The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-03-10
MIR. POTTS AND TELEPHONES.
Will Try to Get One OF the Companies
to ReOrgRnize.

VIII 10 OeL Ohc OA inc
to ReOrgsnize.
If A. f. Potts is not successful in in
ducing one of the telephone companies that
is asking for a franchise to reorganize SO
as to do business under conditions similar
to the Consumers Gas Trust Company, with
the ultimate purpose of furnishing tele-
phones to the city at cost, it is possible that
an enirely ne v company may be organized
to bid for the franchise when the Board
of Works gets ready to sell the contract.
81 have sincere hopes of getting one or all
the companies that have appeared to take
up this pIan,'' said Mr.. Potts, land believe
they will do so. There is plenty of capital
lying idle, the holders of which would be
glad Of an S-per-cent investment. The only
objection I have heard to the plan is that
the amount of interest suggested as fair
profit on the investment, per cent, is too
high. have been informed that I ought
to have fixed the figure at per cent
The plan, as suggested to the Board Of
Works, is that the company receiving the
franchise shall agree to operate so the
stockholders shall receive 8 per cent. only
on their investment, the surplus of profits
to be devoted to wiping out the cost Of in
stallation. After this is accomplished he
proposes that the investment shall end,
virtually, so far, as the stockholders are
concerned, and that when there is no longer
any interest to be paid the rates charged
subscribers shall be based on the actual cost
Of operation. To assure the accomplishment
of this plan he would have the company
file a statement with the city controller
annually showing receipts and expenditures
in detail so that any one could tell just
what the cost of service really ought to be.
1t would also be required to file a list Of
stockholders. Mr.. Potts believes that this
would prevent fraud of any sort ana that
the date of reducing rates to the actual
cost of operation could not be indefinitely
postponed by padded expense accounts, re-
Assume, for the purpose of illustration, -
said he, that it costs 100000 to install the
stockholders on this investment would be
$24 900 year. Assume the cost OF operation
to be $4O.O0O, that would m make en-, the total
come of 100000 there would be balance,
after the payment of these items, of $36 900
a year, to be applied toward wiping, out the
Investment. In about eight years the plant
would be paid for and the stockholders
would have been paid interest at 3 per cent
on their investment meanwhile. With the
interest charge wiped out the only outlay
of the company would be $4,000 annually.
Then the rate to be charged would be figured
on that basis. There is no reason why,
after the plant is paid for, telephones should
cost more than rs cents or 81 a. month, so
that they would be within the reach of
every one. That is what we want"
Mr.. Potts said that he was negotiating
with the representatives Of the various
companies that are asking franchises, hop
ing that at least one of them will reorganize
on this basis. He did not care to indicate
which particular company would do this
He said that there was no question but
what capitalists would be glad of an S-per-
cent. investment even If for only eight to
ten years. ''In thirty days." said he, Il
could myself secure the capital in this city
from men wanting to invest from $1,000 to
$4,000"
.''If neither Of me other companies take up
this plan will you take steps to organize
another company similar to the Consumers
Gas Trust Con panyY
II would not want to say that, replied
Mr.. Potts ''as l have hopes another COM
pany will not be necessary
The impression has gone abroad that Mr.
PottS'S plan is on the cooperative order
where every subscriber is a stakeholder
that is that if it costs 100000 to install the
plant three thousand subscribers would be
required to pay 800 each at the outset Mr.
Potts says he had so such idea in view
He believes there are sufficient men with a
few thousand dollars each to invest to in
stall the plant.
At the conference of the city officials
yesterday afternoon the telephone situat IN
was pretty fully discussed and rough drafts
OF what the board desires the specifications
and contracts to contain were given the
city attorney. Mayor Taggart said that
there had been no discussion of the Potts
plan He does not seem to regard it with
much favor but said that it might be con-
sidered later on when the details of the
franchise are discussed.