The Vermont watchman. [volume] (Montpelier, Vt.) 1883-1911, 1909-12-02
Organizing the Company.

much to the telephone.
Organizing the Company.
The New England Telephone Com
pany has capital of 100000, of
which $1,000 was given to the tele-
phone trust for the use of it's inven-
lions and the balance sold for $4,000
cash to investors in the New Eng
land territory The Bell Telephone
Company had a capital originally of
$450,00O. of which 100000 was pail
to the Old trust or association and
$150,OO0 expended for property ac-
quired, while the remaining $4,000
was sold for cash. The old trust rep
resented an original investment of
$4,000 by the four men who started
it-and mostly by Saunders. Y
therefore received 100000 in the Sc
c'rities of the New England Tele-
phorc ard the Bell Telephone Com
pun Wien those two branches first
came into existence. !-e; US bear tins
IN mind as We consi'ler some Il ne
later details of telephone finance.
The headquarters of the Bell Tele-
phone Company were transferred to
New York in 1878, Mr.. Hubbard be-
ing president until succeeded by Will
liam H. Forbes; Mr.. Sanders and later
George l.. Bradley, treasurer; Mr..
Vail, general manager and one Dew
onshire, accountant and auditor. In
February, 1879, the two original COM
Ypanies were consolidated under the
name of the National Bell Telephone
Company, organized with capital of
$S50,000 of which $3.50 900 was given
share for share for the stock of the
two constituent companies, and $780,
900 carried in the treasury for the
purposes of the corporation. The pos
sibilities Of the telephone were nov
dawning upon the country. Accord
ingly, its securities began to attract
attention in the market and from ar
initial quotation of $50 share in May
of 1879, telephone stock rose to 500
the same month; $40 in June; s13'
in July and 1927 by September.
The Western Union meantime, hat
become one of the big corporations o
Wall Street. Having it's original de
velopment along the lines of the rail
road, it came naturally within tn,
Vanderbilt sphere of influence and il
the later seventies was well estab
lished Vanderbilt corporation who's
directorate was composed o. men nj
less notable than those who managed
the affairs of the great railroad svs
TENS The Bell Telephone people
seeking extension and strong alliance
made a contract with the Western
Union whereby certain holdings o
the National Bell Telephone Compan
were taken over by the Western Uniol
on partnership basis.
! 1t should be explained here tina
: from the very beginning the Bell in
terests, under the advice and guild
ance of Mr.. Vail, gave only short Ii
! censes for the use of their patents
charging rental for the instruments
The licenses uniformly ran for
term of five years, after which tn
Bell company had the right reserve
: to go into the field and take over tn
business itself
1--WE believed" said Mr.. Vail in tel
ing the writer about this policy fe'
days ago, that the Bell interests wer
so valuable that we thought Their
was a partnership right in it whic
had value independently of the pal
ent rights. In other words, we be
e lieved that permanent bushes
S could be established which would ou
last all patents and in that bushes
we wanted to be partners. Therefor
; instead of selling the right to use OF
: system for so much money, or Othe
considerations, we would take par
nership in the business as eXtende,
n represented by a certain stock intel
o est
{ Tremendous Profits of Stockholders
t 1t may be worth while now to ste
o a minute and consider the reward
h reaped by the early hackers of IL
: telephone. 1t will be recalled tn;
: the 100000 of stock in the origin;
S telephone trust represented an in
n tial cash investment of $4,000 an
e received from the operating compai
d les first formed 100000 in their s.
: curities. If that stock had been sol
e at the prevailing high prices of II
:, winter of 1880 it would have rea
e lied little less than $4,000,000
: cash. If it had been kept it wouI
h have received in the stock of the An
lerican Bell Telephone Company 81
. 100000 which, if it We're sold at IL
: best prices, would have realized b
S tween $5,5OO,OOO and s6,OO0,000
y this stock had been held ont
: throughout, until the transfer of Il
e American Bell Telephone to the An
/" erican Telephone G. Telegraph Cor
a pany, in 1894, it would have receive
: $4,SOO,00O in the stock of that co
e poration.
e Mr.. Vail Leaves.