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AUTOMATIC TELEPHONE PRICE IS ONE GRAND
FLIM-FLAM, REPORT SHOWS
T., wanted to pay $6,300,000 for the
automatic, he again backs up the se
rious charges of the Penny Phone
league.
"That the American Telephone &
Telegraph Co. made the agreeement
(to buy for $6,300,000) for the ulti
mate purpose of turning the property
over to the Chicago Telephone Co.
is beyond question, it owning approx
imately 97 per cent of the stock of
the Chicago Telepohne Co.," reports
Miller. "It is significant, however,
that the president of the Chicago
Telephone Co. (B. F. Sunny), who
was at the time also an officer in the
A. T. & T., knew nothing of the pro
posed purchase until after the agree
ment had been made."
Probing for a reason why in the
name of money the A. T. & T. want
ed to pay $6,300,000 for property
worth only $1,141,000,' he says he
couldn't find any real reason. -He
heard maybe the A. T. & T. wanted
the tunnels of the Automatic for Chi
cago phone conduits. But he found
those tunnels could be built up to
1930 for $235,000, which is a whole
lot under $6,300,000.
He then explains that to a man on
the outside looking in, the A. T. & T.,
wanted the automatic out of the way
because it's a nuisance that might
develop into a strong competitor
most any time. He writes:
"There appears on the surface only
one possible theory on which the A.
-T. & T. could justify payment of so
large a sum for the acquirement of
this property, and that is on account
of its competitive or nuisance value.
I do not believe that in 1913, when
the agreement was made, the compe
tition of the Automatic Telephone
Co. was hurting the Chicago Tele
phone Co. very much. There 'was,
however, always the possibility that
sufficient capital might be found by
the tunnel company or its successors
to extend the automatic system all
Nearly two years now the Penny
Phone league has been telling Chi
cago that if city council lets the Chi
cago Utilities Co. sell its automatic
phone system to the American Tele
phone & Telegraph Co. for $6,300,000
phone users of Chicago would be
flim-flammed.
When Morton L. Johnson, presi
dent of the Penny Phone league,
came before the gas-oil committee
charging the automatic system did
not have 20,000 subscribers as re
quired and the property wasn't worth
anywhere near $6,300,000, State Sen
ator Sam Ettelson, lawyer for Chi
cago Utilities Co., disputed Johnson.
Twice Ettelson argued with straight
face and with clear statements that
the automatic company had 20,000
subscribers and it ought to be given
permission to sell for $6,300,000.
Now comes Kempster Miller, con
sulting engineer hired by the gas-oil
committee last July to go into these
technical points. In a 96-page re-'
port he shows that the Ettelson claim
of 20,000 subscribers won't hold, and
instead of $6,300,000, the price for
the automatic at the highest ought
to be $1,141,594 if Ettelson's clients
are allowed to sell at all.
Engineer Miller says plainly that
the Penny Phone league plan is
wrong; that the city cannot run the
automatic phone system and build
it to where, with 350,000 subscribers,
there will be service at a penny a
call. Miller is dead against municipal
ownership. If there's anything he's
sure of it is that the people must take
their phone service from the Chicago
Telephone Co. He's gloomy as a pat
ent medicine ad when ne gets to the
point of the city running a phone
system and the people taking the
profits now going to the Chicago Tel
ephone Co. However, when he gets
onto the question of why the big bil
lion dollar phone trust, the A. T. &
