Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1925-09-02
Phone Co. Hearing
Continued from Pace One


! attract this additional capital. 1t is
| not able to do this under present
rates; hence the request that pro-
| posed increases in rates averaging
! 1870 be approved.
MIR. Jones outlined the economic
reasons upon which he based his
contention for additional revenue.
| During the past 10 or IL years, he
! said, since the outbreak of the world
| war, the cost of labor i'll the tele-
| phone business has doubled, and the
| cost of materials used in telephone
! construction and maintenance has
increased, on the average, SOC. From
! this fact, and from other compar-
sons which he quoted, he said it was
| clear that telephone rates averaging
less than 1879 higher than they were
before the war have not kept pace
with the increasing costs of opera
| ton.
Notwithstanding that labor costs
| have not greatly increased since 1920
and that PRICES of telephone ma
| terials reached their peak in that
year and are now somewhat less,
there has been a marked increase in
| the average cost per telephone, he
! said. In explanation of this fact, he
said that prior to the war it had
been the practice of the company to
anticipate future needs by Installing
considerable percentage of spare
! plan" -switchboards, cables, etc.--in
| order to be able to fill at once any
application for any kind of service
desired.
Small Plant Construction During
War
During the war, the need of the
-;,a1
war service, permitted only a small
amount of plant construction, al
though the demand for service was
undated, and, Immediately after the
war, rapidly increased. The result
was that this reserve Of spare plant
was rapidly taken up by aerYice de-
mands of subscribers.
Each year since there has been not
only large amount of new con-
struction done, but considerable re-
placement of old plant by new plant
All this has tended to rapidly in
crease the average investment per
telephone. On January l, 1922, for
the State of Maine, it was $1449I
per telephone. on January l, 1925 it
had risen to $160.7S, by 1925 it is
estimated it will be $170.S4. by
1927 $1S3.50 and by 1928 $195S1.
III VI uSA 70 tONlluue us COnSlruC-
ton program. the Company must
have good credit or it cannot carry
on, or even maintain its present
standards of service, he said Good
credit requires earnings sufficient to
Fay operating costs upon a basis
that VIII insure good service; suf-
nclent to maintain the plant in
good condition and to cover its in
evTtable deprecia ton; sufficient to
pay the market rates of interest on
bonds and dividends large enough to
keep the stock well above par SO
that new stock will be readily sub
scribed for; and sufficient to pro-
vide an adequate surplus to insure
investors against loss by reason of
/ unusual condition The rate sched-
ule filed is calculated to produce no
more than these results, he said.
He went on to explain that in the
money market its securities must
I compete with other businesses seek
ing capital. To illustrate some
phases of this competition he said
that So electric light companies in
Massachusetts, Rhode Island and
Connecticut, earned net of 9178Go
in 1928 on average property of $685.
100000. and showed a three year
average of S.S761e; % gas com
panies, similarly located, earned
1880 in 1923, and an average of
1853 for three years; % electric light
| companies in New York, Pennsvl-
vania and New Jersey earned. in
1923, S,973f on property amounting
to $1,192,000, 600, and averaged S.4S2&o
| for three years.
Average Earningalpf Manufacturing
Companies
The United States Internal
Revenue reports showed that the
average earnings of manufacturing
companies, were 11.139o for 1920. and
lOl6%o for 1921; that the earnings of
construction companies for compar-
able periods were respectively IL. 500
and 1229ao and of trading com
panies, 1886 and 1860.
The combined electric light and
gas companies of Massachusetts,
with stock and premiums amounting
to >$159,000.000 earned an average of
11.1Sqo for dividends in 1928
The present position of the New
England Company Is to earnings, as
| compared with other telephone COM
panies throughout the country, he il
Illustrated by showing that in 1914
the average annual revenue per
telephone in New England was $3.50
higher than the average of the Bell
System, while in 1925 it was $1,000
per telephone lower.
Mr.. Jones said the proposed new
rates would increase the revenue in
Maine by about 100000 a year, an
increase of 1615 20, as against an in
crease of 20.5To for the Company as
a whole.
Chief Engineer Manson Testifies
tof
of the New Eng. Tel & Tel. Co,
testifying, said that the reproduction
cost, less depreciation, of the COM
pany's telephone property in the
State of Maine was s1S,o47,062. as
of April l. 1925.
The detail of this inventory was
presented by Mr.. Manson in the
form of seven bound volumes of
tabulated statistics.
From the inventory submitted, it
| appears that the New England Com
pany owns land in this state which
has an appraised value of S73,750,
and that the reproduction cost, less
deprecia ton, of it's buildings, is es-
tibated at s704,529.6S.
In addition to land at Augusta,
Castine, Lewiston, Portland and
Rockland, where it owns 1t own CEN
trail Office buildings, the inventory
showed land at Oakland and at Mil
ford, used as pole yards, and also
land on French street, Bangor APP
praised at $4,000 which is the site
of proposed new central Office to
be constructed by the company.
Mr.. Manson's estimate of the re-
production cost, less depreciation of
the buildings owned by the telephone
company in this state, was as fol-
lows: Building containing division
general offices and Forest and Preble
central offices on Forrest avenue