Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1913-11-20

ho down when the company wants to
realize on those securities
DEFENDS THE RATE on LOANS
Mr.. Deavitt commented on the fact
tual the New England company charged
s,, per cent. on its loans to subsidiary,
companies, but was able to borrow all
TIE money it needed at five per cent.
Nh Lonpley took issue with this as a
statement of fact. In 1902, he said, it had
q bond issue of a million dollars at four
per cent, but it had sn,oo000o on which
the interest was five per cent, and as
these bonds brought only 81 they really
represented ia per cent. You could bor-
row some money at five per cent he
said, but all the money that is needed
co.id not be obtained at five per cent,
in my opinion the money can't be raised
that Will be needed to continue the tele-
phone business in Vermont without an
adequate return on the money that is put
II. unless the bulk of the securities of
the company pay at least as high as
seven per cent"
Mt Dtavitt suggested that the $685.
lcar"a he Passumpstc company was on
Eotc- tina, could be called at any time
Mi. LulGvy admitted this but said he
tEou-u' the Passumpsic company would
have difficulty in meeting these notes
"ir any bank VIII furnish money at i've
or ~ yer cent, the New England com
rany viii be only TOO glad to place tho
loans with it,"
Don YOU think the Passumpsic com
pauy could borrow money at five per
cent with the New England company $
endorsement OF it's note?" asked Mr..
Dravitt
Possibly that is true" admitted Mr.,
Loug.cy, but We question somewhat
whether company would have the right
to obi2ate itself for the debt Of another
company.
Mr. Longley said the Vermont Tele-
phUno company began business in 1885,
H. & Brown being a direct licensee of
Ii. 3cll Telephone company for territory
embracing Washington and Lamollle
Counties october IS, 1872 he Incorporated
IFS property as the Vermont Telephone
company, and in March of the following
yea. transferred his property to this cor
poral.Dl and issued stock to the amount
or 2-l"O.
ON November 20, 1897, the New England
Te'epu"n, and Telegraph company pur-
cua-"l tI' entire capital stock from Mr..
o"u aud members Of lis family al par,
S.ns. Juept issues of stock were made as
follows May 20, 1901 for cash, 5000,
aai August !, 1911, for cash, $4,000, max
lie the total stock outstanding at Ne
present time $4,000,
I.c total plant value of the company
Ct tine present time was given as s237
$685. The trial balance Of December
81, 1917, -howod an outstanding indebted
ness Of sSG7342, "A depreciation reserve of
81 ,3oiil, and surplus earnings OF $50, 4l9 &c.
Nj Longley said this surplus repre-
selt"d the accumulations OF profits since
the New England company purchased the
plant i'm 1851 For fourteen years it paid
~ dividends, the first dividend of a..
per cen: being declared In 1911 In 1872
tn d vid, nd rate was seven per cent
and thus far in 1913, three dividends OF
1a4 per cent. have been declared
Chairman Bacon asked the witness II
| he thought the rates should be based up.
on the physical assets plus the cost OF
| establishing the business as a going con.
Germ
| Il think rates should be based upon the
replacement value Of the plant said Mr.
LOngley.
And you further claim that dividends
should be higher now because they have
been foregone in the past is not that cor
| rect?" asked the chairman.