Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1913-11-06

| the American company for 100000 tole-
phones was s3i575O This Az per cent
represents not only the rental of instru-
| ments but various other research and
engineering and legal services and Mr.
| Spalding reduced the additional sum of
$31425O to a unit of ST cents per year per
| telephone which he claimed was very
low figure for the services rendered.
| LOAN s3,000000 AT FIVE PER CENT
| OF the si,OOo,Ooo of additional stock is
| sued in 1872, SIS per cent. went to the
! American Telephone & Telegraph com
pany as one of the stockholders Of the
| Now England company. Mr.. Spalding
said this latter company paid for this
stock at par Just the same as any other
New England stakeholder, and repealed
the insinuation that this could bc con-
! sidored in any sense as a stock dividend
although the New England stock was
selling above par at that time.
| The report of the commission showed
| a loan of 100000 to the American com
pany by the New England company,
which Mr.. Spalding explained with a
( statement that after the New England
! company had made it's stock and bond
! issues for 1912. ana had cleaned up its
! floating Indebtedness. it found itself with
! this amount of cash on hand for future
use. 1t loaned it to the American com
! pany as call loan at five per cent.
! which ne said was more than the com
| pany could get for this money from any
other source
! Just before the close of the days ses-
! sion. the inventory Of the Champlain
| Valley company was supplied at the re-
quest Of Mr.. Cook The figures quoted
were as follows: Central office equip
ment, A,2j373. station equipment, tl1
o67 -; pole lines. N6.9&S57; wire $50, 25G4 AZ;
rights of way. S597372;; aerial cable. So.
25l3S a total of S12o2il0j Supplies were
! invontoried at S1G2G7o tools furniture
and teams at S6NGSi. and working capital
at 81, 4N}So. making grand total of s126,-
| $3.50
! The hearing will be resumed next Mon
day afternoon mt two o'clock.
DEPRECIATION ALLOWANCES
Tho principal subject yesterday was
| tho asccrtaiuing of what is proper al
| loWaucc for depreciation and how a de-
| probation figure is arrived at. President
Spadiur said that as a result of esti-
mates based on their experience and
! best Judgment. the New England com
pauy and its subsidiaries laid aside last
year as a depreciation liability a sum
amounting to six per cent of the actual
value of the plant. This figure repre-
~onted the average depreciation of n
score of items entering into the construc-
ton Of a telephone plant.
This depreciation reserve was always
carried as liability and in no crcum-
stances could 90 to the stockholders Of
the company in the form of d idends
Tho purpose Of the fund. he said. was to
provide for the replacement Of the plant
whenever it became necessary to replace
It because of absolute deterioration,
ohsolcscrnc, or because of extraordinary
CONTINGENCIES such as slcet storms, fires
and the like.
The commission asked Mr.. Spaldng il
he could explain upon what theory Mr.
Lawrence of the Springfield Local Tele-
phone company had managed to increase
his capitalization but the witness said
he was not familiar with the details of
that case and would not want to ex-
press an opinion without having made a
close examination good deal would
depend, he said. upon what charge If
any Mr Lawrence made for his own
services, whether the bookkeeper ON
ployed by him IN his other enterprises
was properly charged for the work done
for the telephone company, whether a
proportionate charge for rent, light and
heat was made for the telephone COM
pany.
PURCHASES NOT LIMITED.
The commission also went very thor
oughly into the question of the purchas-
ing contract between the New England
company and the Western Electric com
pany. The latter concern Is the manu-
featuring and purchasing branch of all
the Bell companies and Is controlled by
the American Telephone IL Telegraph
company. Mr.. Spalding denied. however.
that the New England company, as one
of the Bell subsidiaries. was compelled
ern Electric company. lie maintained
that this large central purchasing and
manufacturing agency was the means OF
enabling the Bell companies to get stand
ard material of better quality at lower
prices and with better deliveries than
was possible elsewhere. one of the con-
ditons of the contract as he read it was
that the New England company might
exempt from tne contract any article II
desired to purchase elsewhere. He quot
ed some figures to show that, during the
last five years, the Western Electric
company has secured Increasing
amount Of the Independent telephone
patronage of the country, and that ii had
supplied to these independents, in COM
petition with other manufacturers bids,
3 per cent. of the apparatus and A. per
cent of the cable.
BY making the Western Electric com
pany its purchasing agent the New Eng
land company has been able to reduce
the quantity of stock carried I'm it's store
houses from an average of IS per tele-
phone in 1903 to an average of s. per
telephone in 1913.
In reply to the suggestion that the
New England company was compelled to
buy from the Western Electric company,
Ar. Spalding said, That is not so; If the
New England company found that it
could purchase TO better advantage out
side Of the Western Electric company,
1t would do so at once"
THERE WITH THE GOODS
When the conversation turned to ready
excuses the other night, Congressman
l,aorVg NJ Norris pf 10