The Barre daily times. (Barre, Vt.) 1897-1959, 1913-11-14
NO DIVIDENDS FOR IA YEARS.
And 100000 Indebtedness Had Accumu-
lated on Vermont Tel. & Tel. Co.


The Vermont public service commits
sion had just reached the discussion of
the why's and wherefores of five-cent
toll charge between Barre and Mont
pelier on the Vermont Tel. L. Tel Co. $
lines when adjournment was taken at
Montpelier last night to next Tuesday
morning. Auditor Longley said the rate
did not apply to single party lines and
that it was imposed when the Barre
and Montpelier switchboards were
changed from magnetic to the common
battery type. He couldn't tell just how
the rate happened to be fixed but prom
ised to explain when the hearing is re-
sumed next week.
Previously, Auditor Longley testified
that the New England company pur-
chased the entire capital stock of the
Vermont company in 1897, but for the
Ia years until 1911 no dividends were
declared Meanwhile floating indebt
edness amounting to something over
100000 had accumulated. In 1917 this
indebtedness was wiped out by the pay
ments received from 100000 of new
stock.
In the same connection it appeared
that whatever surplus was accumulated
was invested in the eompany's plant,
and the question that precipitated the
discussion was whether this surplus
would not have been better invested in
securities. the securities to be used as
collateral for loans.
Mr. Longley said that if the money
is put into the plant it has constant
value and if the plant is kept up the
protection to it is an asset on which
money can be borrowed at any time.
On tie other hand if the investment of
the Surplus is in securities the market
may be down when the company wants
to realize on those securities.
Mm Deayitt commented on the fact
that the New England company charged
o per cent on as loans to subsidiary
companies, but was able TO borrow all
the money it needed at per cent. Mr..
Longley took issue with this as state
ment OF fact. In 1909, he said it had
a bond Issue of Sl,000.000 at per cent,
but it had Sll 100000 on which the in
terest was ) per cent, and as these
bonds brought only 90 they really rep
row some money at per cent he said,
"but all the money that is needed could
not be obtained at per cent. In my
opinion the money can't be raised that
will be needed to continue the telephone
business in Vermont without an ade-
quate return on the money that is put
in, unless the bulk of the securities OF
The company pay at least as high as 7
per cent"
1t appeared that the sum Of 81 ,49l.s7
was paid the Vermont company by the
New England company in adjusting an
account for service rendered the Mont
peler & Wells River railroad during
several years. The New England com
pany stood one-half the cost of this
service. 1t appeared that the telephone
had an arrangement with the
railroad companies by which there was
an exchange of telephone service for
rights OF way and transportation. A
similar arrangement was in effect with
the Boston 4 Maine the st. Johnsbury
& Lake Champlain and other companies.
One per cent Of the gross revenue of
the Vermont company was paid the New
England company fof Supervision, en-
and other overhead charges.
No officer Of the New England company
draws any salary from the subsidiary
Mr.. Longley said he thought
this | per cent charge was altogether
100 small to compensate for his services
ind that OF tile president OF the sub
,idiary companies and other officials who
,ave their services without direct charge.
The new toll contract made with the
Vermont company in 1911 gave the Yer
mont company 3l.3 per cent of the orig
mating toll business as against 27.6
per cent under the old contract, Mr..
Longley said.
Commissioner Pollard noted the fact
hat the 100000 worth of new stock is
sued in 1911 carried per cent divi-
lend rate, while the loans which it took
up were at 6 per cent rate. Mr.. Long
ey thought this was entirely justified, |
irst, because the New England com
1any's own stock paid Z per cent and
,lso because, in his opinion, the Yer |
mont company could not get better
oaning rate than the New England COM !
,any afforded it. In fact he did not |
hink the Vermont subsidiaries could |
,orrow money at 9 per cent without the |
support of the New England company. |