Lower Telephone Rates for New York City

• Author: E.H. Outerbridge
• DOI: 10.1177/000271621405300106
• Published date: 01 May 1914
• Date: 01 May 1914
• Subject Matter: Articles

66

LOWER

TELEPHONE

RATES

FOR

NEW

YORK

CITY

By

E.

H.

OUTERBRIDGE,

Chairman

of

the

Committee

on

Public

Utilities

of

the

Merchants

Association

of

New

York.

In

1905

complaints

were

made

to

the

Merchants

Association

by

numbers

of

its

members

alleging

that

telephone

charges

were

exces-

sive.

The

association

thereupon

appointed

a

special

committee

to

investigate

the

subject.

This

committee

gathered

a

large

amount

of

data

including

the

service

rates

for

telephones

in

the

principal

cities

of

the

United

States.

A

great

diversity

was

found

to

exist

in

these

rates,

as

well

as

in

the

principles

upon

which

they

were

based.

The

committee

reached

the

conclusion

that

a

comparison

of

rates

without

knowledge

of

the

costs

of

operation

and

of

the

particular

circumstances

relat-

ing

to

the

various

localities

would

afford

no

sound

basis

for

testing

the

equity

of

the

rates

in this

city.

The

committee

therefore

entered

upon

negotiations

directly

with

the

telephone

company,

with

the

result

that

the

company

consented

to

give

the

committee’s

account-

ants

access

to

its

books

and

records

for

the

purpose

of

learning

the

relation

of

the

company’s

net

earnings

to

the

costs

of

operation

and

to

the value

of

its

property.

The

committee

further

stated

that

in

its

opinion

the

net

earnings

of

the

company

(including

dividends,

provision

for

depreciation

and

reserve

for

contingencies)

should

be

limited

to

10

per

cent

upon

the value

of

the

property,

and

the

com-

pany

accepted

this

as

a

basis

for

a

revision

of

its

rates.

The

committee’s

accountants

made

an

examination

of

the

com-

pany’s

books

covering

their

operations

during

a

period

of

sixteen

years

and

found

that

the

net

earnings

during

that

time

had

aver-

aged

between

11

and

12

per

cent,

but

that

during

the

year previous

to

that

in

which

the

examination

was

made

the

net

earnings

had

been

approximately

15

per

cent.

The

company

thereupon,

acting

in

concert

with

the

association’s

committee,

prepared

a

new

schedule

of

rates,

adjusted,

as

near

as

practicable,

to

reduce

their

earnings

to

the

stipulated

10

per

cent.

The

aggregate

amount

of

the

reduc-

tions

for

the

year

1906

was

about

$1,525,000.