New-York tribune., 1911-01-20
MORGAN & CO. PLAN
TELEPHONE MERGER
MAY Turn Over Control OF lnde-
pendent Systems to Ameri-
can T. & T. Co.
LEGAL OBSTACLES IN WAY
Attorneys Believe Proposed Com
bination Would Not Be in
Violation of Sherman
Anti Trust Law.

J. p. Morgan & Co., who within the
last year or so have acquired control
of number Of independent telephone
companies Of the Middle West are con-
Quoting negotiations, II is learned from
Authoritative sources, looking to the mer-
ger Of these and other leading indie
.pendent telephone systems of the United
States with the American-Telephone and
Telegraph Company. The negotiations
are stir far from a result, and their ulti-
tmate success depends upon the overcom-
,tng Of legal obstacles which may stand
In the way Of a merger. as well as upon
rhe coming 10 an agreement upon terms
between the independents and the Amer
i;can Telephone and Telegraph Company.
II is understood to be the opinion Of
attorneys for the telephone interests
that a telephone system by the very
mature Of its operations should he a
natural monopoly and that a Combna-
.ton such as is in contemplation would
mot be in violation Of the Sherman anti
.trus; Law.
Within the last few years there has
neen an extensive development Of indie
pendent telephone systems throughout
1.-THE United States. especially in the East
iard the Middle West, and the indie
tIendents taken together, are now con-
siderable factor in the telephone busi-
mess. Not a few of the independent COM
j anics have proved failures. but others
ere being operated successfully.
The principal Morgan purchases were
made late i'm 1909. These included the
acquisition O: controlling interests in
Ithe United states Long Distance Tele-
lYhone Company and the Cuyahoga Tele-
llhone Company. Of Cleveland; the To-
'ledo Home Telephone Company, the Ciu-
tzens' Telephone Company. Of Columbus,
ionic; the Dayton Home Telephone Com
bany. the Indianapolis Telephone Com
panv, the New Long Distance Telephone
lCompanv, Of indiana, and the New Tele-
Il hone Company. Of Indianapolis.
Bouaht with Firms Own Funds.
These companies. it was announced,
dad been purchased by J. ?. Morgan &
Co with their own funds as an invest
rrent. without consultation or arrange
mert with any other interests. The
first announcement was Of the purchase
of the United States Long Distance and
Cuyahoca Telephone companies, and
president Vail Of the American Tele-
phone and Telegraph Company was
quoted at the time as saying:
"Our COMPANY is not interested in the
purchase Of the United states and
Cuvahoga companies. either directly or
indirectly. and does not expect to he.
The two concerns were offered to us
come time ago. hut We turned the offer
down As a matter Of fact. we could not
take them over without violating the
3uterstate commerce law. They are COM
1eting lines. and there will he no change
ir that respect because Of the change
sf ownership, as far as I know
In February, 1910 a series Of hearings
was held in this city before a special
commissioner appointed to take testi-
rnory in o. suit brought 10y minority
stockhoders Of certain Of the indepen-
.Cent companies acquired by the Morgan
linn in the preceding December 10 have
1re sale Of the majority stocks set aside.
Irhe contention Of the plaintiffs was
That J. =. Morgan 4 Co. had acted in
h interest Of the American Telephone
end Telegraph COMPANY.
Tho hearings came to a sudden and
nr,xrlaincd end ON February l., after
having been in progress only a week.
T. J. Hall. president Of the Ameri-
can Telephone and Telegraph Company,
rhe principal witness. testified that
hocal banking firm had bought with
erorey loaned bv his company several
rrNlion dollars worth Of stock of inde-
nerdent companies. the control Of which
icompenies was 20 be taken over by