FEBRUARY 11. 1954 A uiiiiiiasmimission

Continued from page 1

mg L, B. Macmillan. The sbritra- iaon baud Vlhoee findings were "mowed in title Commiulon re- pon comprised Messrs. A. Belcner. F. W. Curtis. and It 5. P, Jardine.

Comrnlldon leport rollowing are excerpts from the re r

D0

"At the outset. it should be said that members of this Commission ,”)recl.ltl'ae the ,importance of trade Unions in industry and mninesa and the many benefits which. in the past, they have secured for the employees. We also feel that they Nlll continue to be pssential in the future and tha: wlTl'l0UT. them the cause of the ..mpioyee would rapidly deterior- ate. For one reason we welcome the presence of Union Repre- gentatives at this inquiry.

"Again. we feel that we should say that while our duty in this inquiry h to confirm. reverse or vary the M'bltrator's award. the use before us is wholly different from that before the Arbitration Board. It was called upon to arbitrate only between two oppos- ing parties while this Commimiori has to deal with the matter in the light of representations not only of The Union and,'I'he Company but of the general public as well.

"We feel. therefnrn. that the- matter shmidl'he aprrroiiched by A ronslderatlgn of the following questions. namely: (1) Are the employees in need of A wage in- crease. and if so how much? :2) Is The Company in a position to meet the added cost of a wage in- crease out of revenues to be d--- rived from the existing rate schedules? (3) And. if not. What effect would a general rate in- orease have on the next rr-venues of The Oompany?

"Although the evidence- in the record by the Union wholly overlooked that part of its case of showing a need for an income In- crease to the employees. we feel that. in equity we should notseizo on that oversight as a reason Mr miashlng the award. but. rather that we should draw upon oer- sonnl information of living costs and their relation to the wage schedules placed in the record. And. therefore. we assume. for the pirmtkes of decision that a wage increase to the employees is in A measure warranted. In taking this new we are not adnnllng am: new- altitude. because the Board of Commissioners of Public Utllcw-s and its successor the Public Utilities Commission have hereto- fore urged tho need for wage in- creases by tho Company . . . .

Company llevenucs

"We shall now pass from the first to the second question which is nhether the Company can meet the added cost of a wage increiisa from the revenues ii-rived from the existing rate schedules The Union claims that the Company can do so and for two reasons. The first claim is that the Com- pany's present revenues are ade- quate to pay the additional cost of a wage increase since its nati- mstes provided for an unap- propriatod surplus of 316.000 after the Dldmelit of all operating costs and a 606 dividend on Common Stock, And the second clalin is that the Maritime Telegraph and Telephone Company is a well-to- do Company and owns the Island Telephone Company and. there- fore. could afford to subsidize the Island Company.

"As to the latter. the ntatetrmif. is that of the shares of common stock of the Island Telephone Company. 60.- too or 'l!i')Fa are owned by Atlantic Utllitlel Limited. a wholly owned subsidiary of the Maritime Tole- lrrmph and Telephone Company. and the remaining 20.000 shares are held by private individuals of whom M31: are residents of this Province.

"And large portions of the shares of Maritime Telegraph and Telephone Company are owned by the nrriployens rvf that Company as well as by some employees of "nae Island Telephone Company. under a stout Purchase Plan which allows for purchase at very favourable rates. And it may be stated further that contrary to prevailing belief in some areas. rs-timer the Island Telephone Company nor the Mhritime Tele- eralph and Telephone Company are either owned or controlled M In)? one of the many corporations comprising the Bell Telephone system.

"One cannot imagine the Board of Commissioners of Public Utili- ties of Nova aootis. permitting the Maritime Telegraph and Telephone Company to divert from its earn- ings any mm of money by way of subsidy to the Island Telephone Oompany operating outside Nova acetic. and that very charge was

correct 80.000

made before the Nova Bcotis Board at a recent Telephone Eat; Hearing.

"But. even If it. were permitted. it would not be fair to the share- holders of Maritime Telegraph Md Telephone Company to hue thelr profiu in Nova Bcotla mrhoned off to make up for de- ficencles in this Province. and. rrvrtninly it would not be favour- ably received by the employees of the Island Telephone Company who hold shares in The Maritime

Telegraph and ibleohone Oom- mnv. The Nova at-otia share- holders. would doubtless. insist

that the non-paying project be abandoned. And history will gaf- firm that Island owned and run- trolled public utilities have not in leneral. met with any reasonable Shire of irrneoerl L Ftnenclalf Status

''In dsaiini with the untion that the additional cost of im- r'l-mentlng the whole award of the Irhltrafors. it is necessary to P!- nmlnr fully the financial status of the company and to briefly state the results. Until December HP! 19'-".. there were only oo.ooo shares of common stock all owned bl Atllhtlc Utilities Limited. I

wholly owned subsidiary ff. Mari-

lalvidend not only on the

placed -

Company no that. up to that time. it was unnecessary for the Com- may to declare and pay full KJlVldeI1dB. The dividends paid for the years 1940 in 1961. averaged a- bout 3.'l96 and including 1961 aver- aged 3.7495. And any sum over and above the declared dividend was permitted to remain as an un- appropriated earned surplus. when. in 1052. the Oompany placed its common stock with .he Dubllc. it then became necessary to retain the confidence of the investors. to declare a reasonable newly iuued 11.000 share block but on e'l the shares of the Cotnpany,

"At the end of 1052 the Coni- plny had an unappropriatsd earn ed surplus of &la0,U18.5l. But. if it had been paying the 895 divi- dcnd throughout the period of 1940 to 1952 the amount of that unapproprlated earned surplus would only have been tl4.30l.'la. The Company then proceeded to make up a financial statement for 1053 on the basis of 10 months actual and 2 months estimated which discloses an unsppropriated surplus of 319.281.

"For the year 1954 on the basis of estiinsted revenue and expendi- tirre. not including any wage in- crease. the Company's unapproprl ated surplus will be 023,817. This includes an estimated sio.ooo ad- ditional revenue to the Company by the transfer of the Charlotte- town Exchange from Group V in Group VI as of July 1. 1954. If the Gharlottetmvn Exchange should fall to reach the higher grouping the Company's revenues will be reduced by approximately 95.100. being the estimated 010,000 less the estimated Income Tax of ti - D00 payable thereon. and thus the estimated earned surplus will be reduced accordingly to 318,577 In- stead of the 323,077 given above.

Company Dividends

"The company claims thatll for sound financing it should be per- mitted to lay aside. as unap- proprited earned surplus. an .in- nual sum of 318.011) representing 954 of its Common Stock, There is no doubt that due to weatlier liaznrds there is a continual risk of the Company being called upon at any time to bear the coat of line damage by storm and if some provision be not made for great line damage the f' mpany may find itself. in some years. com- pelled to defray very large costs which would leave little, if any, money available to pay any filV'.- dens on common stock.

"And. when it is considered that at the end of 1952 the imappro- printed surplus would only have been sl4.32l.'lfl if 657- dividends had been paid. and that in one of the years of this accumulation the amount was as high as 831.- 'T20.M. it cannot be said that an objective of 016.000 for unan- proprinted surplus is excessive. "!'JDeclally is this true when it is realized that the amount of the refundable portion of Income Tax received in recent years exceeded by several times. the amount stat- ed as remaining in the Unap- propriated Surplus Account. If at any time the unappmprlated sur- plus exceeds a reasonable safety margin the right of further ac- cumulntion should be restricted.

"In reaching this conclusion we are not taking any benevolent at.- tltudc towards the investors in the Company. It is unlikely that if their dividends were reduced any of them would go hungry. It is well settled public utility law that public utilities are entitled to such fair return on investment as will attract the minds of the investing public. If the returns be low thi- utility will be unable to secure capital which is continually being required for expansion and im- provement of service facilities.

In fact. in the United states according to the constitution rates which do not yield a fair return of investment are deemed to be confiscatory and invalid. If we fail to give due consideration to the necessity of fair return on in- vrstment, a utility will fail to at.- tract investment capital and the pcnplo of this Province will be the ultlmate losers in the kind of ser- vice made available to them.

Costa or Implementation

"In addition to the figures which the Company has placed in evidence respecting earnings with- out any wage increase, it has also set forth wheat effect the com- plete implementation of the Arbit- ration Award would have. And while this hearing deals only with the award in favor of the members of Union Local No. 1311 any improvement in the wages of these must. in equity. be followed by lncreasq for all employees. Therefore. the figures which will be used in the following com- putations will apply to all Corn- pony employees.

"A wage increase of 'l'.4'l'n ef- fective on July 1, 1956. for all Company employlel. but Without the additional expense resulting from the reduction to a 40-hour week, would cost the Company for 1053. 010.114. lesalO4.Vli' for In- come Tax. which would be pay- able on same. or a net of 5.173. This would reduce the company”! unapproprlated surplus to 014.100. a sum which if not mrther re- duced would not be it serious blow to the estimated requirement of Il6,M).

In giving figures for 1064, the Company was eanpelled to rely wholly on utinaiu based on past experiences. on than oetknatea the Oon-ipnn expects. without nu increases. to new anuna.pproprieI.- ed surplus of 3.071. And the not cost of a fiii will IIIIROIIO '0" all employees will be It-1.510. leav- ing a. balance of IIIJUI. tr e de-

ftclt of am. after providlns for

of mono. As above stated. than direct: are based on the aqua-lotion kt the Oalnpcny will have an but ad revenue of about 010.0!) 1 ing fr-an the anltciooted Ij of the Charlottetown bi h Group VI. "It follows then. Hint an H- aitlonal wan imi-ease of 736 all company uiplorooi '11 - ----.------luv-w

slim margin and dangerously close to an overall deficit with no as- surance of any surplus. However. having due regard to the fact that we believe the Company's elti- mates were conservatively made, there is a strong probability that. if economic conditions had con- tinued as formerly-.. a reasonable is modest surplus would be realiz-

rarm Prices Compared

"But we cannot overlook the mass of evidence given by Mr Roland McDonald, President of the P. E. 1. Branch of the can- adian Federation of Agricullnrrc. of the downward trend in the price of farm products in this Province. And while we do not express urselvea as sharing the views of some prophets of gloom who say that Canada is heading towards a major economl-. depres- sion. we cannot close our eyes to the fact that. in Prince Edward Island our prosperity is very closely tied in with the prosperity of the farmers, and. consequently, business in this Province will be more or less adversely affected. during the coming year. by the decreased spending power of Is- land farmers,

"Any recession in spending. however small. may be sufficient to halt ternporarlly the expansion of the Charlottetown Exchange thus deprive the Company of anticipated revenue as well as health in general the expansion of telephone business in the Pro- Vince.

"While there is nothing to in- dicate the method whereby the Arbitration Board arrived at the increase of 'Il-'.-"?- in the wages of the Union members and while we feel the increase is bordering On danger to the Company's fin- ancial requirements without azi- ditlonal revenue by a rate increase we do not think the difference be- tween the 5ft; increase offered by the Company and the '7'-We award is sufficiently great to serve as a

igroimd for upsetting that part of

the award which, with hesitation we agree should be confirmed. "We now turn to that portion of the Arbitration award which deals with the institution of a 40 hour work week effective January 1. 1954. According to the Com- pany's evidence the net cost 01 the 7'.-2'73. wage increase plus the additional cost of changing to 1! 40-hour week would be 815507

leaving only 8498. above on?!" utional costs and dividends.

obviously any deficiency in re.- veriue eiliher from the failure of the Oharlottctown Exchange to reach Group VI or a falling in :e- vemie due to decreased use of telephone or the removal of equip- ment due to economic conditions would leave the Company without adequate funds to meet the div!- dends requlrements without ap- plication for s telephone rate in- (533559.

"And if a rate increase hpplled for and granted. there can be little doubt that the in- crease would so adversely affect the people of Charlottetown that the Exchange would definitely re- main for some further time with- ir the present grouping with the sttendant loss of revenue to the Company. And in the light of pre- sent economic conditions it rate increase might not bring corres- ponding revenue increases. with these facts in mind. it srmns pro- per to give careful study before acceding to a request for tho ir- auguration of a 40 hour week at this time

WFY8

Foundation of Economy

"Agriculture is the foundation of Prince Edward Island enonomy When Prince Edward Island farmers have good times Island business is relatively prosperous: when their earnings diminish our cconomy suffers. A 40-hour week has never been anrl will not be. in the foreseeable future. the privi- lege of the Iaiands' farmers, The idea. however. is gaining ground In the industrial areas of Canada but. as yet. is far from general.

"According to it recent report of the Economic and Research Branch of the Canadian Depart.- ment of Labor. only something in excess of 40"'r of the employees in Canadian Manufacturing plants were on a 40-hour work week. This fact seems to show that there is still a long way to travel until the 40-hour working week can be said to apply generally In industry in Canada. . . .”

"The report notes that the forty-hour five-dav week for fed- eral public servants is only to be inaugurated 'ln those localities and those classes of emplrrvmenl where the five-day forty-hour week is the established pattern in business and lndustry.' since no such pattern exists in this Pro- vince the five-day forty-hrviir wt;-k will not affect employees here im- leu srovemment policy be chang- ed. The report continues:

Working Hours

"Of industry working on a forty-hour week in this Province none is reported as found outside Charlottetown and 'here only Can- ada Packers and Rite-Way Clear.- arl are mentioned. Canada Pack- ers is a national organization which demands efficiency in pro- duotion far in excen of Prince Ed- ward Island standards. Blnkln; and Imlmhl institutions were

but their stand-

Fifi; it

THE GUARDIAN.

dicates that ii shorter working reek for those engaged in the work of the members of the Uni- ion would lmprove their health or boost their working efficiency.

"Whether the present trend to- wards the shortening of working hours and the accompanying iii- crease in production costs is gen- erally sound from an economic viewpoint is a matter on which we are not called upon to express any opinion. And if that trend is justified in other parts the same reasons do not obtain here.

"In the large industrial areas it is very often necessary for an em- ployee to spend as long as an hour and a half on a crowded street car or driving through con- geeted traffic to reach work and I. like time in similar conditions to return. An employee in such cir- cumstances must add three ad- ditional hours nf strain to those during which he works. The de- centralization of industries mlcht go a long way to help this situ- ation. In this Province. no s-ich problem is met. Very few people here live more than a few minutes time travel from work and it can- not be said that traffic condi- tions cause any rrr-ntai strain

Other Activities

"It may be interesting to con- sider the relation which the work- ing of it 40 hour week in this Pro- vince would bear to the time for other activities. A person working a 40 hour week with two weeks for holidays and time off on seven statutory holidays regularly works 1944 hours in a 365 day year which contains 8760 hours. Allowing for eight hours of rest in each day he sleeps 2920 hours and still has 3896 waking hours. If the waking hours of the 52 Sundays be ex- cluded the hours frec from work in the year amount to 3064. In the first case they are more than double the hours of work and in the second they exceed them by about 5865.

"Much stress was laid on the wage differentials between tele- phone workers here and those elsewhere. But this differential is generally found when Island in- comes are compared with those in other parts of Canada. as is very clearly shown by the great mass of statistical information placed in the record by Mr. A. W. Gsudet. acting on behalf of the independ- ent telephone companies. Our chief sources of income are from farm products and fishing. And the large freight costs arisuig out of the long hauls to market result in the producers receiving smaller returns on their products. The fixing of wages by comparisons with those of other Provinces and cities is only satisfactory when all of the factors which determine net valuw are concerned. The size of the pay envelope alone does not reflect the true picture.

Benefits To Employees

"Comparisons b e t w e e n wage schedules of different utilities. in this Province are only accurate when all the .c1rcumstiu'ioes are considered. The comparisons made between wage schedules of Island Telephone Company and those of Maritime Electric are not complete without due consideration to all the benefits which the former pro- vides to its employees without cost or contribution from them.

"While the Company pays its contribution to the support of compulsory benefits of Workmenis Compensation and Unemployment Insurance amounting to 2.087;. of the total of its payroll, it provides. without contributlon.snd at a cost to it of 11.97;. of its total payroll. for its employee? pensions. sick- ness disability benefits, group in- surance and Blue Cross hospitali- zation, which benedits are by far in excess of those provided by any other employer in this Province. And while some or all of these benefits may not be appreciated by all employees, they are 9. great source of security and stability to the older ones with dependents."

Danaiia'skVlew

Continued from page I

retary to the war office in the last Labor government, asked what difference this made.

Why could not Canada manufac- ture the Belgian rifle and Brit- ain the British one. he asked. in view of the fact that both wea- pons could fire the .300 round a- greed on by the North Atlantic Treaty Organization as standard ammunition. Would not the fact make the rifles interchangeable to a degree if shortages of either

developed? Rrymri Head: "It ought to havc oau-ned on the. honorable gentleman that, if the

government had two rifles in an array. it would mean two differ- ent lots of spare parts. That makes a difference."

In a debate. that. brought Prime Minister Churchill to lead tfhe government defence. argument tended to obscure the real issue.

"Let us get it straight from the beginning," said Head. following Churchill. who had.praised both weapons while stating that the Belgian rifle appeared to mn- taln more potential for changing with the times.

Make Under Licence

"One side of the House . .sayl that the E. M. 2 British rifle is the best rifle; it has British in- vention and prestige Now we have standardized on the .300 round. why not give the E. M. 2 I. .300 calibre. because. we have overcome the problem of standardisation?

"This ride of the House (the

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KINII EULE

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behind it. i

Freetown Royals

Defeat ll.C.A.F. .

Flyers its