Evening star. [volume] (Washington, D.C.) 1854-1972, 1902-07-12
Action Taken by G. and P.
Telephone Company.
ITS ADDED EXPENSES
BELIEF THAT PAYMENTS WILL
BE SOON RESUMED.
Announcement Causes No Surprise In
Local Financial Circles-Mr.
Bethel's Statement.

| The announcement that the directors Of
| the Chesapeake and Potomac Telephone
Company have decided to suspend the pay
ment Of the regular dividend caused no
surprise in local financial circles, as 1t has
been anticipated for some time past that
| that course would be adopted. The stock.
which is dealt in to some extent on the
local exchange, has been rather weak dur
Ing the past six months, and there has
been but little activity in it.
The shares are 500 par, but the recent Of
| ferings of the stock are at 500 per share.
| There are 81 $780, 600 of capital Stock and
after the company was organized, nearly
| twenty years ago, a dividend OF per cent
was paid.
| From 1888 to 1890 the dividend was adj
| vanced to per cent. Subsequently there
was period Of about year when no div
| idend was paid.
| For several years past and up to the
| present quarter a per cent dividend has
| been paid. In addition to the annual divi-
dend. amounting to about S105ooO, the
bonded indebtedness of the company IS
| about one million in ) per cent bonds.
| 1t is understood that over 30 per cent OF
| the stock is owned by the American Tele-
| phone and Telegraph Company, which is the
| concern with headquarters in Boston con-
! trolling the Bell patents AS is well known,
| the telephone company does business not
only in this District, but in Maryland, and
to some extent in Virginia Its business
| career has not been without setbacks in
Baltimore, we'll as in this city, and at
the present time rival company is operat-
| ing In the latter place, which naturally has
| an effect on the rates charged by the Ches-
apeake and Potomac Telephone Company.
An Alleged Difficulty.
| 1t is asserted that the new company Is
G,,I
the stipulated rates, and while the COMPETE
| ton is reducing the receipts of the older
company, it is thought there is a prospect
| Of a change which will eventually improve
the conditions of the telephone business in
the monumental city. at least from the
| standpoint of the Chesapeake and Potomac
| Company.
I While the rate war in this city is by no
| means over, there are other circumstances
| which tend to add to the expenditures Of
| the company without increasing for the
| present at least its revenues.
| 1t is estimated that the company will be
| required to expend about a half a million
OF dollars In complying with the legislation
| enacted at the last session of Congress,
| extending the area of the underground ser
vice, or that II will be necessary to substi-
| tute in the section to the north of the
| business center for the overhead wires and
| poles the underground conduts.
| 1t Is asserted by the representatives of the
| company that this expenditure will be
| merely to furnish a new mode Of doing the
| business which the company already has
! and not for an enlarged service.
Increasing Facilities.
| AS already announced in The Star plans
| have been completed by. the company for
| increasing it's facilities for doing business
| and also Its capacity in its present field Of
| activity. Two large buildings are to be
| tod |,
pIeted. One is to be a modern steel frame
| eight-story structure on the west side of
18th street Just south of G street, which
will be the central office of the system.
| A branch exchange structure, four stories
| in height. is also to be built at the northeast
| corner of 14th and r streets.
1t is not known when the payment of
| dividends will be resumed. According to
| the estimates furnished semi officially of the
| cost Of the extension of the underground
| system, it will take the entire amount of
! the per cent dividends for four years to
| pay for the new work.
There is also a practical addition to the
| bonded Indebtedness, 1t is understood
| that the funds for the proposed new build
| ing are to be obtained from what is known
| as the parent company.
| In spite Of these conditions 1t is thought
| by some that the stock Will be back to par
within the next four years, and the COM
| pany will be paying a dividend Of per
cent.
The Action Explained.
| In explanation Of the action Of the direc-
tors in suspending the payment of the divt-
dend Mr.. w. N. Bethel made the following
statement:
I Through the introduction of low rates
| during the past four years the number of
| telephone subscribers in Washington has
grown from about 1000 to over 1900 Dur
! ing this time Congress, though repeat edly
| applied to. failed to authorize an extern
| sion Of the underground telephone sys-
| tenn to take care of this large growth, and
| consequently the company was compelled
| to invest large sums in overhead lines,
| which 1t Is now required to take down.
The poles will be dead loss, and costly
copper wire must be sold for what it Will
! bring junk. This form of depreciation
must inevitably be met by every telephone
! company operating in large city, and
usually a reserve to meet the loss when 1t
occurs is set aside from earnings But the
many and peculiar difficulties existing here
have prevented this company from pursuing
| that course successfully. In most cases
| the overhead lines were necessarily run
| over long and circuitous routes, and were
frequently in trouble. This made the cost
| of maintenance exceedingly high.
The litigation growing out of the hastily
| enacted rate law Of 1898, and some other
matters. have affected the company'sr earn
| ings and expenses, but chiefly because of
/ the extraordinary maintenance and recon-
! struction charges which have been I'M
avoidable 1t has been impossible to lay up
fund sufficient to meet the present con-
tingency and continue the payment of div
| idends. However, the company. now that
Congress has at last authorized an extern
sive underground system, Is going forward
with the work OF providing such a tele-
phone system as the national capital should
have. confidently believing that sooner or
later 1t will gain public confidence and ap-
prevail. and be permitted to make fair
return on its investment
las to the recent reduction of the public
pay station rate from 10 cents to 5 cents at
time when the suspension Of the dividends
| was necessary, that reduction was In line
with the policy which the company has
been following for some time. SO far has
been possible under the existing conditions.
BY popularizing the service the company.
| Of course hones in the end To he benefited