Evening star., 1938-07-01
TELEGRAPH RATE
DENIAL EXPLAINED
]. c. c. Asserts Companies
Failed to Prove Need
for Increase.
BY WILLIAM J. WHEATLEY.

for Increase.
BY WILLIAM J. WHEATLEY.
Holding that the domestic telegraph
companies had failed to provide SUM-
cient data to support 4 finding that .
fiat IS per cent rate increase would
not give them more than 4 fair re-
turn, the Federal Communications
Commission today made public q
lengthy opinion giving its reason for
rejecting the rate increase plea.
It was accompanied by q scathing
dissenting opinion. prepared by Com
missioner T. A. NJ Craven and con-
CURED in by Commissioner Norman g.
Case. In which 1t was held that the
evidence indicated the public Is con
fronted with the specter Of 4 bankrupt
telegraph industry. with all the disrup-
ton. lowering OF service and displace-
ment Of labor such . chaotic situation
implies" Danger of monopoly also
was cited.
The commission made the bare an
nouncement of its decision in April.
Commissioner Craven expressed be-
lief it is necessary to grant the In
crease at least for one year and in
the meantime reopen the hearing and
expand the inquiry 80 rs to include
testimony on matters that will enable
more logical decision than that
rendered in the ma jority opinion"
Rate Fixing No.Duty.
The majority opinion held the COM
mission Is under no duty to fix rates
for domestic telegraph service so all
carriers engaged therein may earn .
fair return on property devoted to that
service, or even make some profit on
their operations. The commission
said it would be purely . coincidence
II rates, reasonable As to one carrier,
should also prove, measured by the
same standards, to be reasonable to
another carrier.
In the Communications Act Of
1884" the majority opinion said,
there Is no recognition that all car
riers engaged in communication serv-
ice are necessary to care for the coun-
try's needs in this respect; there Is no
method provided for ironing out any
inequalities in earnings through ad-
justment in divisions on joint trafic
there is no provision for recapture OF
excess earnings OF strong carriers and
no mandate to fix rates 50 that the
carriers as a whole may receive sum-
cient revenues to provide adequate
service to the public"
Object to Exceptions.
The commission majority also found
fault with the requested increase, in
that certain special services were to
be excepted. These included press
messages, stock and commercial news.
telemeter, facsimile. leased wire and
greeting message services. The car
riers sought to justify this proposal by
the argument that the Post Once De-
partment gives low rates to periodicals
and other second-class matter.
There also was the suggestion that
the Western Union Telegraph Co.
might adjust its plant to bring it
down to the service demand. On this
point the commission said that II the
estimates of cost and value submitted
by Western Union are to be given seri-
Gus consideration, substantial adjust
ment should be made to relate the
plant in existence to the business
available. since the public may not be
required to pay rates necessary to earn
4 return on q plant far In excess Of
the needs of the service.
The record shows, the opinion
stated. that the Western Union plant
Is loaded to less than half its present
capacity during the peak traffic periods.
Question Of Overhead.
Conceding that the evidence indi-
Gates that the financial condition of
the Postal Land Lines System and the
Mackay Radio System is grave, the
commission said it was not shown
that the rate structure is primarily re-
sponsible for this condition or that
it would be remedied by an increase
in rates, even assuming there would
be no dininution in trafic handled.
However, on this question Of ex-
cess overhead, Commissioners Craven
and Case said the evidence shows that,
compared to the past. other operating
expenses have been added in the in
terest Of. stability Of employment in
accord with the Governments proper
corrective measures of conditions
caused by modern economic trends.
The dissenters also pointed out that
the evidence showed the message ca
pacity Of the largest petitioning car
riers were only twice as large - the
present business, which they held was
not an excessive margin when one
considers that In an emergency the de-
mands for instantaneous service on the
part Of the public may increase in one
day to the full capacity of the plant. "
Commissioners Craven and Case
conceded there may be an unsound
rate structure now prevailing. but held
this was not the fault Of the carriers,
but rather was due to the failure to
regulate destructive competition.
Here's q Short Sentence.