Capital journal. (Salem, Or.) 1919-1980, 1922-02-21


license revenue paid to The Amer
lean Company was constantly re-
ferred to as exacted from the pa
irons of the company and paid to
the parent company for no con-
sideration whatever, notwith-
standing that 1t was well known
to counsel for petitioners that less
than one-half Of this percentage
was allowed by the commission,
and that this allowance was based
on the actual cost of service rem
dered by The American Company.
Washington, Idaho, Arizona,
Colorado, Utah, Wisconsin, Mich
igan, Missouri, Arkansas, Louis
lana. Alabama, Georgia, South
Carolina, Virginia, West Virginia,
Ohio, Illinois, Pennsylvania,
Maryland, District of Columbia,
New Jersey and the Dominion Of
Canada have allowed the four and
one-half per cent or an equivalent.
Oregon, California, Indiana, Kan
sas, Oklahoma and Vermont allow
1t in part. None reject it.
"The Western Electric contract
has been accepted by every state
which has passed on it. In their
brief. petitioners abandon the
claim that Western Electric prices
are higher than those of other
supply houses, but maintain that
they ought to be much lower, and
that all relief should be denied
the company until the operations
of the Western Electric, which
cover the entire nation, have been
investigated in every detail and
its rate of net earnings ascertained
In order to determine how much
lower it might be compelled tC
sell. 1t is of no consequence tC
counsel that such an Investigation
would cost half million dollars
and would require two years OF
more time.
Testimony concerning farmer
lines consisted of complaints thai
the rates had been raised. 1t Il
interesting to know that thu
Everett Telephone Company, 81
highly lauded by counsel for pc
titioners, charges farmers thirty
three and one-third per cent NOR
than the highest rate for sucl
service in Oregon.
"The commission 8 allowance
for depreciation was attacked a
unscientific on the ground tha
no such calculation could be re
liable unless basedeon the histor
ical records of the property In
1 volved. Order 499 shows tha
this principle was recognized an
adopted by this commission tw
years before 1t was discovered
in the Chicago case quoted b
council.
Petitioners principal exper
admitted that five and one-hal
per cent for depreciation was
reasonable average rate for tele
| phone properties in the Unite
Estates and that six per cent wa
carried by the companies wit
which he was ye9nnected. Thi
commission has allowed an avel
age Of four and one-half per cen
l "Seven authorities are cite
and quoted in the brief of th
City of Portland in support of til
claim that a depreciation reserI
can not rightly exceed a certai
percentage. Not one of these al
thorities supports that contention
"The depreciation reserve ha
been constantly represented as
burden on the ratepayers. On tn
contrary, 1t consists of FUND
withheld from the stockholdei
for the protection of the propert.
, 1t has been contributed by tn
ratepayers, and is, and always wi
be the property of the ratepayer
The company is Obliged to accour
for it as such. The claim tn;
the reserve Is too large Is equi'
alent to complaint that til
company has withheld from Il
stockholders too large a propo
, tion of its past earnings in ordt
, to put them into a fund for tn
benefit of It's patrons.
CAT the same time that the r.