The New York herald., 1920-12-07
PHONE COMPANY'S
LOANS S28,5OO,OOO
Hearings Are Resumed on Ap-
plication for Higher Ser
vice Charges.

Resumlng their hearing on the appli-
cation of the New York Telephone Com
pany to increase It's rates. the p-State
Public Service Commissioners learned
yesterday that the New York company
is virtually carrying many weak sis
ters' in other Eastern States, while at
the same time contributing to the sup
port Of the parent corporation. the
American Telephone and telegraph
Company.
This was brought out by NJ. Maldwin
Fertig. Assistant Corporation Counsel.
from the conpany's own exhibits and a
cross-examination of II. A. Trax. chief
accountant for the New York Telephone
Company. Mr.. Trax testified to grand
total OF s2S,513.716 advanced by the
New York concern to companies operat-
Ing In other States in the Eastern terri
tory for construction purposes. The
lending company was to get a return on
this of six per cent, Mr.. Trax said. but
that return seldom has been Forthcoming.
One Of the companies mentioned. the At
lantic Coast Telephone Company OF
Maryland received $4,000. 900 I'm 1909.
not a cent of which has been repaid and
on which no interest has been collected.
he testified. The others have been able
to make occasional payments of some
sort.
Regarding the New York companv's
exhibit Of So2.0O0.oO0 Invested in stocks
and bonds. Mr.. Fertig showed through
his questioning of Mr.. Trax that this
vast sum was invested entirely In "sys-
TEN" companies operating under the
license of the Bell Telephone Company
owner Of most useful telephone pat
ents. Mr.. Trax said there was fair
fat lxt,t 4
mitted that the return might have been
larger had the company bought other
securities. such as Pennsylvania or New
York Central Railroad securities.
Mr.. Fertig wanted 10 know IL any
Of the companies whose securities had
been purchased were prosperous. Mr.
Trax said all the principal companies
were paying propositions. but a few Of
the smaller ones were not. On the
company's books nm expected return
Of : per cent was set down. he testi-
fled. but few of them realized that
much
Mr. Trax testified that the American
Telephone and Telegraph Company Is
now the owner OF the Bell Telephone
Company. and thus In control OF all
the company's securities that have been
purchased. ms shown by the New York
fled. these were all subsidiaries OF the
American Telephone and Telegraph
Company. and that that company. In
tho final analysis, is the owner, too, OF
the New York Telephone Company.
Going into the New York company's
exhibit indicating its revenue returns
for tho year 1920. the Assistant Cor
poration Counsel pointed out an item
Of s2.1s7.Ooo OF a<t,Ial earnings deducted
from the total gross revenue as re-
ported in the exhibit. This. he showed.
Is charged off as so much paid 10 the
narent company for the use of instru-
ments and other equipment provided by
Tho American Telephone and Telegraph
Company.
The afternoon session was devoted TO
consideration OF the New York COM
pany's expenditures. which. " IL alleged.
arc causing deficit Of $1,000 month
under the present rates Mr.. Fertg
poiu,ed out that one item was $4,000
for advertising and another OF S26o'0oo
was spent in campaign TO promote
nnblIc sentiment favorable TO an In
crease IN rates.
The hearing was adjourned until next
Monday ut 10 a. NJ.