Indiana daily times. [volume] (Indianapolis [Ind.]) 1914-1922, 1921-10-19

COMMISSION
WANTS TO KNOW
Relationship Of Two Phone
Systems Operating in
Indiana.
CASE BEGAN AT MUNCIE

Demands that the Indiana Bell Tele-
phone Company give the public service
. commission detailed information as to its
relationship with the American Telephone
and Telegraph Company were made at
hearing before the public service COM
mission today. The telephone company
replied that the information asked for
is not material but that it will endeavor
to give the commission any information
which the commission may hold to be
material.
The demand was made by the city Of
Muncie, but the result of the hearing
is expected to apply as well to petitions
for increased rates in indianapolis and
other cities in Indiana. The question
Of the relationship between the two COM
panies has always entered into telephone
rate cases. In a Ageneral way the Ameri-
can company is practically the owner OF
the Indiana company.
ATTORNEYN JOHNSON
ASKS QUESTIONS.
Fred Bates johnson, attorney for the
city Of Muncie, In opening his argument,
set out the following questions which
the city wishes answered:
L The exact capitalization OF the
American Telephone ana Telegraph
Company.
2. What properties IL owns.
3. What its operating expenses are.
A. What sources of revenue 1t has.
5. Whether too much or too little is
paid for overhead revenues.
6. Whether too mucn or too little
IS paid for toll revenues.
He said that the city already knows
the following facts about the relationship
Of the two corporations: That the Amer
lean Telephone and Telegraph Company
at Muncie is still exacting per cent of
gross revenues from Muncie despite an
order Of the commission; that the salaries
of local engineer, auditors etc, are still
being paid as operating expenses at Mum
Gle; that the amount credited to a local
exchange such as Muncie is just the bare
cost Of the service, without any profits
to the very unit which originates the
business contrary to the order of the
commission; that the Indiana Bell per-
sists in aecruing depreciation both on a
higher value and at a higher percentage
than that allowed by the commission;
that the parent company is highly pros
porous and the subsidiary not making op-
Grating expenses.
CLAIMS TWO COMPANIES
HAVE STRANGE RELATIONSHIP.
Mr.. Johnson made much of the latter
statement He declared that the Amer
lean Telephone and Telegraph Company
is paying 9 per cent on $45G, 900 of
capital stock while the subsidiary COM
pany cannot pay operating expenses. He
pointed out that the subsidiary company
is paying the parent company AN per
cent Of its gross revenues.
He said he did not know that there is
anything improper in the relationship be-
tween the two companies but that he de-
sired information.
In replying in behalf of the Indiana
Bell Telephone Company, r. F. David
son, attorney for the company, took up
Mr.. Johnson's questions point by point
He said that the Muncie exchange paws
no money for tolls or toll service to
the parent company but merely acts as
collection agency between the public
and the parent company.
TELEPHONE ATTORNEY
EXPLAINS.
The AZ per cent Of gross receipts.
which has met with SO much objection
is paid, he said, for the use Of trans
mltters and receivers, for rights under
all the A I. & 7. patents, for the right
TO use new and improved apparatus, for
relief from the payment Of royalties, for
engineering and accounting, for research
work; for advice and assistance in financ-
ing, for cooperation for the benefit of
employees and for other things.
Fhe commission" he said, sis without
jurisdiction to hold the contract under
which this payment is made illegal or to
inquire into the cost of the service"
He said the number Of shares Of A T
& I. stock, their par value and dividends
paid is not material, but if found to be
so can be found in the annual report of
the A. T. & T. He added that it is a mat
ter of common knowledge that a 0 per
cent dividend is being paid. He declared
that Indiana is one of two States not
paying revenue to the owners Of A. T.
& T. stock.
What the A. T. s. lis making outside
OF Indiana is of no concern to the city
Of Muncie," he said
Continuing, he said, the question Of
whether the A. T. & T. is a holding or
an operating company has no bearing
on the case but that 1t can be found in
tho annual report of the company. He
reierred in the same manner to an analy-
sis OF operating expenses and revenues
and to the question Of what companies
outside of Indiana pay to the A. L. & 7.
In closing his argument Mr.. Davidson
pointed out that there has been a long
delay In hearing the petitions for in
creased rates and asked that an early
date for hearing be set Immediately. He
declared that the Indiana company is
running up a deficit of SS17 coo a year.
while the hearings are delayed. He point
ed cut that the petition for an increase
was filed LAST Nav