Evening star., 1938-04-01
Walker Says Rates Could
Be Reduced by rs
Per Cent.
INTERNAL DISSENSION
OVER SOME PROPOSALS
Craven Criticizes Conduct of
Probe and Disagrees on
Recommendations.

a proposed" report of its special tele-
phone investigation staff, which sug-
gests powers for the commission that
would give it practical control of the
S. 5000.000,0 900 Bell Telephone System.
The report. drawn up by Commits
sioner Paul A. Walker, said the sys-
tenn could reduce its rates Is per cent
by eliminating unnecessarily high
costs"
Statements by members OF the
commission indicated internal dis
sension over some Of the more drastic
proposals Commissioner T. A. M.
Craven criticized conduct of the in
veStigation and said Il am unable as
yet to agree with some of the recon-
mendations in this report Chairman n
Frank R. McNinch emphasized that
the report was not in final form, but
was being studied for subsequent de-
termination"
In statement issued simultaneously
with the report, Walter S. Clifford,
president of the American Telephone
& Telegraph Co., which owns the Bell
System. said that If summary avail
able to him is correct, the report
presents much that is simply not true
and has been prepared with the same
unfairness that characterized the in
vesligation proceedings" A full copy
OF the report has not been furnished
him, he added.
Bell earnings have never been ex-
cessive. Mr.. Clifford continued, and
the suggestion that rates might be re-
duced 25 per cent by changing the
policies and practices Of the system
was absurd"
Pending delivery of the full commits
sion report to the Capitol, Mr. Walker S
findings were submitted to the Senate
Commerce and the House Interstate
Commerce Committees for study.
High Cost Held Unnecessary.
Commissioner Walker contended
rigid Government control of the tele-
phone industry was necessary to elimi-
nate monopolistic practices, and said
the proposed program would serve "the
best interests of the general public,
the telephone users, the stockholders,
the employees and the companies them
selves"
Mr.. Walkers report charged that
centralized control of all Bell System
activities by the management of the
A. T. g. T. in New York had enabled the
system to successfully evade State
regulation" making effective regula-
ton possible only through extension
OF F. c. c. authority
After urging the F. c. c, to correct
many OF the telephone company poll
cies already coming under its juris-
diction, the proposed report called
for action by Congress to give the
commission additional powers to:
l. Review, approve or disapprove all
Bell System policies and practices
promulgated by the central manage
ment group of A. T. & T.
2. Regulate the costs and prices of
telephone apparatus and equipment.
3. Review, approve or disapprove all
intercompany contracts
T. Regulate Bell System financing,
including sale of future stock issues
terms of loans advanced by A. T. g.
T. to associated companies, and ac-
QUESTION of securities in subsidiary
companies.
s. Limit the scope of Bell System
activities to the communications field
including authority to permit any
utility under F. C. c. jurisdiction to
use patents owned by others.
6. 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.
rs Pet. Cut Held Possible.
Mr.. Walker said the F. c. c. in
vestigation indicated that action under
these proposed powers to correct Ger
tain policies and practices of the
Bell System would reduce "unneces-
sarily high costs" resulting from them
sufficiently to make possible an ap-
proximate rs per cent reduction in
telephone rates without decreasing ex-
isting net earnings of the system.
He pointed out that reductions in
long distance rates and other charges
estimated to save the public nearly
100000 900 annually already had re-
suited directly and indirectly from
the investigation. which cost the Gov
ernment S1,500,000.
His report urged the F. C. C. take
further action under its existing
authority to:
l. Regulate depreciation charges in
cluded in operating expenses as a
basis for rate-making SO as to pre-
vent accumulation of excess deprecia-
ton 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 $l.050 per month each.
3. 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 30, disclosed that the more
than 200 corporations in the Bell
System. controlled directly and in
directly by the A. T. & 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
(See A. r. d r, Page A-4)