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HOW CHICAGO TELEPHONE CO. RIMMED THE PEOPLE
As a separator of the people
from their motley, the Chicago
Telephone Co. stands without a
Chicago has suffered much
from hold-up men, but a hold-up
man is a simple child of nature
compared with the telephone
company, which accomplishes the
ends of the highwaymen, with
much more ease and less chance
of going to the pen for it.
This was clearly shown by the
city's expert, Professor E. W. Be
mis, before the cpuncil committee
on gas, oil and light yesterday
The exposure came when ques
tions were asked aboutu little $4,
5(XfD00 issue of stock made by the
"The company," explained Be
mis, "overcharged the people $4,
500,000 for their, telephones.
"Now, if the! company had
treated this properly as surplus, it
would have had to give a 10 per
"A 10 per cent dividend is
above a reasonable return on an
investment, and the people would
have hollered for a reduction of
rates and probably would have
been upheld in their demands.
''So the company did not treat
this amount as surplus. It put
the amount in the maintenance
and operation column fork while,
made a fewfextensions, and then
issued $4,500,000 of stock.
"This stock it gave as-a present
to its stockholders, The stock
holders did not pay a cent for it.
"It was very clever. The addi
tional issue of stock reduced the
dividend from 10 per cent to 8X
per cent, which does not sound so
'unreasonable, and the stockhold-'
ers got the money just the same.",
"But if the stockholders did not,
pay a cent for this issue of stock, j
it was watered stock, wasn't it?
asked Aid. Theodore K. Long.
"Not exactly," said Berois.
"You see, although the stdckhold
ersdid not pay for the stock, the "
subscribers did jh overcharges.
"Watered. stock i stock which.,
does not represent any invest
ment. In this case, the people
paid for the investment and the
stockholders got it." '
"Can't we make the company
give up that money?" demanded
Aid. James B. Bowler. "Can't we
m&ke the company rebate $15 or
$20 to each subscriber?"
Prof. Bemfs threw up his hands. i
"Oh, no, you can't do that," he r
said. "You couldn't do any thing ;
"But the money was taken from 1
the subscribers, wasn't It?" Bow
ler demanded, ' '
"Yes," said Bemis, J"but in a
perfectly legitimate business'
At this point, sounds of great
agitation Were heard from one
corner, of the 'council chamber.
They came from B. E. Sunny,
president of the telephone com
pany. Mr Sunny seemed to be
Aid. Bowler s suggestion is -ridiculous,"
he gasped, "simply
ridiculous too ridiculous to talk :