Albuquerque citizen., 1908-03-20
CONSTANT GAIN
DURING THE
YEAR
President Vail Gives Interest
ing Figures of American Tel.
ephone and Telegraph co.

pauy vhlCh mas just Dteh lssueu' |
President Theodore n. Vail gives |
some interesting figures and discusses |
at length several features of the tele- |
phone business.
The business has shown constant |
gain during the year and at the |
close there were S,S39,000 stations |
connected to the system, with a total |
of S,610,592 miles of wire. The to-
tai number of exchange and toll calls
for the year was about 5,997, ,000O 900. |
During the year $50, 400 was add
ed to construction. and in the past
eight years $351.S35,655 has been 50
added.
At the present time there are out
standing 1,525,2S0 shares of stock of
the company, 1,312,502 of which are
held by 23,453 stockholders, an
average of less than Sc shares each.
the balance 2t2.77S shares, being
held by 16 shareholders each with
5000 shares or over.
At the close of the year valuation
based on the replacement cost of the
existing plant, without any allowance
for franchises or for unearned in
crement. showed s4SS,296, 900.
Against this there were outstanding
phone and Telegraph company and
its associated companies, including
capital stock at par in the hands of
the public, of 1854, $4,000. These
companies also had cash on hand,
quick assets and investments of $1O1,-
O74.OO0, so that the obligations
against the plant were only $453,-
865,000. or $34.431, 900 less than its
appraised value, The book value OF
the exchange construction is $11 per
exchange station and the book value
of all property, including the long
distance lines, is s162 per station.
For the first time a statement of
the operating companies (that Is,
those companies which directly fur
nish the telephone service) is given,
with gross earnings for the whole
country of s120,753,200, operating
and general expense of 53.242,3OO,
and maintenance of plant S34,665,-
zoo. The balance available for divi-
dends was s25.S19, 700. out of which
dividends amounting TO S19,206,1 100
were declared, which seems reason
able when the value of the plant is
considered.
President Vail calls attention to the
exaggerated stories Of the profits
made by early investors and shows
how these stories, coupled with the
general business activity OF the last
few years, have made 1t possible for
promoters to launch telephone COM
panies pledged to low rates for ex-
change service and high dividends to
investors. Many of these companies
are asking relief from the conditions
they readily accepted, and for In
creased rates and congratulations are
now in progress These companies
found that repairs and reconstruc-
tion, which with new plant are at
a minimum, steadily increase, and
that many times while the plant is
growing rapidly these charges are lost
in construction. Sooner or later these
charges must be provided for out of
current revenue. and if dividends
have been paid without first making
adequate provision for maintenance
there can only be an end in disaster.
Under these conditions ii would seem
as IL any gain to the public by COM
petition based on low rates has not
made up for the loss of capital in
vested.
The problem of rates and rate reg
ulaton is discussed at length, and 1t
is shown that the policy of the Bell
companies in any controversy as to
rates IL to make a complete showing
OF the cost and value of plant and
service, and that there is nothing to
conceal. Fair rates are all that Is
asked for, and the belief is expressed
that with full knowledge of all the
circumstances the pubic will readily
acquiesce in such rates. Fair rates
are defined as those which maintain
the plant in a state of high efficiency
a.. faf Co. piN
fair return on money invested and
promise a fair return on new money
needed. Any revenue beyond these
requirements could, after allowing foI
proper reserve be used for the bene-
tit of the public, but the company
should be allowed to retain a par
sufficient to stimulate the most eff
cieut and economical management.
4 regards public control in the
absence OF competition the repOr
says 1T is not believed that there Is
any serious objection TO such control
provided il is independent, intelligent
Cousidera'e, thorough and just rec
oSnizing, as does the Interstate Com
iuerce commission in its report re
Gently issued, that capital is entitled
90 It's fair return and good manage
ment or enterprise to its reward"
The value Of telephone service Il
the subscribers is aualyzed, ana i
is shown that while a connection viii
the exchange may be termed a con
venience for that subscriber, it Is
necessity for all other subscribers. l
is the ability to communicate Will
others which makes the exchang,
valuable. l. is the use Of other cir
cults than your own. The value o
any exchange depends on the are'
covered and the maximum number o
desired individuals who can b.
reached, and the measure of the vaiu
depends upon the use Of the eN
change system rs a whole Rate
must be sa adjusted that no rate shal
bear unjustly on particular iadiyid
uals or classes and that a. some rat
connection with the exchange is with