The following is a comparative income statement for the State of Washington for the months of August and September, 1917 and 1918, reflecting increased costs of labor and material:

XVIII.

[Wash.

The data set forth in Paragraphs X. to XVII., inclusive, was gathered by the experts of the Public Service Commission of Washington from the books of The Pacific Telephone and Telegraph Company, and the annual reports of this Commission. Set up in another form, and covering somewhat different period of operation, The Pacific Telephone and Telegraph Company has produced and introduced as evidence several schedules. From these schedules they have made the following condensed statement which forms part of the proofs in this case:

† Under Proposed, without reference to toll rates effective January 21, 1919.

XIX.

VALUATION OF PROPERTY.

The total book value of The Pacific Telephone and Telegraph Company's property in Washington, Oregon, Idaho, Nevada and California, including The Home Telephone and Telegraph Company of Spokane, is $95,915,422. Of this sum $19,203,782 represents the book value of the properties of The Pacific Telephone and Telegraph Company and The Home Telephone and Telegraph Company of Spokane in the State of Washington. Practically 20 per cent. of the total property of The Pacific Telephone and Telegraph Company is in the State of Washington. As the government is to pay The Pacific Telephone and Telegraph Company, under the agreement with the Postmaster General, $4,233,233, in a sense, Washington's share of this compensation would be $846,647. In its 1919 estimate, The Pacific Telephone and Telegraph Company considers $884,703 as compensation for its property; this would be a rate of return upon the property in Washington, exclusive of Spokane, of 5.15 per cent. The foregoing book value is different in Washington from the rate base found by the Commission plus net addi

[Wash.

tions by years. The rate base in Washington with net additions by years as of December 31, 1918, three months of 1918 being estimated, is $16,641,145. The estimated net additions for the year 1919 are $1,053,700, or a total as of December 31, 1919, of $17,694,845, making an average for the year 1919 of $17,167,995.

XX.

ADDITIONS TO PROPERTY 1919.

Of the estimated net additions to property for 1919, the greater proportion thereof is allotted as follows:

RETURN UNDER COMPENSATION AGREEMENT.

The book value of the holdings of The Pacific Telephone and Telegraph Company's Pacific Coast System is $95,915,422. The compensation to be allowed for the company's Pacific Coast holdings is $4,233,233, or a rate of return of 4.41 per cent.

XXII.

PERCENTAGE OF INCREASE PROPOSED.

The estimated percentage of increased rates on exchange service under Tariff W. P. S. C. No. 2 is 16.8 per cent.

XXIII.

REDUCTION IN TOLL RATES.

On December 13, 1918, the Postmaster General promulgated his General Order No. 2495, to become effective January 21, 1919, under and by virtue of which he did, in sub