The Montgomery advertiser., 1905-01-28


 1902, and in less than two years time 1t represented to the public that its business could not be continued under the rate Limitations of its franchise. The rates were raised. regardless of the terms of the franchise, and the City of Toledo brought suit in the Su- preme Court of Ohio to test the valid ity of the company's action. At this writing the case Is undecided.
 The present rates of the two teie- phone companies operating in Toledo are as follows:
 Business Service.
 Inde- Bell. pendent. Individual line .......S72. .00 $52.00 Two-party line ....... 42.00 ...... Four-party line ...... 90. % ...... Residence Service.
 Individual line ...... .oo s32.00 rwo-party line ...... 24.0 ...... Four-party line tseiec-
 tive) ......... 1S.00 ...... Four-party line (non-
 selectfve) ..... 1S.0 ...... The Independent Exchange has no party lines, excepting a few extending into the country. The rates of the Bell Company are tho same at present as they were before the competition began. excepting that the rate for a two-party line residence service has been reduced from $30 to SPA.
 An analysis of the officiaI financial statement of the Toledo Home Tele- phone Company not only brings to light some inaccurate items, but shows the whole financial structure to the flimsy. The item that breaks down the entire structure is the amount of $2,3S5,749.Se, carried as an asset to show cost of the plant" This amount, according to the statement made by the company itself, includes besides the original investment, $167,- 965.43 spent for construction during the past two years, $10.00O invested in toll lines, $1944S spent for toll line con- struction. and s25,000 to represent the value of the franchise. Although the money spent during the past two years for construction has been added to cost of plant" nothing has been deducted from that item during the same period for depreciation. There is no obvious reason for including $25,000 for value of franchise in the "cost of plant" be- cause 1t is doubtful if the franchise has any value whatever, for the req son that anyone can get a similar fran chise In the same way that the Toledo Home Company obtained its franchise If this s25.ooO be deducted from the item. the amount remaining to rep resent cost of plant Is $2.360, ,749.36. which is a very excessive sum to be carried on that account. The compa- ny's statement shows that It's exchange has S,400 stations, and the cost of the plant, per station. according to the figures given would be $2s1. This is an extremely large amount per sta- tion of this telephone exchange. The average investment, per station. of the Bell Telephone Company operating in tine State of Pennsylvania was only So4 in 1903. according to sworn state ments made to the department of in- ternal affairs.
 1 From what sources did the Toledo Home Telephone Company derive it's so-called investment of S2,36O, 749. 36, carried as an asset on It's books l? Certainly not from the amount of mon ey 1t realized from the sale of It's bonds and stock. There Is a bond is- sue of 31,160.000 and a stock issue of l the same amount, but most of the stock was given as a bonus to the in- vestors in the bonds. The bonds, with the stock bonus accompaniment, were originally placed on the market at ST 1-2, and the bonds are now quoted at 77 to 80. Even if the company realized S7 1-2 on the entire bond is- sue. the total Income from this source could not have exceeded S1,015, 900. Add to this the amounts given In the statement as having been spent for con- struction since the opening of the plant, and the amount of the toll line investment, and the sum will be $1.- 1s3.159.91. which is a more likely fg- ure that $2.360.749.S to represent the actual cost of plant" With $1.193.- 159,9l to represent the cost of plant, the cost. per station, would be $149, a more reasonable figure than $2S1. The facts show a possible actual in- vestment, on account of cost of plant, of only $1.193.159.91. The company's statement shows the investment on this account to amount to $2, S6O,T49.36, af- ter the S25.000 franchise item is de- ducted. Here is a decrepancy of ST.. 167.5S9.45. If this $1.167.589.45 was ac- tually invested In the plant. as the statement shows where did the money l come from? Certainly not from the sale of the $1,160. 900 of stock, because most of that was given away with the bonds. But even if the company's organizers did manage 10 withhold the stock bonus from some of the bond buyers, certainly enough of the stock was not withheld for future sale to realize the amount of $1,i67.5s9.45, for that would be more than the par val | ue Of the entire stock issue. and the stock is quoted at present at only 2g The decrepancy of S1.167.5s9.45 is not accounted for in the statement of the company's liabilities; so the amount could not have ben raised on credit and put Into "cost of plant"
 l Perhaps the company figures that It's property, costing less than S1, ,200.- 900, has appreciated in value 10 the extent of about 100 per cent. But, if this Is so. it Is hardly fair to carry the appreciation under the head of cost of plant" An application &C., count should have been opened. This would have been something new and startling in the telephone business, of course, but 1t would have been inter- esting to investors in the bonds of the Toledo Home Telephone Company. The statement of the Toledo Home Telephone Company shows totals as- sets amount to $2,546.91A31; liabilities 1 of s2.459,573.e9. and a surplus of ST. 940G2. If the evident $1167 .5S9.45 of water In the assets called cost of plant" is tapped and allowed to run out. the total assets remaining will amount 10 only s1.379,S2AS6. and the surplus of $S7.340.Ge will be trans formed in deficit of $f.0sO.24s.S3. But deficits never look well on state ments prepared for the "enlightment" Of the prospeetice investors.
 The following figures to show earn