St. Johnsbury Caledonian. [volume] (St. Johnsbury, Vt.) 1867-1919, 1913-07-23

against public policy, and in viola
ton of law.
Consider it a Monopoly
We do not think it should be the
policy of the state of Vermont to
sanction or permit the existence of
such contracts, or protect any cor
poration or individual in any rights
or privileges obtained Hereunder.
We consider such contracts a per-
feet exemplifcation of monopoly.
The officers and agents of the New
England company and it's subsidiary
companies, claim to us that they
are not making any profit from the
business conducted in this state.
but we are thoroughly convinced
from our investigation that their
contention is not we'll founded in
fact.
This proposition at the outset in
wolves the methods of bookkeeping
adopted by these companies, and
the correctness, fairness and hon
esty of the same, and the unfairness
OF their contracts and methods of
operation, to the state of Vermont
and the business done in Vermont.
For instance, we find that the
New England company leases to all
OF its subsidiary companies in this
state, and to a large majority of
its connecting companies, all the
receivers and transmitters used by
them in their respective territories.
The cost price of a receiver and
transmitter for each telephone com
plete is So, and the New England
company exacts from such controlled
or connecting companies, in some
instances, an annual rental of IS
cents for each such receiver and
transmitter so leased, and from
others an annual rental of S1.25.
And from our investigation we find
that the natural life of a receiver
and transmitter is from ten to
fifteen years We also find that
there is a further tax exalted from
each subsidiary company of one
per cent of their gross revenue for
services rendered by general officers
of the New England company.
Division of Tolls Unfair
We are also satisfied that the
division of tolls between the New
England company and the local or
subsidiary companies is unfair to the
latter company or companies, and
that the natural result of such divis-
ion of earnings is not only to deprive
the local companies of a large portion
of their just revenue, but to divert
the same into the treasury of the
parent company and diminish the
gross revenue of the companies do
ing business within this state, and
we are satisfied that the policy of
this state heretofore existing of
taxing such companies on their gross
revenue has been an important fac
tor in bringing about this condition
of affairs.
We have made some examination
into the methods of such bookkeeping
and the various items of their ac-
counts, and we are satisfied that the
charges of these various COM
panies, particularly relating to main
tenance and reconstruction and the
reserve for depreciation charged to
their expense account, are unreason-
able, exorbitant, and an indirect di-
version of the profits of the business.
When these items were questioned
by us directly to the officers repre-
senting the New England company
and its various subsidiary companies
in this state, no satisfactory explana-
ton was made, and we were in
formed that it would be well for us
" OONalA1 TIC dSSlSldnC6 VI a COIDS VI
accountants to audit these COM
panies' books, and that was the only
way to determine affirmatively wheth-
er our conclusion of unfairness of
these and other items was justified
or not. In this connection we advise
you that the books, accounts and pap
ers of these various companies, in
Guiding the stock books of the
subsidiary companies, organized IN
der the laws of this state, are
kept at the Office of the New Eng
land company in Boston. Not only
are the books kept in Boston, but
they have not been presented to us,
and much information that we
have requested in writing with rela-
ton to the matters of the respective
companies, and copies of contracts
between the New England company
and the American Telephone & Tel
egraph company, which controls it,
and also copies of existing contracts
between the New England company
and the Western Electric company,
another company controlled by the
American Telephone & Telegraph
company, have not been presented to
us or furnished in accordance with
our requests.
FaVOf NaUIO0aI AHVCSISdAl1On
Inasmuch as the American Tele-
phone & Telegraph company by own
ership of all or a majority of the
stock owns and controls not only the
New England company, but also the
Western Electric company, and
various other companies with which
the New England company has con-
tract and intimate business rela-
tionship which vitality affects the
business in this state, it is our opin-
ion that a national investigation
should and ought to be made.
We find that the American Tele-
phone & Telegraph company exacts
from the New England company an
annual tax of 4 y per cent. of its
entire gross revenue, and the only
tangible consideration we have been
able to find for such payment is the
use of receivers and transmitters by
the New England company and its
subsidiaries.
The entire gross revenue of the