The New York herald. [volume] (New York, N.Y.) 1920-1924, 1922-03-30
ASKS COURT TO HALT
new Phone Rates
New York Go. Says Maximum
Allowed by P. S. Board Is
Confiscatory.
Sa,ooo,ooo LOSS SEEN
Present Schedule Yields Only
3.55 Per Cent. Yearly,
It Is Said.
$4,000, 900 LOSS SEEN

The New York Telephone Company
yesterday brought suit in the United
States District Court to enjoin tire
Public Service Commission from put
ting in effect the new schedule OF
maximum rates to subscribers which
the telephone company states are con-
fiscatory and would ruin it's service.
The company announced through its
ice-president, J. S. McCullogh, that
it had been forced, for the first time
in the history of the company, to re-
sort to courts to protect its property
and to safeguard the large number OF
investors holding stock.
If the order is enforced, Mr.. Nc
Cullogh said. 1t would seriously ham,
per the company in adequately serv-
ing the public
The application was made bafore
Judge Augustus Hand. who ordered
both parties to the suit to appear for
argument in the United States District
Court this morning.
In saving telephone subscribers an av-
erage OF one cent day. the complaint
sets forth. tl.e new rates would at the
sama time cause loss to the company
OF approximately ss0oO.O0 a year Tbs
complaint continues that the cost cs
property used in furnishing intrastats
service in New York is $247, ,o23, anil
excluding allowances for franchises held
by the company the present fair and
reasonable value Is in excess Of
1929. 600 00O
The rates allowed by the Commission
prior to their new schedule of March 3.
the company asserts. yielded only 3.41
per cent. for the last half of 1921. ana
for the entire year 3.55 per cent. 1t Is
also stated that under the new schedule
the company would earn not more than
zoo per cent. on the cost of the prop
erty and 1.ss per cent. on the value.
The Commission Is accused of acting
in violation OF the company's constit,-
tional rights by ordering rates which
would confiscate the property. The
statement by vice-President McCul-
logh says:
rne rates charged for telephone SER
vice In New York State are not ade-
quate to produce a fair return upon the
value Of the property now actually used
In public service. The rates ord cred into
enect April ! by the commission wouId
be confiscatory. The telephone COMPANY
has $4,000 subscribers in New York
state. The proposed rates would save
the average subscriber about one cent
day. but In the aggregate would re-
duce our annual revenue at least s3. 600 :
900. Such reduction would create n
serious situation In the conduct OF our
business.
The commissions order OF March
3 was issued at a time when there
was pending an application by the COM
pany to permit 1t to adjust certain
rates to overcome the present conditions
OF inaoequate revenue.
THE telephone company has NOT
fully recovered from conditions arising
out of the war. We are stil engaged
In building up the system to meet the
constantly increasing demand for SER
vice. which continues abnormally heavy.
During the last two years we have ex-
pended s64.sSs,I90 in extensions and
additions to our plant In New York
State. This expenditure was necessary
to expand our system to meet the pub-
Hes growing requirements for new tele-
phone service. During the next few
years we will need some $4,000, 900 to
s50.000.000 annually for new construc-
tion.
I'VE must compete in the open mar
ket for new money with other Industries
mot regulated by commissions, which can
and do pay a high return upon the
capital invested In their business. Our
last borrowings cost us more than 6h
per cent. and our return has been sub
stantially less than that figure"