Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1925-09-01

be regretted because of the expense
which it involves. The officers Of the
New England Company would prefer
to secure the needed revenue in some
other way, If there were any other
way. but since there is not they come
to the conclusion that to protect the
existing investment in the Company's
business, to maintain the credit of
the Company. to obtain the money
which they must obtain to give New
England telephone users through the
Company's territory and in the state
Of Maine to pay rates commensurate
with the cost of furnishing service"
President Jones Testifies
Matt B. Jones, president of the
New England Telephone and Tele-
graph Co. since February, 1919, and
for some 20 years before that date
connected with the company as
counsel, general counsel and vice
president, was the first witness.
He described the organization of
the company in 1888, when it took
over the property and business of
eight Or nine small companies, which
were consolidated into the New Eng
land Telephone and Telegraph Co.
This company now renders ex-
change and toll service for approx
mately 100000 telephones in the
states of Maine, New Hampshire,
Vermont, Massachusetts and Rhode
Island, of which approximately $4,000
telephones are in New Hampshire.
Some 10000 telephones, chiefly in
Maine, New Hampshire and Vermont
are operated by other telephone COM
panies. In some of these companies
such as the Aroostook, the Maine,
the Moosehead, the Eastern Tel and
Tel. Co.'s in this state, the New Eng
land company has a stock interest.
In most Of them, however, 1t has no
interest except an agreement for an
interchange of toll business.
Mr.. Jones gave an extensive re-
view of the financial history of the
company, the principal feature of
which lay in the large amount of
new capital required in the last few
years to meet the growing demands
of the public.
Annual Capital Requirements
From 1896 to 1920, a period of "a
years. the annual capital require
ments were about eight or nine times
as much as for each of the previous
y
September /, 1920, to Jan /, 1925. he
said the company had issued bonds
or long time notes. to the amount of
! $35,S00,0O0. capital stock to the
amount of $16,549,200, and had bor-
! rowed upon short term notes, yet to
be funded, over $31, 100000, making a
total of approximately sS3,500,00o.
The new capital requirements of the
| last five years averaged over $4,000
| 900 per year as against the average
annual requirement of $2,400.000 for
the "a years previous to 1920. Ex-
pressed in another way, the new cap
ital requirements for the last four
years were almost as much per
month as they were per year for a
quarter of century prior to 1920.
Reviews Rate History Of Company
Reviewing the rate history of the
company, Mr.. Jones said that in 1919,
during the period of government con-
troll, the postmaster general estab-
! lished a complete new schedule for
exchange service. This increased fiat
rate business service by so cents
month and fiat rate residence service
25 cents a month. The monthly
guarantees for measured service were
similarly increased, but with cor
responding increase in the number OF
calls allowed.
The postmaster general also made
changes in toll rates. classifying
them as station to-station. person.
to- person, appointment and messen-
ger calls. The practical effect Of this
was to bring about 900 of all calls
into the station to station classical
ton, the lowest rate. The revenue
, increase from this change was, these
fore, less than 10 percent.
The effect of all the rate changes
during more than 10 years, including
the changes made last year, has
been to increase the revenue of the
company by about 14.7 percent.
Relations with American Tel. 4 Tel.
Co.
Asked about the New England
Company's relations with the Amer
lean Tel. and Tel. Co., he said they
were two-fold-a stock ownership
relation. the American Company
owning about So percent OF his Com
pany's stock, and a contractural re-
lationship based upon the so-called
license contract, under which, in re-
turn for certain services which he
described in detail, his company
paid A IL percent of it's telephone
revenue to the American Company.
This contract was originally es-
tablished on October 81. 1883, be-
tween tie New England Tel. & Tel.
Co. ana the American Bell Tel. Co.,
the predecessor of the A. T. & T. Co.
At that time the American Bell Tel.
Co, did not own any stock in the
New England Company. nor were
there any officers common to both
companies.
When the New England Company
was formed, the American Company
received in stock $4,26S,000 for a
perpetual license and slightly under
50 ,000, 900 for telephone property
which it transferred. All subsequent
acquisitions of stock by the Ameri-
can Company have been made on the
same terms as by other stockhold-
ers namely, by payment thereof in
cash at par.
The license contract provided that
the American Company should fur
nish all transmitters, receivers and
induction coils used by the licensees
subscribers. AS the business de-
veloped, various kinds Of expert adj
vice and assistance were furnished
by the American Company, implicitly
as a part of this contract. In 1920
the contract was reaffirmed and
what had been implied on the ba-
sis of usage and custom was set
forth in explicit terms.
Among the services rendered by
the American Company under this
contract Mr.. Jones specified the fol-
lowing:
1t furnishes all transmitters, re-
ceivers and induction coils used by
his company's subscribers, thus re-
lieving his company of an invest
ment Of several million dollars, and
also of the major maintenance costs
incident thereto: likewise, replaces
them when worn out of when i'm
nroued tynes are deYeloned.