Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1899-11-04
VERY COSTLY COMPETITION.
An Instance Where a Rival Telephone
System Failed.

System Failed.
In support of the position main
tanned by his company as to the cost
and experience of rival telephone VEN
lures. Local Manager Roberts, of the
Central Union Telephone company,
calls attention to the following from
the Chicago Post of Nov. 1, which he
desires published:
Stories of telephone company
fnanciering and the diff culties en-
countered in trying to create local
competition in the telephone business
are Interesting to those who seek to
get the best service in cities, and they
are told by one side and another
where such competition is planned.
Here is one intended as q warning and
which is considered as giving a typi-
cal experience: T'/
IA prominent and wealthy man in
western city, having real or fancied
grievance against the local Bell Tele-
phone company, organized with a
party of about twenty of his friends
to drive out the Bell An expert
promoter hearing of this intention
quickly made the acquaintance of the
man and was engaged to do the work.
larger than the Bell could be put in
for $500, 600. A prominent trust
company undertook to advance this
amount for the period of one year on
the following terms: At the end of
a year it was to have an option on
the bonds of the company at 80, or
was to be paid the notes at high
rate of interest covering the amount
advanced.
AT the end of the year the ex-
change had not been completed and
was not ready for operation, and an
other 100000 was needed. This
sum was arranged for on practically
the same terms. After considerable
delay the exchange was partially
opened. The local influence of the
men backing the enterprise had
served to attract large number of
subscribers. The trust company then
stepped in and astonished everyone
by taking the bonds at so. The orig
inal party was left with the stock,
having paid nothing whatever for it.
Another inside party was then or
ganized, consisting of fewer than half
of the original mum Der of men, who
made up a pool and bought back the
bonds from the trust company at SO.
The latter had realized it's profit and
was safely out of the deal. The in
side men, who were the most promi-
nent of the original crowd, then
doomed the exchange and put abroad
such rosy tales of ultimate profit that
the prices of the bonds went up, and
their friends were let in on the
ground floor at prices ranging from
SO to 1O3.
The exchange was fairly under
way by this time and it was found
that the service was poor 1t was
first necessary to change all the tele-
phones. Then began the process of
rebuilding the cum bersome switch
board. which process has not yet
ceased 1t became notorious that the
public at large would not continue
long to pay for such service, and for
a great portion of it nothing was paid.
Meanwhile, operating expenses in
creased and the service remained as
poor as ever. The price of bonds
naturally went off under these cir
cumstances, especially as there was
no compactly organized party back Of
the deal to keep them up.
at is announced that the entire |
operating apparatus is now TO be re-
built upon new plan, but it is ap- |
parent TO all who have studied these !
matters that if il works as well as
the manufacturers allege, it will be !
far behind the Bell company's appara-
tus. Meanwhile, the Bell company
has continued to increase it's ex-
change, with only such notifications
in rates as have come in with meas