The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1925-04-29
8 PER CENT
PROFIT IS
CALLED
FAIR
Four Leading D. c. Financiers
Give Testimony Favor
ing Company

Four leading Washington bank
ers, testifying today before the
Public Utilities Commission in the
rate reduction case of the Chesa-
peake and Potomac Telephone
Company declared that a arte of
return of less than 8 per cent is
unfair. A higher return would
prevent a reduction in rates.
Tha benkers were John Poole,
president of the Federal-American
National Bank; Eugene E. Tho1nn-
son, investment banker; Robert
v. Fleming, vice president of the
Riggs National Bank, md John
r. Edwards, investment, banker.
Per Cent Held fair
The fonr witnesses were intro
duced by the telephone company in
their effort to prove that the
present rate OF return, approx
mately per cent. is not too high.
The Commission has in recent cases
held per cent fair.
The witnesses were also used to
offset any possible influence which
the decision of Judge Rose, in a
recent telephone case in Baltimore.
might have on the Commission.
Judge Rose declared that a 6 per
cent return would not be unfair.
Clayton Asks Per Cent
William NICK. Clayton, represent
ing the Federation of Citizens AS
ISOLATION, cross examined the three
bankers. seeking to bring out that
the monopoly which the telephone
company enjoys and its utilization
with the American Telegraph and
Telephone Company should have a
material effect on the Commission
In establishing a rate of return.
Clayton contends for a per cent
return.
At tho opening of the hearing,
Dozier a. De Vane, Of counsel for
the company. introduced Mr.. Thoinp-
son. and asked hin what consti-
ttuted a fair return. Clayton oh
1ected. Chairman j. Franklin Bell
overruled him.
TbOmpsOn's View.
MY opinion, based upon knowl-
edge of other cases. is that utility
should DE entitled to earn 8 per
cent" Thompson declared. He said
II a utility carried less than 8 per
cent. the factt wtoOId have a bea~-
ing on bankers ia handling the
utility's securities.
rs it necessary" Mr.. De Vane
asked. ito earn 8 per cent to attract
capital and be sound financially
and be able to carry on business,
developing when. needed?"
Mr.. Thompson answered: Yes"
Commissioner Bell asked Mr..
Thompson whether the fact that a
company enjoys a monopoly has any
effect on those furnishing money.
Not altogether" replied Mr..
Thompson. but IT is taken into
consideration
A. T. & T. Credit Higher.
Commissioner Bell questioned Mr..
Thompson as to whether the local
telephone company, with its affilia.
lions with the A. T. & T.. was a
better risk than a corporation such
as the Washington Railway and
Electric Company without conncc-
tions.
Thompson replied that the A r.
& T. credit was higher, pointing
out, however, that the disposition
Of investors is not to look with
great favor on traction companies.
He pointed to steady decreasing
business for railway companies and
an increasing business for the tele-
phone company.
A question By Alley andeF Britton,
- counsel for the company, brought
a laugh when he inquired of Mr..
Thompson whether tie fact that a
company is under control of q com.
miss on is worse than a company
which has competition. Thompson
replied that the answer to that ques-
ton depended upon whether the
commission was giving the utility
fair treatment. H. said that in
recent years, some of the local cont-
missions have not accorded utilities
fair treatment.