Savannah morning news. [volume] (Savannah) 1868-1887, 1886-02-04
THE ASSISTANT SURGEON.
THE WAR OF THE TELEPHONES
Alleged History of the Pan Electri
Telephone Company.

Telephone Company.
The New York World gives the follow
ing as the history of what it calls ''The
Pan Telephone Scandal"
The Pan Electric Telephone Company
has $5,000,OOO capital stock, divided into
shares of $1,000 each; these shares were
held originally by the following named
persons:
j. f. Johnston. $500, 900 j. D. G. Atkins $500, 900
J. q Harris 500,00OlJ II. Rogers 2000,Os0
A. II. Garland 100000 The COMPANY. 500, 600
Casey Young. 100000
1t will be observed that these five gen.
tlemen each held one-tenth of the stock,
but knowing the vagaries Of inventors,
they required that another tenth, making
a majority, should be put under their con-
Irol, so that they could have the business
in their own hands. This 100000 worth
of company stock belonged to the holders
OF the other shares in proportion to their
holdings, but was controlled by the direc-
tors.
The Board of Directors Of the company
was composed of Joseph f. Johnston,
lsham G. Harris, A. IL. Garland, Casey
Young, j. G. d. Atkins and j, Harris
Rogers, The officers were: Joseph K.
Johnston, President; Isham g. Harris,
Vice President; Casey Young, Sec
rotary and Treasurer; A. Il. Garland,
Attorney.
The company was chartered by the
State of Tennessee, with its principal Of
flee in Memphis. and another in Wash
ingtOn city. Under the laws Of that
state as to corporations, all that was nee
essary to be paid In OF the $4,000, 900 CAPT
tai stock was the fee to the secretary of
state Tor using his seal, amounting in
n fA IN
In November, 1888. the directors deter
mined to issue licenses to local compa-
MES; that is, sell territory in which the
Pan electric instruments were to be used.
The terms upon which these sales were
to be made were agreed upon and are as fol-
lows: "Forty per cent. of the capital
stock of the local company to be held by
the Pan Company; all instruments to be
furnished by the Pan Company at a stated
price. A royalty Of $40 per annum to be
paid by the local company on each instru-
ment; bonus in cash to be paid by each
local company.
Under these considerations eight local
companies were formed: One for Pennsyl-
Vanfa, with the Hon. Robert Klotz, form
erly in Congress, as the principal pro-
moter. Gen. Frank Armstrong, now In
dian Inspector, being the secretary; one
in Baltimore, the Hon. Eli J. Henkle,
IOFmEilX III AOuEIEbbs Dtluk lnt
to which the States OF Maryland, Virginia
and the District of Columbia were sold !;
one in st. Louis for Missouri; one in Wis
consia; one in Tennessee; one in Alaba-
ma, OF which Gen. Upshur, now Chief
Clerk OF the Indian Bureau, was the pro-
moter: one in Texas and one in Louisiana.
The two tirst-named companies were not
required 10 pay any bonus, but in all their
contracts the Pan Company agreed to de-
fend its patents a. its own expense.
When tie first local company paid its
bonus Of $4,000, the directors proceeded
to pay back the sums expended by them
selves in paying for patents, experiments,
etc. This amounted TO 1915 for each OF the
five, showing that OF the So, 100000 capital
stock there never was paid IN but $3.50,
being little more than One-fOrtieth OF /
per cent.
After this money was paid back, the
directors next proceeded to divide the re-
mainder OF the $4,000 as dividend 70 the
stockholders, the amount received by each
holder Of one-tenth Of the stock being lit
tie less than $500.
The $500, 600 of company stock had in
the meantime been partially distributed,
100 shares going 10 eX-GOv. John G..
Brown, OF Tennessee, now resident In st.
Louis, and principal attorney for what is
known as "tbe Gould system OF south
western railWay5W Other sums were
given or sold TO other parties having or
supposed TO have either local or national
Influence, Senators Vest OF Missouri aud
Vance Of North Carolina each getting a
portion.
AT the beginning OF the first session ofthe
F0rty-eighth Congress brother Of Sena.
tor Vance, Dir. X. B. Vance, then a Rep
resentatiye from North Carolina, intro
duced a bill IN the House Of Representa-
tives giving the Attorney General power
70 bring suit upon application 10 yacate
patents. This DILL was referred ton COM
mittee, which reported In favor OF its pas
sage, saying in it's report that since 1896
the Attorney General had not been en-
trusted with this power. The bill passed
the House Of Representatives almost un-
noticed, but was never reported from the
Senate Committee on Patents. Contracts
continued to be made in the spring OF 1884
until eight local companies, as before sta
ted. were organized. As these companies
paid in the required bonus, the money
was paid out 10 the stockholders as dIyi-
dends. two being declared in July OF 81 90
per share, giving each Of the original pro-
moters, Garland. Johnston, Harris, At
kins and Young. 500 at each division. or