South Bend news-times. (South Bend, Ind.) 1913-1938, 1922-06-07
FORCES ADMISSION
PUBLIC MUST PAY
FOR BAD JUDGMENT
Appraisal Engineer Declares
Double Cost Service Is
Saddled on City.

Saddled on City.
Because bad business judgment |
may have permitted two competing
telephone companies to exist in South |
Bend. and then one concern absorbed |
the other two, after which the two
systems continued 10 operate. pos
sibly at a double cost, the public
must pay the freight.
This was substantially the basis OF
argument adopted by B. @. Haistead. !
appraisal engineer for the Bell sys
TEN. star witness for the company |
in its present hearing for a huge in
crease in rates. Mr.. Halstead's dec /
laration came after Mayor Eli F. |
Seebirt had propounded a soaring
cross-fre Of questions 10 ascertain [
the experts views on why replace |
ment costs. valuations and the like
had been placed on two parallel, or
as the city puts 1t, two duplicate
systems.
IN your Judgment" asked the /
mayor Of Mr.. Halstead, as It fair 10
the citizens Of South Bend and +
Mishawaka 10 be asked 20 pay for /
the poor Judgment Of business men, |
made at a time when there was no
service commission, resulting in alb
sorption Of two concerns 20 stifie /
competition ?"
Because both systems are being
used, there should be a return on
the investment" said Mr.. Halstead, /
lin substance, land therefore heavier
rates"
Pay For Management.
Mr.. Seebirt apparently did not care
for the witnesses evasive answer and
pinned him down further by asking /
II 1T was his opinion that citizens
contemplating coming &c South Bend
should pay a high rate because Of !
acknowledgement by a group OF bus
mess men" He was answered af- /
firmatively.
Then the mayor began TO assume
a few points. Referring to the par
allaling Of wires and poles and con- /
Quits Of the manual and automatic /
systems, Mr.. Seebirt asked:
suppose. Mr.. Halstead, that not
Just two systems were taken over, /
but that there were six competing /
lines absorbed Then would you as /
an expert declare it TO be fair 20 the
citizens Of this community TO ask
them to pay for a return on an in
vestment which included duDlica-
ton of six parallel lines?'
"Somebody Must Pay"
Again Mr.. Ealstead answered that
II all the lines were in use, that
somebody would have to bear the
brunt.
And again the mayor wanted to
know If 1t was the experts opinion
that the citizens coming to this city
should bear in mind as an unfortu-
nate circumstance that a situation
over which they had no control that
they should be forced to pay high
telephone rate If they wanted serv-
ice.
Although not specifically stated. |
the Issue raised seemed to be that
the sins of the past generation had
been visited upon the future. The
justification for this attitude. Mr..
Halstead said. was that cheap rates
befJ-e 1916 must be amortized to
show a return on the investment
today.
Previous to this bombardment OF
questions which would have dis
com1ted a less evasive witness. Mr. /
Seebirt started on a different line.
Admits Service is Poor.
The mayor wanted TO know If
there we're not more opportunities
for trouble by using the automatic
and manual systems IN the exchange
area than If only either the manual
or automatic exchanges were used. |
II took Mr.. Seebirt at least six ques-
tions before the witness was willing
10 answer that such a condition
might exist. but he qualified his an
swer by adding that there was no
reason why good service could not
be obtained under that dual system.
The mayor examined the witness
on the inventory submitted. Mr.. /
Halstead was asked III the years
from 1915 10 1920 during which /
perlod Of time the inventory COW
cred had not been the highest point
from price view point speaking c.
business conditions generally.
Proceeding from that general con- !
clusion 10 the specific. Mr.. Halstead /
m response to sharp examination by
the city executive which was pune
tured with scathing sa- ;asr.c COM /
ments. declared telephone cOnstruc-
ton costs had not raised. because
the Bell bought their materials from /
the General Electc CO. AID had 1
been looking for a price increa7t in |
materials and had bought heavily
I'm anticipation.
Then Mr.. Seebirt attacked the
witnesses testimony that equipment /
could be purchased from the Wes-
tern Electric CO. more chcar.y than I
IL could from other concerns. Mr.. /
Hals-ead said that this was inlpos- I
sibie because examination Of list
prices Of other electrical equipment .
concerns showed j high r price than /
those Of the General Electric Co, .
an organization controlled by the A 4
T. &. T. Co which also owned the I
Indiana Bell system.
The mayor then ripped UP this
statement and showed by Inference 3
that had outside concerns a chance I
10 compete in the detr'csl market /
that lower cos OF such equipment I
might have been obtained.
The hearing was enlivened when I
the mayor wan-ed 10 know why IN (
used equipment had not been de- (
Quoted from the inventory valuation /
and by the lack Of personal 17owl- /
e6ge OF Mr.. Halstead on this point
Z p Ferris chief examiner