Evening star., 1932-09-24
COURT FIGHT BEGUN
BY PHONE COMPANY
ON 10 PER CENT CUT
Order Is Asked Restraining
Utilities Body From Effec-
tuating New Rates.
RULING ON DEPRECIATION
RESERVE ALSO ATTACKED
Directors Assert Earnings Will Be
Under 6 Per Cent-Hearing
September 20.

The Chesapeake & Potomac Tele-
phone Co. today applied to District Su-
preme Court for an order restraining
the Public Utilities Commission from
putting its 10 per cent telephone bill
reduction into effect.
The company also asked the court to
annul the commissions order for it to
reserve per annum, an order which
would have the effect Of making some
100000 to S35O,O0o additional per an
nun available for rate reductions.
Attorneys Hoover and Van Orsdel,
representing the telephone company,
presented the petition to Chief Justice
Alfred A. Wheat and he signed an order
requiring the commission to show cause
September % why the execution of the
commissions order should not be sus-
pended.
The company's bill claimed the pro-
ceeding on which the order was based
was really valuation proceeding, but
that no notice was issued for such a
proceeding and that the hearing was,
therefore, illegal. 1t said the figures
found by the commission for the value
of land and rights of way are lower
than those indicated by the evidence in
the case. No finding, the bill stated,
was made as to the amount allowed for
going value" although the company
introduced evidence to show that it was
S4.000000.
Deduction Item Scored.
The deduction of S6,OOO,OOO for de-
prec,ation should have been not more
than s3G00,0oe, the bill claimed The
return OF 6 per cent, fixed by the COM
mission, should have been not less than
per cent.
As to the depreciation order, the COM
pany said this matter is under control
of the Interstate Commerce Commits
sion and the local commission has moth
ing to do with it, and, therefore, its
order is void
The board of directors of the COM
pany at the same time Issued q state
ment explaining its stand in the con-
troversy.
1T is the opinion of the board of
directors and officers of the company"
the statement said, that compliance
with the recent orders of the Public
Utilities Commission relating to rates,
valuation, depreciation and other fun
damental questions would seriously
handicap the company in furnishing
adequate and satisfactory service to the
people Of Washington.
Recall Boom Times Policy.
THE Chesapeake & Potomac Tele-
phone Co, with its 5000 employees, de-
Sires to conduct its business in the in
terest of the public, not only for a tenn
porary period. but year in and year out.
1t has been operated and regulated to
maintain reasonable charges and earn
ings at all times.
1t did not increase its charges in
boom times. On the contrary it made
reductions in its charges and extended
ard improved its service in order to give
the public more service and better serv-
ice for the same or less money. There
fore, as its charges did not rise in good
times it does not seem reasonable to
reduce them merely because times are
less prosperous. This is the position
which is being taken by many public
utility commissions.
Our earnings are not at this time,
nor have they at any time been, excess
sive. During the past II years the earn
ings of the company have averaged ap-
proXimately 6l2 per cent on the actual
pany's books, which are kept in accord
ance with the system of accounts pre-
scribed by the Interstate Commerce
Commission. The earnings Of the two
year period 1930-31 are practically the
same as the 12-year average.
In common with most other bus1-
nesses, cur revenues and earnings have
been declining in recent months. Just
how long or how far they will continue
to decline we do not know. Based on
the first eight months figures, the COM
pany estimates that the earnings for
1892 will be less than per cent with
cut considering the rate reductions
which have been ordered.
Additional taxes have recently been
imposed on our business. Pending leg
islation will, if passed. still further in
crease our taxes. Taxes are an item
Of expense paid for indirectly by the
telephone user.
When, in these circumstances, the
commission orders 10 per cent reduc-
tion in rates, and with the implication
that the price of telephone service is to
30 up and down with the curves of busl-
ness. it is making an innovation In
regulation which, we believe, would be
as unsatisfactory to the public as to the
company.
THE company expects to continue to
furnish the people of Washington the
best possible telephone service and to
conduct it's business in manner con-
sistent with the best interest OF It's
customers, its employees and its stock
holders.
Want Public Confidence.
1--WE are glad at all times to explain
the facts about our business and we
fully realize that the stability OF our
business depends. upon public conn-
dence.
'The board of directors has followed
closely the progress of this case. Mem
bers of the board have attended hear
ings before the commission. We have
carefully considered the contents Of the
commissions orders. We have every de-
sire to maintain harmonious relations
with the commission, and it is with
regret that we reach the decision that
the terms of the orders are not in the
best interest of the company or the
public and that the company should
submit its case to the courts"