The Birmingham age-herald., 1923-04-01
HARRISON ASKS FOR
 COMMISSION SURVEY
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rom the municipalities to the public service commission boasted of the fact that the public service had set up the machinery that would guaran- tee these results to the people.
 We feel that the only way of de- termining telephone rate that $ far 10 the interest of the public and patrons of the telephone company, and at the same time fair to the telephone company itself, is to make an exhaustive and thorough valua- ton of this company, squeezing out all fictitious and inflated values that may be involved, and fixing a tele- phone rate based upon the actual finding and result of that valuation. Such a proceeding is doubly necessary when we consider that under the pulp lie service act 1t is mandatory upon the commission to fix q rate that will guarantee a fair return to the company. Certainly 1t fs equally ob llgatory that the public interests be safeguarded. by fixing fair rate to the public.
 If the procedure Is to be one of negotiating a reduction in the tele- phone rates, or, in other words, making such reduction as the tele- phone company is willing to give, then certainly such reduction should at least be equivalent to the in- creases In rates that have been giv=
  mission in recent years, which were given without any valuation what ever. Since wrote you on this sub Ject, the official representative of tho telephone company in this dis trict has given out & statement to the effect that the rate increases granted by the public service com mission wcre necessltated by increas- es in the salaries and wages of em- ployes, as well as increases in the prices of equipment and materials. If that be true. then the commission should determine in its negotiations Just what amount of increases In salaries was given. and what educ tions in materials and equipment and wages have taken place since tha time. and also the increased reve- nues accruing to the company in this district and state as compared to the increased operating cost; then fix a reduction in rates proportion ate between the Increased costs and the increased revenue. But even then, we say that such a procedure would be merely a step In the dark. We maintain that under the Ala bama public service act such q pro- cedure is not proper and correct that the only procedure is one -of valuation. especially in view of the fact that the machinery has been created and the revenues pr vided, both by appropriation from the state treasury and also by leyying of spe- ciaI fees upon all the utilities with which the public service commission can function and pay the cost of making a proper and fair valuation.
 We understand from the last an- nual report of the public service comm ssion that the utilities have paid into the public service commis- sion sufficient fees to cover the en- d ,1e .fa. md of the operation of the public ser vice commission for last year. We take it that these utilities are re- quired to pay these fees for the very purpose that such valuation as are required ofix rates should be made. Therefore, expense should be no bar to making this valuation.
 As pointed out to you in my first letter. it Is my understanding that the Southern Bell Telephone com pany is merely a subsidiary of the American Telephone and Telegraph company, which is the parent com pany; that the Southern Bell Tele- phone company is in effect merely the operating agent of the parent company in this district. In this connection I should like to point out to you some very interesting state- ments contained in the annual report of the directors to the stockholders of the American Telephone and Tele graph company for the year 1922. The report contains this statement; "The American Telephone and Tele. graph company owns directly or in- directly all the voting stock of IA associated companies, 7S per cent of nine others, and S1 5-10 per cent of two others"
 These associated companies com prise what is known as the Bell Sys- tenn, which includes the Southern Bell Telephone company; also the American Telephone and Telegraph company. known as the parent com pany, owns the Western Electric company. The report shows about 9S per cent of the voting stock of the Western Electric company is owned by the American Telephone and Tele graph company" and it is said that the Western Electric company las in effect become the manufacturing and purchasing department of the Bell System.
 Tine annual report above referred to reveals some rather Illuminating figures, which would indicate that the telephone business for the year 1922 has been by no means bad. Speaking of the Western Electric company, the report shows the sales billed by the company during the year 1922 aggregated $210,900,000, which Is the largest year on record. Of these sales s15S,600,000 were to the Bell companies. The com pany's floating debt was reduced during the year from s29,500,000 to 12,600, ,000"
 Referring to the Bell System, which includes the Southern Bell Telephone company the report shows the net income. after deducting all cost and expense, was $S6,622,752. Dividends paid for the year amount ed to S60, ,305,204. After meeting all expenses and paying a return on the capital used in the business (after deducting dividends), there remained as balance. earnings of s26S17,54S. The assets of the Bell Sys- tenn show total increase of $260,- 012,470 during the year. The book cost of the assets devoted to I earning a return on these outstand ing securities amounts to over s2.- 065,700, 900, while the actual value thereof is considerably in excess of this figure"
 Referring to the parent company itself, the American Telephone and Telegraph company, the report shows: "The company in 1922, after meeting all operating charges and making adequate provision for de- preciation and obsolescence, and for federal and all other taxes charge able against 1922 earnings had available for interest and dividends ss1,666, 440. Interest charges were s15,49s.ol1.Ss reduction of $4,023,- 0s717 from 1921. Dividends paid to stockholders at the rate of s9 per share amounted to $52,971,251.9S, an increase of s10.2s6.S4S.93 over 1921. Of the resulting balance there was appropriated for contingencies $5,- 100000, and the remainder, $S,19s,- 176.19, was carried to surplus.'
 Perhaps you have already studied this report. but it was new to me. It seems to me from this report, made by the parent company, the American Telephone and Telegraph company is the most gigantic interlocking cor poration in. Enc world and that its