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NOW IS THE CHANCE FOR PEOPLE OF CHICAGO
TO GO INTO THE TELEPHONE BUSINESS
BY N. D. COCHRAN
Probably the people of Chicago will neverget a better opportunity than
they have now of going-into the telephone business for themselves, and I
know- of no matter better worth the earnest attention of the city adminis
tration than the. municipal ownership of telephones.
In 1899 a private corporation was granted a telephone franchise by the
city council. The usual promise of better service, competition and lower
rates was made.
Having secured that telephone franchise, with the right to construct
conduits under the streets owned by the people,' the corporation proceeded
to construct a tunnel system along with the telephone system.
Now the .private corporation which secured a tunnel franchise as well
as a telephone franchise comes before council and asks permission to sell
out the telephone end of the business, which would leave it in full possession
of its freight tunnel system.
Nothing is offered the city as compensation for waiving its rights
under the franchise beyond the empty argument that one telephone is bet
ter than two, and that telephone business is a natural monopoly.
The consideration given the people for the original franchise was lower
rates and better service. The people got lower rates and they got much
better service. But now the franchise grabbers come hack to the city ask
ing that they surrender that compensation, give up both the lower rates
and the better service m order that the company may make more money.
And the people are asked to make -telephone users make good the
$6,300,000 which the 'phone trust proposes to pay for the TELEPHONE
PROPERTY of the funnel company, which means that Chicago will have
what it had before it granted that franchise; that is, a telephone monopoly
by the Bell 'phone trust, . except that $6,300,000 is added to the capitaliza
tion, on which telephone users will -have to pay 7 per cent interest.
On $6,300,000 the interest at 7 per cent would amount to $441,000 a
year; and telephone users, after the automatic is sold to the Bell, will be
$441,000 a year worse off than they were before the automatic company
got a franchise.
The same old monopoly will be on the backs of the people,1" with the
right, under its franchise, to make the people pay to the Bell company
what it pays for the automatic property. Telephone users will be at least
$6,300,000 in debt, with nothing to show for it For they will have to pay
in telephone rates the interest on the $6,300,000.
And there- is not even a guarantee that it will be only $6,300,000, for
the tunnel company proposed to sell to the Bell concern, of which the Chi
cago Telephone Company is a subsidiary concern. And the Bell concern
may then sell the automatic to -the Chicago Telephone Co. for any sum it
sees fit what it paid $6,300,000 for.
If the city waives its rights and permits this, sale, what can council do
to prevent the American Telephone & Telegraph Co., the Bell' 'phone trust,
from selling it to the Chicago Telephone-Co. for $10,000,000 or $20,000,000
or $50,000,000? -
It should be remembered that the franchise of the Chicago Telephone
Co. permits it to earn 7 per cent on its capitalization. How can the city
prevent the Chicago Telephone Co. from making that capitalization what
ever it sees fit, by paying to itself, as-the American Telephone & Telegraph