TIIE MORNING OREGOXTAX, "WEDNESDAY, FEBRUARY 22, 1922 ' 5. V TELEPHONE RATE 1 DENIED Protestants Said to Have Failed to Show Proof. PRESENT SCALE TO STAY Evidence Adduced In Kehcaring Is Held to Have Been Nothing1 but Needless Agitation. fOnttnued From First Page.) could have had no other object than to divert the attention of the publio from the fact that the commission had granted much less than the com pany asked. "The commission listened with in terest to dissertations on technical matters by a telephone engineer of undoubted and scientific attainments, who dwelt on the . advantages of equipment other than that used by the company. The responsibility, however, of prescribing the equip ment to be used by the utilities of the state does not rest on this com mission. The testimony of this wit ness was therefore almost wholly irrelevant and beside the issues. Accountant on Stand. . "Petitioners presented, through a publio accountant, whose standing Is known to carry weight with the commission, certain calculations pur porting to be income statements of tho Paiic company. On being ques tioned as to the basis of these state-L'in-nts, the witness, replied that he had prepared them on certain hy potheses dictated to him by coun sel, and that he disclaimed any re sponsibility for- their correctness. Yet, we find counsel, in their brief, presenting these statements as the testimony and conclusions of this witness. "A score of witnesses were put for ward to say that they opposed a.ny increase in rates. This was not nec essary. Every man of reason knows that no one wants to pay more for service. The witnesses are not more averse to paying higher rates than this commission is to ordering them paid. "Much was said by counsel about poor service, but the petitioners' own witness showed by test that calls were answered with a promptness possible only under efficient man agement. Inefficiency Jfot Proved. "Hours of argument and pages of brief were devoted to assertions of gross inefficiency of management, but the petitioners' only witness on this point testified that he had vis ited four exchanges in a single after noon, and basied his opinion on the fact that he found in use certain devices which he thought not the best for tho purpose. Futhermore, it was admitted by counsel 'that the stockholders of the company would be the first to profit by economy. "The 4 per cent licensee revenue paid to the American company was constantly referred to as exacted from the patrons of the company and paid to the parent company for no consideration whatever, notwith standing that it was well known to counsel for petitioners that less than one-half of this percentage was al lowed by the commission, and that this allowance was based on the ac tual cost of service rendered by the American company. "The Western Electric contract has been accepted by every state which has passed on it. "Testimony concerning farmer lines consisted of complaints that the rates had been raised. It is interest ing to know that the Everett Tele phone company, so highly lauded by counsel for the petitioners, charges farmers 33 1-3 per cent more than the highest rate for such service in Ore gon. Expert Is Quoted. the commissions allowance for depreciation was attacked as unsci entific on the ground that no such calculation could be reliable unless based on the historical records of the property involved. Order 499 shows that this principle was recognized and adopted by this 'commission two years Deiore it was 'discovered' in tne Chicago case quoted by counsel, Ihe petitioners' principal expert admitted that 6 per cent for depre ciation was a reasonable average rate ior leiepnone properties in thn irnitrt V States and that 6 per cent was r. ried by the companies with which he was connected. This commission has anowea an average of 4 pe cent. seven authorities are cited an quoted in the brief of the -city of Portland in support of the claim that a depreciation reserve cannot rightly exceed a certain percentage. Not one of these authorities supports that cuuiuiuion. Reserve for Protection. The depreciation reserve has been constantly represented as a burden on the ratepayers. On tha it consists of funds withheld from the stockholders for the protection of the i"""'' ! nas been contributed by .'m "?tepayers- ana is, and always ...i. iUa piuperty or the I payers. Duties Are Defined. the commission then proceeds to review the conditions existing prior to the regulation of public utilities and seeks to define the duties of the yuuiiu service commission. The commission then continue "Expenses, instead of falling, have uuniiuuu to increase. T,le comnanv finding that it was earning less than a Z per cent return, not enough to meet Interest charges, again applied io tne commission for. relief. After a thorough scrutiny of accounts an exhaustive, hearing and careful con sideration of the demands of justice m aji concerned, tne utility, Its e pioyes and its patrons, the commis sion issued order 689, now under re view. "It may be here noted that the net result of the various proceedings uuiiineo. is mat in the year 1921 tne t-aciiic company received a small er percentage, of return on its in ina.li in i3ia, Derore any ra-ie auvance naa been made. Thus, in iiis ui an increase Of , 25 per cent in the number of telephones in use, the entire effects of increased rates have been more than absorbed in aavancea wages and cost of ma tejials. It cannot even yet be safely assumed that the peak of cost of op eration in telephone service has been passed, for operating expenses per telephone in 1921 were 11 per cent more man in 1920. Clone Snrvey Made. we nave thus shown that fo more than two years prior to its last order the .commission had had the operations of the telephone company under close surveillance. Fourteen months mid been occupied with ae tual ; hearings and investigations. Many" or the most prominent weii-AiiviEcil attorneys of the state had -anearod. representing 25 cities and otttor civic bodies. One hundred witiiesstrs had been examined, includ ir.g ensmeers, accountants and ex pcrts of unquestioned ability; more than 200 exhibits had been received, including voluminous statements pre pared upon request: the testimony' covers more than 2000 typewritten pages; and the, expense to all par ties, caused by these investigations, together with the valuation, is esti mated at about one-quarter of a mil lion dollars; all prior to the last order. ' "Scarcely had these proceedings been concluded when the petitioners appeared, requesting that since the commission had failed to inform it self on telephone matters, its rate order be set aside and the company's affairs be investigated. Rehearing la Granted. "These petitioners had all taken part in the various proceedings and were at least partly responsible for any alleged lack of completeness In the evidence. Nevertheless, so seri ous were the allegations In the peti tions and so insistent were they in their assignments of error that the commission granted a rehearing, bas ing its order on representations that sufficient new evidence would be brought out to justify the time and expense of further consideration of this important subject. "It is right that the people should now be informed of the extraordinary manner in which they have been im posed upon and the time of their of ficials wasted. In spite of positive assertions of error in the findings of the commission, not a scintilla of evidence worthy of the name was offered in support of the contentions of the petitioners. In saying this we do not impugn the motives or the in telligence of the witnesses in the least. The responsibility for offer ing irrelevant testimony on matters at issue or on subjects already fully covered must rest on those conduct ing the case. Petitioners' Counsel Seored. Actions of counsel for petitioners have been characterized by an appar ent desire to confuse rather than to elucidate the issues before the com mission. Wholly extraneous matter was constantly dragged into the dis cussions. Instead of direct evidence were heard extravagant declartaions of what counsel were about to prove, or ha.d proved, although examination of the record fails to show that a sin gle one of their contentions was proved or even plausibly attempted. The rehearing was asked osten sibly for the' purpose of pointing out the errors in the conclusions reached by the commission in order 689, but the attacks of the petitioners were directed, not against that order,1 but against the evidence by which the company supported its claims at the hearing which led to that order. We thus have the strange spectacle or rehearing" devoted chiefly to ar- Euments against claims made by the company and already rejected by the commission. The maneuver could have had no other object than to divert the attention of the public from the fact that the commission had granted much less than the com pany asked. Evidence Is Disputed. The only evidence offered during the rehearing which, would tend to ustify any appreciable reduction in the total revenue of the company was the. opinion of a witness for petition ers that the total depreciation reserve accrued by the company to date is excessive. This evidence, when correctly In terpreted, thus shows the converse of its author's contention and illustrates the accuracy of the commission's esti mates. "Farmer line service was freely dis cussed at the rehearing and many of the users offered testimony as to the character of the service, and its value. determining the latter by comparison between-past and present rates. Such testimony, while instructive, lacks the essential elements of proof necessary to demonstrate that .the present rates' are unreasonable or inequitable. Coun sel made no attempt, either by exhib- ts or testimony, to show that the company's present schedule of rates was inherently excessive, or that his clients vere being made to bear more than their just proportion of the bur den. 'Discriminations have existed be tween communities as well as classes of patrons.. Communication from Oak Grove and Milwaukie to Portland has been permitted without charge, a 5-cent toll rate being required in the opposite direction. The latter charge was frequently evaded by prearrange- ment of calls. Subscribers in these towns thus received what was vir tually Portland service. They received it for less than Portland rates, though the cost of giving it was more, on account of distance. Milwaukie Wants Change. Milwaukie now proposes that it pay the Portland rates arid be includ ed in the Portland primary rate area, arguing that it is only a mile outside the city limits. Oak Grove amends by proposing that the area be extended to the Clackamas river. The Clack amas river is just outside the city limits of Oregon City, so it would be unreasonable to resist the claim that Oregon City, too, should be included with Portland. The size of the primary rate area, as well as the number of users in it. is an important ' factor in cost and consequently In rates. Inclusion of Oak Grove and Milwaukie would mean that the extra cost of serving them would be laid on the Portland rate area. The line must be drawn some where, and we can see no other place as suitalbe as at the city limits. All that has been said of Milwau kie and Oak Grove applies with even more force to the situation at Oswego. While other petitioners claim that Oregon is merely an outlying part of national system, and, being in backward state of civilization,. should not be expected to pay Its way, Asto ria goes to the opposite extreme and contends that its own rates should be fixed on a strictly local basis. It has always been the position of the commission that in telephone rates the state should be treated as a unit. Astoria Plant Rushed. '"The apparently high earnings in Astoria have been due to the fact that the plant is being used to the fullest possible extent, "completely saturat ed," In technical phrase, needed ex tensions and betterments having been prevented by scarcity of labor and difficulty of obtaining materials. The sudden expansion of the city's indus tries during the war added to the congestion. Temporary expedients have kept down expenditures and pro duced the appearance, for a time, of high profits. But good service cannot long be maintained with makeshifts. Permanent construction in Astoria, al ready far advanced, will so increase the total investment that the return will not exceed the most conservative estimate of a fair rate. . "From the beginning of considera tion of telephone rates, this commis sion has given special attention to the relations of the Pacific company to the American Telephone & Telegraph company, studying not only the nature and extent of services rendered by the latter, but also the. actions and opinions of courts and other commis sions relative thereto: "It is strange that the petitioners should even question the value of the financial assistance rendered by the American company, since they have themselves asserted that for years the Pacific company's net return was un der 4 per cent. It should be known to them, as it is known to all intelli ger,t business men, that no industry, unless it has powerful outside assist ance, can be financed, so as to sell its securities at par and meet its obliga tions promptly, on such a showing- of earnings. "From the evidence submitted in the preparation of Order No. 499, we vers able to make an estimate of the cost to the American Telephone & Tele graph'company of rendering scientific and financial services o its subsid iaries. No one has ver attacked the fairness of this estimate. A portion of the cost was assigned to Oregon on the basis of the number of station! in the state compared with the tota number served by the American com pany. This was found to be approxi mately 55 cents per station, on pre war prices. It is probably more now Pacific Company Subsidiary. "The manufacturing department of the American Telephone & Telegraph company is a subsidiary corporation known as the Western Electric com pany. f ., "The commission's engineers have made a careful study of the prices charged by the Western Electric and those of other supply houses on all comparable material. The result has been to show that the prices paid by the Pacific company are not only not higher, but are in most cases lower than those charged by the competi tors of the Western Electric. From the record and its investigations the commission believes that the Western Electric contract Is of direct advan tage to the patrons of the Pacific company. "The city attorney of Portland con ducted an inquiry into the nature of the service rendered to the patrons of the company in that city. A few witnesses gave clear and convincing evidence of unjust treatment or un satisfactory service, but the number was so small in comparison with the vast number of subscribers in the state as to furnish convincing proof that the great majority of telephone users find the service reasonably good. "That the rates have not been raised beyond the ability of more than a very few of the least benefited users to pay is shown by the effect on the number of telephone patrons. In the six months following the estab lishment of the present rates the number "of "telephone users in the state decreased three and one-half per cent. Beginning with September, there has been a net gain each month. "This evidence, when correctly In terpreted, thus shows the converse of its authors' contention and illustrates the accuracy of the commission's estimates." MANY PHONE RISES SOUGHT First Application of Pacific Com pany Filed In 1911. SALEM, Or., Feb. 21. (Special.) Today's order handed down by the public service commission in the Pa cific Telephone & Telegraph rate case is, in reality, a consummation of investigations and hearings dating back for more than ten years. Hear ings during that period totaled 53 days. The last hearing, held last summer, required 35 days, with 3SC exhibits and more than 7000 pages of typewritten testimony collected.. The first application for 'an in crease filed by the Pacifio Telephone & Telegraph company was under date of January 1, 1921. This application sought to establish rates in excess of those in effect on that date. Since that time several applications have been filed by the company and as many orders have been issued. LUMBER PARTY IS FETED GRAYS HARBOR CITIES ENTER TAIN EASTERN RETAILERS. Luncheon Served at Hoquiam and Banquet in Aberdeen Depar ture Taken for Portland. ABERDEEN, Wash., Feb. 21. (Spe cial.) Gray sky, with patches of blue, a little sunshine and some rain greet ed 69 persons, 30 of them women, com posing the retail lumbermen's party from New York and Massachusetts who arrived on a special train of seven coaches over the Northern Pacific railroad this morning. They were in Tacoma yesterday and having remained until after midnight at a banquet, it was with much reluct ance they left their rooms this morn ing at an early hour to tour this part of the state. At the hotel the women of the party were met by Mrs. Charles Ewart and Mrs. W. B. Mack, who took them in charge, going first to the Grays Harbor Country club, where luncheon was served, and late in the afternoon to Cosmopolis for tea at the residence of Neil Cooney. The men were met by a committee of lumbermen of the harbor cities and taken to the-Red Cross building where an exhibit of lumber was inspected'. Later they were taken on a tour through the mills and entertained at luncheon in Hoquiam. The Hoquiam luncheon was served at 12:30 o'clock in community service hall under direction of the service staff and a committee of Hoquiam lumbermen headed by C. H. Cunning ham of the Northwestern Lumber company. . A banquet at the Lafayette hotel, Aberdeen, starting at 7:30 P.M., completed the harbor . programme. after wlgch the party was to leave for Portland. Boys Rescue Drowning Playmate. ABERDEEN, Wash., Feb. . 21. (Special.) Three small v boys were playing on the banks of the Wishkah river Saturday afternoon when one of them fell into the water. The other two did not run away, but by quick work managed to save him from drowning. Afraid to take, him home, they built a bonfire at the river bank and dried his clothing. In the meantime someone had tele phoned mothers of the boys and two of them rushed down from the homes on the top of Dabney hill, creating much excitement The informer had told the mothers the boys had been drowned. . Tenino Mill Resumes Operations. CENTRALIA, Wash., Feb. 21 (Spe cial.) The shingle mill of C. E. Bus sell at Tenino resumed operations yes terday. The plant has been shut down over a period of several months. Oregon's Best Coal Southport. a sack. 75c. Bdwy, 70. Adv. Try Orpheum matinee today, 15-25-50-Ad. PHONERATERD LI is lie ill Mayor Baker Declaces Order Defies People's Rights. . SYSTEM OR LAW WRONG Decision ol Public Service Body ' Held to Be Monstrous by Head , ot State Federation. "We went to the bat In what we believed was S- just cause and If we could not convince the public service commission that an increase In tele phone rates was wrong, the public will have to pay the bill or elect some other procedure," was the com ment of Mayor Baker yesterday when the fact became known that the com mission had not granted relief to patrons. -He and H. M. Tomlinson, as sistant city attorney, who had direct handling of the case, were greatly surprised at the decisien, contending that evidence sufficient to justify ana sustain lower rates was submitted during the long hearing. . "I felt that the city of Portland was Justified in all that it did in attempt ing to bring about readjustment of telephone rates and I still feel that way, regardless of what the mem bers of the state public service com mission may say," said the mayor. Public Has' Right to Know. "When the telephone rates were in creased the public demanded to know why. We are the representatives of the people of -this city and it was our duty to make this demand on the public service commission. Further-: more, it was their duty to tell us and show us, and tell and show the public, why the rates should be in creased. . It is my belief that is what the public service commission is for. If it is not, I cannot understand why we should have a public service com mission. . . "If a city council cannot make a request for information from the public service commission, or contest a decision of that body, there is something wrong with the system, or the law, because to have it otherwise is nothing more nor less than autoc racy. ., . Cause Believed to Be Just. "We went to the bat in what we thought was a just cause and If we could not convince the commission that an increase in telephone rates was wrong, the public either will have to pay the bill or elect some other procedure. ."Personally, I think It would be much better for the commission to explain and defend its course in this case thap .to attack other bodies that in good faith have questioned tne commission's action. ' ' "All I care to say at this time,' said Mr. Tomlinson, "is that evidence sufficient to Justify lower rates, and which would have sustained such decision in the courts, was submitted to the state commission during the long hearing. Personally, I was great ly surprised at the findings, in view of the evidence." Decision Branded Monstrous. "The decision Is monstrous," said Edward M. Cousin, who appeared In the case for the Oregon telephone federation. "This being a rehearing, the commission could do only two things confess erroneous findings of fact 'and conclusions of law in its order of February 28, 1921, or find from the evidence adduced at the re hearing that its former record was incomplete. There was' a mass of substantial affirmative evidence on both these propositions. It was shown that the service was inadequate and insuffi cient, and not worth the price charged for it; that the valuation of the company's property was fictitious and exorbitant; that the operating expenses included enormous exac tions for depreciation, the unex pended portion of which had accrued until millions of dollars had accumu lated; that other operating expenses including contributions to parent companies were extravagant; that the company's showing consisted largely of figures based upon esti mates and assumed calculations; that the company had stifled competition and created a monopoly, and that the rates had been increased beyond all reason and were higher than pre vailed In other cities of the same class served by the Bell system. Irregular Practices Charged. "Much evidence disclosed unjusti fiable relationship. between main-line and party-line rates, and so many complaints of individual discrimina tions and irregular practices ap peared that the commission could not hear them,, all. Farmer-line rates were shown to produce 150 per cent more than the highest residence rate in the exchange with which, the line connected. "All these and many more items tended to show that the decision was improperly founded and should be modified, but the commission ap parently has ignored them all, re pudiated its own responsibility to examine the company's affairs and left the burden upon the public to gather facts and evidence without any official assistance." Lawrence A. McNary, who was counsel for the State Hotel 'associa tion, said: "It may be that the rates contin ued and assured to the Pacific Tele phone and Telegraph company do not produce more than a reasonable re turn upon the investment in this state, as that investment and the op eration of the company, are revealed to the state public service commis sion. But when it is understood that the American Telephone and Tele graph company is the owner of the greater part of the stock of the local company, and that the former is pav Insr dividends of 9 per cent or more 11111 it Mrs. Esther Short The many friends of Mrs. Esther Short, one of Portland's most prom inent and successful teachers of shorthand and well known along the entire Pacific coast, will be Interested to learn that she has recently acquired an active Interest in the NORTHWESTERN SCHOOL. OF COMMERCE (Link'3 Business College, expanded) as Secretary and Principal of the Stenographic and Secretarial Departments, . ac cording to an announcement made by Charles F. Walker, President Her observation already con vince her ; that the possibilities here are greater than she has had in any similar connection, because of the morefciature and better type of students comprising the enroll ment. ; per annum, it is apparent that the stockholders were in fact already re ceiving adequate returns. "However, the decision, as indicat" ed in the published report, is not a dignified writing. Decision Held Justifiable. , C. E. Hickman, divisional commer cial superintendent of the telephone company, said . he did not see how the order of the commission could have been otherwise than to uphold the previous rate schedule, or to have increased rates. . ' "We really are entitled to 8 per cent return on our investment, but by the commission's . order, reaf firmed, we get but 4 per cent," said Mr. Hickman. T RESERVES ORDERED TO TRAIN NEAR TACOMA. War Department Announces Plans for Military ' Maneuvers Next Summer. PUGET SOUND BUREAU. Tacoma, Wash., Feb. 21. Qamp Lewis will become this summer one of the im portant camps for the training of the organized reserves and the reserve officers' training corps and for the citizens' military training corps. according to announcement just made by the war department The State camp at Murray, nearby, prob ably will be the gathering place for the national guard units of the state. The military training camps of next summer will embrace for the first time all of the components and agencies of the army of the United States as contemplated under the na tional defense act, said the announce ment received at Camp Lewis. The war department plans, which are contingent on passage of appro priations by congress, provide tha: approximately 160,000 members of the national guard, 30,000 reserve of ficers and specialists, 10,000 student members of the reserve officers' training corps and 27,000 civilians will undertake this field of training. The training will be under the su pervision of the 9th corps area com manders. Practically all troops of the regu lar army will be engaged during the summer in work pertaining to In struction and administration at these camps. Officers and enlisted men will assist in the training at all camps. It was further proposed to use 900 reserve officers as instructors at the civilian military training camps, pro vided that number of qualified offi cers volunteer to serve a 30-day pe riod in addition to their 15-day train ing period. Camp of 15 days' duration will be held for the national guard of the states comprising each corps area. Emphasis will be laid upon the fun damentals for small units, as a rule, no maneuvers will be attempted tl...vai all fo.A nnri irenoral n f f i . ilUWC.C, IL. . , . . . . ...... C - - v... cers will participate in at least four NEW SHOW TODAY Mabel Normand IN MOLLY-0 COMEDY LOVE TEARS ROMANCE ADVENTURE Today Thursday and Friday Only in, 8 -vi SV. JSL V, , ' - - Ann nil ftm iMniiiiiifl i iSw mum 12,000,000 Oysters THe Toke Point Oyster Co. have over twelve million growing oysters on their . beds in Willapa Harbor. This tremendous number of bivalves is the reserve that makes it possible to supply your table with fresh "Toke Points" daily. The Toke Point Oyster Co. have holdings valued at over one and one-half mil lions of dollars. This huge investment was made in k the firm belief that West ern folks should have fresh, pure sea food. Toke Points Are Oysters Supreme Ask for Them Toke Point Oyster Co. Pittock Block, Portland halfday terrain exercises without troops. These exercises will furnish tactical problems appropriate to the respective grades of., those partici pating and will deal with assumed war situations for the units to which the officers belong. John M. Stahl Production "THE SONG OF LIFE" An interesting comedy drama from life a tory of dishes and discontent. Richard Headrick Gaston Class Georgia Woodthorpe Grace Darmond and a big cast. Coming Saturday THEODORA The Greatest Spectacular Picture The World Has Ever Known! Daxmond a THE-SONG OFUFE; 7 YOU ONLY. HAVE 2 DAYS MORE TO SEE LON r .new . AkjL 1.3V : In His Latest and Most Thrilling Production "THE NIGHT ROSE" h f Blue Mouse OCpl Concert I Mats. I Orchestra COMING SATURDAY "THUNDERCLAP" ANOTHER 'BIG WM. FOX SUPER-SPECIAL., STARRING MARY CARR I'DBDBQgOi The Oregonian publishes practi cally all of the want ads printed in the other three Portland papers, in addition to thousands of exclusive advertisements not printed in any other local paper. . 9 I Y XJ The Prodigal Son Returns Home! BUT THE DAUGHTER; WHAT ABOUT HER? This age-old, yet ever new question, is power fully presented in Directed by TH0S. H. INCE NOW PLAYING With an all-star cast including FLORENCE VIDOR LLOYD HUGHES THEODORE ROBERTS MADGE BELLAMY Other attractions including KEATES AT OUR ORGAN HO 103.2 h