirely insufficient
10 pay a reasonable return TO the owners
OF the properly on their investment.
AS has been said before no dividend
has been paid to the owners since 1908.
The small amount of Net Earnings.
a a.ter payment of interest on indebtness
which have been realized during recent
years, have not been used for divi-
3euds; not only have they been entirely
insufficient amounts as related to the in
yestment, but it has been necessary to
put them Immediately back into the bust
7rSs for plant construction and exten
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
1any. The Balance Sheet as OF August
81, 1920, shows assets of $3,756,5l5, and
indicates, among liabilities, the capital
and other obligations of the Company.
The present low rate of earnings
of course a serious menace
% the credit of the Company. Further
and this is of primary and immediate
Importance to the users Of the service
I will, if longer continued prevent the
company from securing new capital for
he purchase of materials and equip
nent necessary to provide adequate.
and extending telephone
ervice which the needs of the people
II Delaware require. Ii should be
'orne in mind that a telephone COM
any is unlike the average business en-
erprise in the respect that it can never
tand still-can never conhne its opera
ions to boundaries and volumes fixed
y itself. In the operation of the aver
sc business II is possible at all times
. cut ones coat according 10 ones
10th, so to speak. The average bust
eSS man can take on as much trade or
ttempt as much production as his
ABILITIES and purse will permit. The
'lephone company, however. in serving |
le general public, is compelled to meet /
le public demand whenever. wherever G
nd in whatever volume it may arise. I
Again, telephone company cannot f.
and still Growth must be undertaken 4
herever the requirement for it arises h
furthermore, even II there were no in =
ease in the number of subscribers. new l.
I'd additional plant would be constantly
quired TO meet the increased and
langed requirements of present sub n
ribers, both at their existing locations y
I'd at points to which they may from y
ne to time move. This is lust one of the
spectS III which a telephone company
uSt be continually on the move towards
ant expansion and improvement. Ii
III be readily understood by every user
the telephone. There are numerous
her respects in which substantial and n
ntinual expansion and improvement are "
He'd for. although time need not be
zen to bring them out here.
In short, new money is required con-
lntly, each year. to keep pace with a.
bic demand That money has been
cured in the past entirely on the basis
the promise of the future. The
'ners have heretofore been willing TO
their money in the securities of the .,
amond State Company entirely on D
, basis that some day proper return
uld be made. Not only has the
ming of that day been continually
aged BY the increased cost of every -
ng which goes to make up the ail
nishing of telephone service, but
y II annr.aa r..n-n .-n...-A. Il | L