The Jersey City news. (Jersey City [N.J.]) 1889-1906, 1897-03-08
NEWARK TELEPHONES.
The Bitter Meeting Of the Home
Company Stoekholders-Re-
sumo Of Facts.
[From Electrical Engineering, for
M March =

tHiom Etectr1cal Englueer1ngV for
March.l
The interest awakened by our editorial
in the February number of electrical
Engineering" relative to the so-called
Chain of Home Telephone Companies
wrongly advertised to be in. full operation
In certain cities, and to have from 1000
to 5000 subscribers, while our inyestiga-
ton revealed that in some OF the cities
named there was not a single telephone
in operation. and In only one were more
than two hundred telephones in service,
j~ustifes us in presenting a resume of the
actions that led to the methods Of the
Home companies being freely criticised
at the annual meeting held in the city Of
Newark, New Jersey, or February /. The
NeWark daily papers report tha this
meeting was so we'll attended by anxious
stockholders that many had difficulty In
securing admittance to the room. A Mr..
M. 7. Barrett desired to learn on what
authority the circular sent out some six
months age had been made to imply that
the Newark company had several thou
sand telephones Installed, when the list of
actual subscribers Just issued gave only
LOG names. He also desired to learn who,
authorized the placing of a mortgage for
SSoo,Ooo on the plant of the Newark Tele-
phone Company, and agreed that in adj
Qition to the interest $1,000 should be set
aslQe on me nrst day Of each month, be-
ginning November ]. 1896, as a sinking
Board OF Directors had authorized both,
and that while no money had been set
aside as called for in the mortgage, 1--WE
Will do so as soon as we cam"
So great was the bitterness shown by
many stockholders that we made a care
iul investigation, and believe the follow
ing to be the facts concerning much that
has been done by the Newark Telephone
Company; The promoters were George
H., and w. J. Atkinson, claiming to be
packed by what was then known as the
and by a liberal allotment of stock sew
eral respectable citizens were induced to
allow the use of their names as officers
and directors. Then a franchise was OBJ
tanned containing conditions that unless
200 stations were installed and in actual
operation within one year, 1,400 within
two years. and 2,100 within three years,
the franchise might at any time be abro-
gated by vote Of the Board of Works,
and that at the end of fifty years, or at
the ~abrogation of the franchise, all the
property of the company in the city of
Newark should revert to the city. I'M
mediately upon the securing of the fran
chise circulars were sent out soliciting
subscriptions to the stock of the company.
dends which the stockholders would re-
ceive t5 per cent. per year, etc.). coupled
with the assertion that the Home Tele-
phone Company was already operating
iourishing exchanges in Washington,
Baltimore, Cleveland, st. Louis and Pitts
burg lover 24,0N subscribers), while the
fact was that in all these cities there
were not one hundred Home telephones
in exchange service when the circular
was issued. AS no large subscriptions
were forthcoming, agents were employed
to solicit subscriptions from servant girls,
small traders, and widows. In many
cases subscriptions were received. upon
lynne of one dollar per share, the bal
ance to be paid at the convenience of the
more than 49,, 900 was raised, nearly all in
small sums. After the market for stock
had been exhausted, a mortgage of $780,
coo was placed upon thef franchise and the
that was purchased at SO a share is being
hawked about at 50 a share, and shares
have been offered as low as $3.50; entail
ing a loss of IS per cent. on the original
Investment.
An examination of this mortgage shows
that it %purports to have been authorized
at a general meeting of the stockholders
called for that purpose" But several
stockholders state that they never re-
ceived notice of any ouch meeting, and
at the nnual meeting of the company
no such meeting was ever called or held.
1t was shown, however, that the entire
issue of bonds and 500, 900 In stock had
been bargained to a concern called the
INV 1Okh 1G1GS4d ShlN 4CtCPlAOtAC SOll
struction Company (having an office on
Nassau street, and composed largely of
individuals connected with the Newark
Telephone Company and Home Telephone
Company, in payment for the conStruc-
ton of q telephone plant in Newark, AT
that time much was made OF the fact tnat
a reputable rpst company, the state trust
Company of New York, had taken trustee
ship under the mortgage, and 1t was even
stated in the press that this trust COM
pany had agreed to furnish the 100000 as
49, 49, - Hrn &C thn ~ mo, nf
this old and reputable company has been
used to entrap the unWary investors. One
OF the directors informed US that the
agreement with this construction COM
pany called for the payment of 100000 In
cash and s300,000 in bonds for the conl-
plete construction and installation of a
switchboard. subway and pole line cir
scrfbers, as stated in the advertisement,
station, though the promoters, had talked
of a cost not exceeding $50 per station:
No financial Statement. either from the
apparently be obtained by the ANXIOUS
stockholders at this annual meeting. But
the company acknowledged that it was
IN default some $12,0 600 in its sinking fund
payments called for in the mortgage;
that none of the amounts received from
the sale of stock, etc. $4,000, was avail,
no income, and according to the terms of
its contracts could expec none until at
least 500 subscribers were connected 10 the
exchange, and as the total number now
connected was only LOS. the possibility of
an Immediate income was not at all fat
tering. But here a bomb wa exploded
by showing that as the date on which
roo subscribers were to be connected in
service had expired ON December Is, 1896,
according to the terms of the franchise,
the entire property reverted to the city,
and the Newark Telephone Company
possessed nothing OF which any future in
come could be secured.
Whether the city of Newark lost its
interest in the reverSion of the property
by not protesting against the placing of
the mortgage is q question yet to be de-
termined, as well as whether there was
any authority for placing the mortgage
In any event, the. city appears to have
been torn up to no purpose, and the csti-
zens are dissatisfied with the limited SER
vice supplied and the poor prospects of
ever receiving one per cent. on their in
vestments for the capital stock.
OF the capital stock disposed Of, 1t iS
acknowledged hat $3.50, 900 was issued for
the rights to use the alleged patents of
the Home Telephone Company of Balti-
more, and it is claimed that every certi-
fcate issued bears the stamp ISSUED for
property purchased" and that the stock
which was sold in the name of the COM
pany was really stock which had been
originally issued to the chief promoters Of
the scheme, and by them peddled out to
the subscribers for personal gain. As the
innocent stockholders are becoming con-
WINGED that they have been swdndled out
of their hard-earrled savings, the promi-