The New York herald., 1922-03-04
CUT IN PHONE Rates
OF 5 PER CENT. HERE
ORDEREDFOR APRIL1
Saving Of S3,OOO,OOO to Sub
scribers to Result From
Ruling.
3 REDUCTIONS IN YEAR
Public Service Commission
Finds Depreciation Claims
Are Too High.
SURPLUS OF S36,579,446
Must Not Expect Advances to
Help Meet Emergency Costs,
Is Boards View.
SURPLUS OF s36,579,446

Special Dispatch to TIE NEW YorK HERALD.
New York Herald Bureau.
Albany, March 3.
Reduction in telephone rates through
out the State. which will mean a saw
ing of about s3,oOo,ooO year to sub
scribers. was ordered to-day by the
Public Service Commission.
The cut is per cent. in New York
city and about per cent. in the rest
OF the State.
This is the thirtl reduction ordered
by the commission since its appoint
ment by Gov. Miller last year, and
reduces the wartime increases Of oS
per cent. in New York city by more
than half. Further decrease is ex-
pected to follow the downward move
ment OF prices.
The New York Telephone Company's
claims for depreciation are held to be
too large, and are not allowed. The
commission rules that the company's
entire schedule of expenses can be re-
vised downward.
The commission lays down the i'm
portant principle that the telephone
and all other utility corporations
should meet increased costs during an
emergency period rather than expect
to obtain full measure Of such increase
through advancing rates.
New Rates In Effect April 4.
April / is tire date set for the new
rates to take effect. and these will con-
tlnue until the commission closes Its
Investigation.
Tho commission Is OF the opinion.
says statement given ont with the
decision. that the rates nov put into
effect arc necessary at this time. not
only on account of the downward price
trend OF ell materials. the decreasing
cost OF money the daily readJustments
in the labor market, the effort toward
economy manifested by all private busi-
ness enterprises. but also because the
commission Is convinced that the sums
set aside for annual expenses OF de-
probation are largely In excess Of wha,
Is necessary and In consequence the
accumulated depreciation reserve IL in
creasing more rapidly than conditions
warrant"
The commission came TO the con-
clusion that the company's estimates OF
the rates OF depreciation are too high
and are not substantiated By the evi-
dence.
'The company-s depreciation reserve
states the commission, "apportioned TO
New York State now stands at s6s.-
59e.73e. whereas its total fixed capital
I'm New York State. including land and
Intangible items, Is s229,427,s13, pro-
ducing a ratio OF more than 80 per cent.
But when this company was brought
under the supervision OF the Public Ser
vice Commission twelve years ago the
ratio Of its depreciation reserve to fixed
capital was only 1917 per cent.
Depreciation Item Too High.
"rn other words. there has been ac-
cz,mulated through charges TO revenue
since 1919 more LnAn Sio"v'vVV oi utpie-
citation moneys that should have been
set aside out OF revenue prior TO 1910
and Is now presumably In the COM
pany's surplus. II must be clear that
depreclat ton rates which have enabled
the company In twelve years to make
up depreciation deficiency OF sl5.oo.oof
had been too high and should now b.
reduced. The company estimates the
necessary depreciation for 1872 TO be
az. 10000. On the fact presented we
believe $1,000, 900 Is sufficient"
In discussing the expenditure by the
company OF Saoo,ooo.ooo In 1922 for pub
licity and advertising expenses the
commission is inclined TO the belief that
the company In advertising the rates OF
TO act forth the attractlveness OF en-
ployment in the company's service or
to market the company's securities
should not charge the cost TO subscrib-
ers and states this expense should be
materially reduced.
The commission sets forth that in the
last twenty-five years the company has
made an annual return OF SIT per cent.
and that It's accumulation OF surplus
undivided profita) OF s3s57a.ti6 durins
the same period makes 4 apparent that
the company has been generously
treated In tho matter Of rates.