The Barre daily times. (Barre, Vt.) 1897-1959, 1913-07-16


or permit the existence of such con-
tracts, or protect any corporation or in
dividual in any rights or privileges OBJ
tanned Hereunder. We consider such
contracts a perfect exempliication OF
monopoly.
The officers and agents of the New
| England company and its subsidiary
companies, claim to us that they are not
making any profit from the business
conducted in ,-.,s state, but we are thor
oughly convinced from our investigation
that their contention is not well found
ed in fact.
This proposition at the outset involves
the methods of bookkeeping adopted by
these companies, and the correctness,
| fairness and honesty of the same, and
the unfairness of their contracts and
methods of operation, to the state OF
| Vermont and the business done IN Yer
mont.
| For instance, we find that the New
England company leases to all oil lts
subsidiary companies in this state, and
| to a large majority of its connecting
companies, all the receivers and trans
mitters used by them in their respec-
! tive territories. The cost price OF re-
ceiver and transmitter for each telephone
complete 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
receiver and transmitter so leased, and
| from Others an annual rental OF Sl.2o.
| And from our investigation we find that
| the natural life of receiver and trans
mitter is from 10 to 10 years. we
also find that there is a further tax
exacted from each subsidiary company
of one per cent, OF their gross revenue
for services rendered b. general officers
of the New England company.
| We are also satisfied that the division
of tolls between the New England COM
pany and the local subsidiary companies
| is unfair to the latter company or com.
panies. and that the natural result OF
such division of earnings is not only 10
deprive the local companies OF a large
portion of their just revenue, but to d.
vert the same into the treasury OF the
parent company and diminish the gross
revenue of the companies doing business
within this state, and we are satisfied
that the policy Of this state heretofore
! existing of taxing such companies on
I lutI RIbSH revenue has bNNti ~
| tant factor in bringing about this con-
dtion Of affairs.
| We have made some examination into
the methods of such bookkeeping and
the various items of their accounts, and
we are satisfied that the charges OF
these various companies particularly re-
lating TO maintenance and reeonstruc-
ton and the reserve for depreciation
charged to their expense account, are
Unreasonable, exorbitant, and an indirect
diversion Of the profits of the business,
| When these items were questioned by
us directly to the officers representing
the New England company and its va
rious subsidiary companies in this state,
no satisfactory explanation was made,
and we were informed that it would be
we'll for us to obtain the assistance OF
a corps Of accountants to audit these
companies books and that was the only
way to determine afiirmatively whether
our conclusion of unfairness of these
and other items was justified or not.
/ In this connection we advise you that
the books, accounts and papers OF these
various companies including the stock
books of the subsidiary companies or
ganized under 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 in
! formation with relation to the matters
of the respective companies, and copies
of contracts between the New England
company and the American Telephone d
! Telegraph Co., which controls it, and also
copies Of existing contracts between the
New England company and the Western
Electric Co., another company controlled
by the American Telephone & Telegraph
Co.. have not been presented to us or
! furnished In accordance with our re-
quests.
Inasmuch as the American Telephone
& Telegraph Co. by ownership of all or
a majority of the stock owns and con-
trolls not only the New England COM
pany. but also the Western Electric Co,
and various other companies which the
New England company has contract and
intimate business relationship which VI
tally affects the business in this state,
it is our opinion that a national lnves-
tigation should and ought to be made,
We find that the American Telephone
& Telegraph Co. eNacts from the New
England company an annual tax OF az
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 sub
salaries,
The entire gross revenue OF the New
England company for the year 1912 was
ESI6,l36 .2SS.42 and for the state OF Ner-
mont for the same year $780, 1896.
Officers of the New England and sub
sidiary companies requested an oppor-
tunity to appear before us to show the
condition of the companies and furnish
information respecting their cost and
management and all other matters in
volved in our investigation. This re-
quest was granted and hearing was
had at the courthouse in the city OF
ST. Adams on Thursday, July 3, at which
hearing there were present. representing
these various companies, Manager Brown
of the Passsumpsie company, Manager
st. Clair of the Franklin County com
pany; F. w. Storys, vice-president OF
all the subsidiary companies in this
state; and NJ. B. Jones, general counsel
for the New england and its subsidiary
companies.
The distinguished gentlemen named
did not have, and no person appeared
before us who did have any knowledge
concerning the books, accounts. and gem