Oxford Democrat. [volume] (Paris, Me.) 1833-1933, 1908-09-15
New England Buys Competitors.
INDEPENDENT TELEPHONE COMPANIES
WILL CEASE TO DO BUSINESS.

The New England Telephone and Tel.
egraph Co. has recently secured control
Of three independent telephone compa-
MES, the Northeastern, the lewiston
Auburn, and the Cumberland. The sub
Joined official statement is given out by
the New England Co. regarding the
matter:
"The New England Telephone and
Telegraph Co. has secured control OF the
Northeastern Telephone Co., the Lewis
ton-Auburn Telephone Co. and the
Cumberland Telephone Co., three inde-
pendent companies operating In some
twenty-five towns and cities in the State
of Maine. How this control was secured
the New England Telephone and Tele-
graph Co. believes to be OF legitimate
interest to the general public as we'll as
to the limited number of the stock and
bond holders of these companies.
"The most considerable of those COM
panies, the Northeastern Telephone Co.,
was inc rporated under the general laws
of the State of Maine in 1882, under the
name of the Dirigo Telephone Co. In
1888, seven months before the incorpora.
ton of the New England Telephone and
Telegraph Co, It's powers were enlarged
by special act, and in April, 1902, its
name was changed to the Northeastern
Telephone Co. By the act of 1888 tue
amount of stock authorized was 81 ,000,-
600, of which 5000, 900 was finally issued
at par value of SO. On Dec. l, 1902, a
mortgage was given to the Portland
Trust Co. on the entire property Of the
company to secure bond issue of
5000, 900. The stock was advertised as a
FIVE per cent stock, and the bonds bore
interest at five per cent. The fact that
the bond and stock holders we're mainly
the same, and In most cases held an
equal amount of stocks and bonds,
creates the presumption in the light of
the history of the company that little or
nothing was paid for the stock. Ger
tainly nothing was received from 1t in
the way of dividends.
"After the general custom In Inde-
pendent financing the bonds were mostly
issued to construction company In pay
ment for the plant, custom resulting
in this case as in others in no appreciable
advantage except to the construction
company in the possibility of its secur-
ing a double profit, at tho expense of
the operating company. Some bonds
and stock were placed in small amounts
among local enthusiasts for competition
who were dissatisfied with existing con-
ditions or were eager for low rates. For
the company was, in the language OF tho
circular, the Investors and Subscribers
Mutual Benefit Public Service Corpora
tion.' And rates were promised igno-
rantly and improvidently. To quote
from another circular The above rates
are less than half the present rental
charges for the miscalled private line
telephone of tho New England (Bell)
Co..
"In 1902 and 1908 it rained circulars to
prove the advantages offered by the
Northeastern company. Apparently the
plant was paid for on the basis of 10000
subscribers. But history was made very
rapidly; too rapidly even for the con-
structiOn company to get rid of all its
bonds. With ignorance of operating
conditions, with seeming disregard of
depreciation, and with large open con-
struction account, the Northeastern
Telephone Co. drove rapidly towards
failure, till in the fall of 1907 with about
5000 subscribers, and with eighteen
months defaulted interest on it's bonds,
it passed into the hands of a receiver.
"Since then there have been issued
Receivers certificates to the amount OF
$2O,5OO. The balance sheet Of June 80,
1908, shows a deficit of $59,377 2S.
"The lewiston Auburn Telephone
Co. was organized April 2, 1908, under
the general laws OF the state of Maine
with an authorized capital stock of
$3.50, 900, par value 500, all Of which was
issued. Its exchange territory is the
two cities of Lewiston and Auburn. On
May 81, 1905, it had 1910 subscribers,
and on Aug. 20, 1908, 142l subscribers
including some free telephones. On
April /, 1904, it executed trust mort
gage to the Portland Trust Company to
secure S250,O00 20-year five per cent
bonds. As in the case OF the North
eastern, a construction company took
most of the bonds and stock. Interest
was paid in full on the bonds to March
81, 1905, and partial payment amount
ing to $500 was made on Sept. 80, 1905.
Since that time no payments have been
made. No dividends have beon paid on
the stock. The Company's balance
sheet of June 80, 1908, shows deficit of
1924, 1Os 85. Considering the number of
subscribers this is fairly comparable
with the Northeastern compsny's deficit
of $59,377.2S.
1.-THE Cumberland Telephone Co.,
the smallest of the three companies, was
organized under the general laws of the
State of Maine, July Is, 1908, with q
capital stock of $50, 900, divided into 100
shares of common stock OF the par value
of 500 each, and 400 shares Of preferred
stock, of the par value of 500 each. Its
territory is mainly the town of Gorham
and city of Westbrook and 1t started In
business with about 81 subscribers, which
have decreased to IS in the last five
years. 1t never issued any bonds, and
the dividends it paid during the years
1904, 1905 and 1906 were not earned.
The balance sheet of June 30, 1908,
shows deficit Of 1904 20.
"Briefy told, the story of all three of
these companies is that they have been
run at loss, which is even greater than
the figures quoted show, for no allow
ance was made by any of them for de-
probation. Taking the cost of the plant
and the items of the construction &C
count at their book values, and making
the modest estimate of eight per cent
depreciation, these companies should
have set aside for depreciation during
the last year s139,149. Against this
there Is nothing. With these values the
cost per station for the Northeastern
was $4OS, for the Lewiston-Auburn 1925,
and for the Cumberland $500. The
average cost for all the Bell companies
is $l49 per station.
with the companies in this condition
there came to the New England Co. a
representative of the majority stock in
terests with an offer to sell. The offer
was declined as being unsatisfactory in
substance and detail. The management
of the New England company did not
care to make the purchase. A bad ex-
ample was more valuable to the New
England company than bad purchase.
But in justice to its own stockholders it
was bound to consider what might prove
to be good bargain. 1t made careful
of the plant and liabilities
of the three companies. After many
conferences and much correspondence it
in turn made an offer to purchase. The
offer was accepted.
"The seller agreed to assign certain |
indebtedness, to pay the re-
ceiver's salary, attorneys fees in excess
Of $500, certain receivership expenses,
4 - Ill kpfa nd