Wheeling register. [volume] (Wheeling, W. Va.) 1878-1935, 1900-01-23
TIE OlD STORY AGAIN.
A GIGANTIC TELEPHONE CONSOLE
DATION ACCOMPLISHED IN
MICHIGAN.

mllAUN
h Bell Company Nearly
All the Independent Subscribers
in That State After the Utter
Failure of Competition.
A telegram from Detroit gives the
following interesting and instructive
information Is to Independent tele-
phone methods in the State Of Michi-
gan:
A gigantic telephone consolidation
has been consummated. Ten thousand
Independent telephone subscribers To-
Gated in As cities in Michigan, includ-
ing Detroit, 5000 miles of independent
long distance lines, 100 long distance
stations, representing fully 70 per cent.
of the entire independent telephone
business in the State of Michigan pass
ed into the hands Of the Michigan Tel
ephone Company. Charles ]. Glidden,
president, and Hon. John C. Burke,
general counsel, of the Michigan and
Erie telephone systems, have been at
the Russell House the past few days in
consultation with the managers of the
Independent companies.
John Stuart Mill clearly explained to
our grandfathers how foolish people
were who expected the price of any
product would be permanently kept
down to the cost OF production through
a war of competition. And now the
good citizens Of Detroit have had a
practical illustration of the same lesson
our g~randfathers learned seventy years
ago. and which has also been practic-
ally illustrated every few years since
the opening of the sixteenth century.
The press dispatches inform us that
"the Michigan (Bell) Telephone>C Com
pany has closed the deal for the control
of the two independent companies that
were pioneers and leaders in the indie
pendent telephone movement, the De-
troit Telephone Company and the New
State Telephone Company. Governor
Pingree and several of his political
and personal friends were prominent in
the organization of the Detroit COM
pany."
The Detroit Telephone Company was
organized on February 20, 1896, under
circumstances that led the citizens to
believe that it would prove a strong
and probably successful competitor or
the Bell. 1t was capitalized at $1,000
900. Published reports show that the
initial working capital vas obtained
through gently ~persuading many an
officelholder in the various depart
ments of the municipality, the police
men and the firemen, to invest in one
or more shares of stock on the install
ment plan. An elegant prospectus was
then issued showing that on a basis OF
5000 subscribers there would be a GER
tainty of 10 per cent. annual dividends,
together with an annual surplus OF
more than $50, 000, after paying all fixed
charges, including 6 per cent. on $780,
O bonds and all costs of operation and
maintenance.
But there never was any surplus,
and the company never earned a d1vl-
dend. For the cost of operating an
exchange far exceeded all expecta-
tions, and it was oon found that the
cost of maintenance. fixed charges,
and the OUTLAWS required for replace
ments were ~aggregating more each
quarter than the subscribers were
paying in. So it became necessary to
adopt a new plan to rescu the pub
lic-spirited gentlemen who had bene-
flied the good people of Detroit by
giving them a competing telephone
system These good and loyal men
owned much capital stock that they
generously preferred should be owned
by others. But if it could not be
shown that the Detroit plan was a
profitable investment how could the
people be inveigled into buying the
stock? Thus these generous gentle
men reasoned that if a new telephone
company could be organized with the
avowed object of connecting up all in
dependent exchanges in the State, and
connecting every farmer with tele-
phone lines to the county seat, its