Evening star., 1924-03-14
URGES $750,O)O CUT
|NC.&P. CO. INCOME
Clayton Declares Telephone
Company Cleared Nearly
IS Per Cent in 1923.

The Chesapeake and Potomac Tele-
phone Company could stand cut
OF S750,000 year in it's revenues
and still earn reasonable return.
William NICK. Clayton. representing
tions. declared, in memorandum
filed with the Public Utilities Com
mission today.
The commission held public hear
ing on telephone rates two weeks ago.
but has been waiting for the written
arguments before deciding the case.
Chairman Bell said this morning he
would give the company time to
answer Mr.. Clayton's statements prior
to rendering verdict.
The federation asks that reduc-
tions in the tolls and charges of the
company be made to the extent Of
$3.50. 600" read the petition. This could
be done and the company continue TO
earn per cent rate of return through
out 1924 by proper and just treatment
by the commission of the depreciation
S2,3S9, 600 Profit Charged.
"It could be done and 100000 al
lowed to depreciation for the year
1924 if the company is held to 6 per
cent rate of return and the bonus paid
the American Telephone and Tele-
graph Company held to s125.000.
These estimates assume that the COM
pany has no increase in business dur
ing 1924 with resulting increase of
profits therefrom, and no economies
are effected in the management and
conduct of the company"
Mr. CLAYTON contends in his brief
that the company earned three rates
of return last. year. as follows:
Amount deducted FIR depreciation,
s771 900. or per cent on investment;
amount deducted for payment to the
American Telephone and Telegraph
f24S.0o0, or 1 II per cent on invest
ment, and amount available for net
'eturn. s1,370,000, or S.35 Per cent on
investment.
Combining these three rates of return
results in a rate of return for 1929 of
on valuation of SIG, 500, ,00o,' Mr.. Clay
ton asserted.
AS in previous rate cases, Mr.. Clayton
attacked the payment by the local com
pany OF Az per cent of it's gross re-
Ceipts to the American Telegraph and
Telephone for the rental of telephone in
Struments and for engineering, profess
sional and legal services rendered
A. T.. & T.. Owns Stock,
The federation representative asserted
that the American Telephone and Tele-
graph Company owns all of the stock
IF the local company. He added that
should the commission grant his pending
motion to make the American company
I party to the present case the commits.
SION could not allow the Az per cent
payment. which amounted to s24s.o0J
asst year.
Mr.. Clayton recites that the compahy '
now has in it's depreciation account
900, "or over 81 per cent of ,he
Fair value of the property as found by
The commission. The Company claims to
De operating 100 per cent efficiently.
The question occurs at once: How can
t do so with plant and equipment de-
preciated "a per cent?
.The truth is that no such deprecia,
ton exists or can be found, and the
depreciation set up is far beyond the
bounds set by the adequate deprecia-
iton named in the public utilities act
and exceeds by a large margin any
reasonable needs and requirements of
the company"
Hits Tax Deduction.
afr. Clayton then asserts that the
company treated its $160,000 income
tax in 1928 as an operating expense
He then says the commission ruled
hat income tax should not be SC
treated, but must be deducted from
The company's net returns and not
from the gross receipts.
nlr. Clayton takes the position that
since the telephone company has 2
monopoly, it should not earn more
than per cent return.
At present the telephone rates are
Unlimited residence service, IS p
month; limited service, 81 a month
and party line service, $3.50 a month
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