The herald., 1898-11-04
LARGE SUMS SUNK BY HEED
LESS INVESTORS
EUROPEAN INVESTORS BUYING
California Mint Returns-Insurance
Changes-Dividends Declared.
',-, Big Copper Profits
OFFICE OF THE HERALD,
Toe Anoales Nov q lSDS

The independent telephone companies
seem to be in bad way, according to the
New York Financier. The Erie Telephone
company recently arranged with the West
ern Electric Telephone company Tor the IN
stalation OF Bell instruments on the latter's
lines in Minnesota and the Dakotas, giving
the Erie the benefit of all the independent
toll lines in those states, and the press now
announces that the Iowa Telephone com
pany, operating under the Bell patents in
the State of Iowa, has entered into an agree
ment with the Western Electric Telephone
company which gives it tho control OF the
entire system of $50 miles of wire in Iowa
This, it is needless to say, annihilates the in
dependent system in the states named, as
without toll privileges the local exchanges
cannot exist
1t would be difficult to estimate the
amount OF money that needless investors
have sunk in promoting independent tele-
phone lines, or rather, how much money
they have paid plausible promoters in at
tempting to build opposition lines in com
petition with the Bell system. The latter
may be, and is, to all intents and purposes,
monopoly, the administration of which
Indifference to public needs and welfare.
1t is not difficult, as a general rule, to crys-
fallize the spirit of resentment that pre-
walls in these cases into an opposition com
pany, financed by local interests. If these
operations were at all times controlled from
inception to operation by local capital, and
managed by men familiar with the section
covered, they might prove profitable ven
tures, but the history of some of them re-
ceals Il reckless disregard of even the com
mon sense methods of finance. In the ma
jority Of eases the promoter has no interest
in the scheme, beyond securing as much of
the capital paid in as he can divert from
legitimate purposes. The plan of opera
tion is to organize Il local company with a
large capitalization, reserving majority
of stock for the original subscribers. A
bond issue follows for construction PURPOSES
the proportion OF the proceeds actually used
being an uncertain quantity. Even here
the profit does not cease, for the allied con-
Germs with which the promoters may be
identified generally secure the contract for
building and equpping the lines, together
with the expensive additions that may be
incurred under the head of 'eXtras.' The
total net profits in number OF instances
that have been brought to notice must have
been enormous. One city with less than
quarter OF a million population had not over
two years ago four telephone companies in
direct competition, the capital involved
amounting to about S3,000,000, with $780,
900 bond issue added. The only basis for
this capitalization, aside from the cost of
construction, was the vague hope of future
prosperity. Yet the stock found an active
local sale, and the bonds were listed as a
good collateral.
1t is needless to say that over competition
is quite as harmful as no competition, and
thc benefits to the public are very dubious
The West is finding that its interests have
not been advanced by the new concerns, at
least in proportion to the expense involved,
and one of two southern cities, where the
matter of new telephone competition is
being advocated, will do well TO consider the
question from all standpoints before invest
ing in doubtful experiment, and especially
in one where their funds are handled by
promoters, rather than by local capitalists
1t is also to be hoped that the corporation
in whose name the maiority OF the standard
patents are held will begin to realize that
these efforts to ruin its prospects, so far as
local support is concerned, arise from
feeling that equitable relief can in no other
way be obtained Such an impression, once
deeply rooted, is more to be feared than
competition. The remedy lies in liberal
policy, with better understanding of the
facts, as basis.
In the light of the foregoing it is inter
esting to read the following account OF an
other competitive undertaking lust starting
in New York, as set forth in the Financial
Record, as follows, under the heading of
Lower Telephone Rates.:
The new Peoples Telephone Corporation,
which has Just been Incorporated at Albany
with capital OF Sj,000,000, expects to be
able to give first class service within year
An immediate cut will be made in the un-
limited service in Manhattan from $240, the
present price, to $780, the new company's
charge, which includes the right of free use
OF its public pay stations for 100 calls per
annum per subscriber. The message serv-
ice rates for business places vii be cut from
500 for 600 messages to $40 for 400 messages
For larger numbers of messages on the
message schedule the rate goes as low as 4
cents per message. The residence message
rate for service on private wires will be $50
TO families living in apartment houses and
flats an unlimited service connecting with
all the other subscribers of the company
VIII be given for ST. per month on group
lines. The unlimited service for business
places in Brooklyn will be cut to SIS Der
year, the Bell company's rate being now
$50.