Evening star., 1938-04-02

activities to the communications field,
including authority to permit any
utility under F. c. G. Jurisdiction to
use patents owned by others.
8. Fix temporary rates for interstate
telephone service whenever it appears
that the return on net book cost
Is excessive.
T. Assess costs Of such regulation
against the industry being regulated.
Mr.. Walkers report also urged the
F. G. G. take further action under its
existing authority to:
/. Regulate depreciation charges in
cluded in operating expenses as q
basis for rate-making so as to pre-.
vent accumulation OF excess deprecia-
tion reserves by the Bell System COM
panies.
2. Force reduction of large payments
to executives under the systems pen
sion plan, which in 1884 was said
to have given nine persons an average
OF 81 050 per month each.
8. Require that dues for employees
memberships IN civic. commercial, pro-
fessional and social groups amounting
to $473,683 in 1880 be borne by the
stockholders and not charged to oper-
ating expenses for indirect collection
from telephone subscribers.
Largest Capital Aggregation.
The F. c. c. investigation, which
began in 1885 and continued until
last June 80, disclosed that the more
than 200 corporations in the Bell
System, controlled directly and in
directly by the A. T. e. T., Con-
stitutes the largest aggregation of cap
ital and resources that has ever been
controlled by single private company
at any time in the history of busi-
ness"
The investigators brought out that
the system controls between 80 and
80 per cent Of local telephone service
in the country; SO per cent of the
long distance wires including those
used for radio program transmission,
and also manufactures, through the
subsidiary Western Electric Co., more
than 80 per cent of the telephone
equipment in the country.
The report pointed out that operat-
ing companies buy their equipment
from the A. T. g. T.-controlled West
ern Electric at "artificially controlled"
prices which make up part of the
telephone rate base.
Excessive Reserves Charged.
Excessive depreciation reserves have
been built up through the income from
telephone users and used by Bell Sys-
tenn companies to finance new con-
struction, the report also charged,
thereby enabling them to obtain
source of capital free from the burden
OF interest or dividend requirements
on which they have claimed a return
to the extent that the depreciation
reserves exceeded the observed depre-
ciation"
Results of the investigation, Mr..
Walker contended, demonstrate the
necessity for adoption of long-range
national policy in order to
achieve efficient telephone service at
reasonable cost"
Although declaring he was unable
to agree with some of Mr.. Walkers
recommendations, Mr. Craven said he
did believe that in general the report
indicates the necessity for an improve
ment in the existing regulation OF the
telephone system" He added, how
ever, that "it is only fair TO recognize
that the telephone service in this coun-
try is, in general, excellent"
Mr.. Craven also said he felt more
could have been accomplished If the
telephone company had not been de-
MED the right of cross-examination
and rebuttal during the investigation.
He pointed out that he was not men,
Der of the commission during the in
vestigation.
Mr.. Clifford charged the investigation
was "one-sided from start to finish u