The organization of Midway Telephone Company




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The Organization of Midway Telephone Company
by Robert Godell

In the summer of 1957, Mr. M.F. Fox was in his office at the Trout Creek Abbott Fox Lumber Company sawmill when a stranger, who had been trying his luck for trout in the Trout Creek, walked in requesting to use the telephone. Mr. Fox said, "Certainly you can use the phone. And for $1.00 you can even buy the telephone company."

That was how Earle Harris, owner of Boulder Junction, Wisconsin Telephone Company was introduced to the Trout Creek-Calderwood Telephone Company.

The company which Mr. Fox was ready to sell had been organized in 1910 by owners of numerous sawmills and other forest product type industries that operated in and around a booming Trout Creek. By 1957 the town of Calderwood had disappeared into the forest, the woods industry had dwindled down to the one sawmill in the village of Trout Creek, all other directors and stockholders of the telephone company had moved away, giving up their interest, leaving Fred Fox appointed as their receiver.

The company consisted of sixteen subscribers in the village of Trout Creek, serviced by Francis "Bud" Bonin, with the manual switchboard in the home of Flora Martin who, twenty years prior to this, had been requested to "temporarily" operate the board. Michigan Public Service Commission (MPSC) was recipient of petitions from Trout Creek area residents, also requesting service. Mr. Fox who was in no position to improve or expand the present company, was ready to sell even if the price wasn't right.

Also at the time the Ottawa National Forest Improvement Association (ONFIA) centered in Kenton, Michigan, a citizens group organized for the sole purpose of improving social and economic conditions in the area, was working to improve the communications system in the neighboring towns of Kenton and Sidnaw. The village of Kenton at the time was served by Michigan Bell Telephone Company (MBT), with nineteen toll stations on two circuits out of Ironwood. Also on one of the circuits was a farmer line known as the Golden Glow Telephone Co., with seven customers, which was switched manually by personnel at the Ottawa Lodge. Sidnaw had fifteen subscribers, served by MBT, also out of Ironwood.

Mr. Walter Beck of Sidnaw, secretary of ONFIA, made contact with Covington Telephone Committee, who had been very active in trying to get someone to serve their area. Covington had twelve MBT toll stations, Watton had five. ONFIA arranged a meeting at the Kenton school on December 1, 1957, 12:30 p.m. CST. the meeting was chaired by Earle Harris and Anton Maki, who was serving as chairman of ONFIA at the time. Purpose of the meeting as sated by Maki was whether or not to organize the telephone company, which Mr. Harris had proposed, and how to go about it.

Mr. Harris answered questions about the proposed company. A decision was made to have the various committees canvass their communities for pledges to buy stock. $20,000 was the established goal, with stock at $10 per share and five shares minimum, as recorded by Secretary Marie H. Johnson.

The December 15 meeting was opened at 2:00 p.m. CST by Mr. Harris for the purpose of forming and organizing a telephone company, upon approval by the Michigan Public Service Commission, (MPSC) The company intended to serve Trout Creek, Kenton, Sidnaw, Watton, and Covington areas:

Individual present at the meeting:

Earle Harris, Boulder Junction	Anton Maki, Kenton
Fred Fox, Trout Creek	G.W. Nordine, Kenton
E. Tibbits, Trout Creek	H.J. Smith, Kenton
Arvo Harju, Trout Creek	Ed Nelson, Kenton
Reino Lakanen, Trout Creek	H.K. Anderson, Kenton
George Pelkola, Trout Creek	Rodney Young, Kenton
Toivo Kariainen, Trout Creek	Robert Godell, Watton
H. Perry Thompson, Sidnaw	Raymond Maki, Watton
Walter Beck, Sidnaw	Waino Autio, Watton
It was moved, supported, and motion carried that the following officers be elected: President - Earle Harris Vice President - M.F. Fox Secretary-Treasurer - Anton Maki Directors elected were: Robert Godell, Francis Collins, and Guy Nordine. Walter Beck was recording secretary for the meeting. Last but not least in a move made by Anton Maki, supported by Fred Fox, it was decided the the company's name shall be "Midway Telephone Company". Motion carried. Then the work started. The first meeting of the board of directors was on March 27, 1958, in the office of the Abbott Fox Lumber Company. C. V. Wright, a telephone accountant from Lansing, Michigan, who was present, was hired as accountant and was requested to prepare necessary applications for establishing the corporation, prepare by-laws, obtain the territory franchise needed, and file a schedule of tariffs. At the March 27 meeting, articles for the corporation were reviewed, the proposed by-laws were read article by article, and all were approved. April 8, 1958 meeting: final agreement was made on articles of association and by-laws. Purchase of a lot, at a cost of $150 from the Hardes family was approved for the exchange meeting. July 16 meeting: raising of of money was discussed with plans made to complete money raising by Mid-August. August 12, 1958: Corporation and Securities Commission certified Midway Telephone Company as a Michigan Corporation. September 29 meeting: a decision was made to purchase a used switchboard from Michigan Bell for $1,500. Mr. Ed Cadwell, of Levering Telephone Company, was contacted to move the switchboard and install it in Trout Creek. November 7, 1958 meeting: Mr. Harris explained that he had taken over another telephone company and since he couldn't spend much time at Midway, he would be willing to drop out. It was decided that Mr. Harris should remain as president and help would be hired for planning and construction of a telephone plant. During 1959, Glenn Martz, building contractor, was paid in full for construction of the Central Dial Office Building (COD) in Trout Creek. Also the company's first vehicle was purchased from Bessemer Auto Co., a half-ton Ford pickup, at a bid price of $1,969.33. On August 14, 1959 the Trout Creek switchboard was cut into service with forty six subscribers. August 27, 1959: an emergency meeting was called, which Mr. Harris was unable to attend. A lengthy discussion was held as to company finances and future operations. A suggestion was made by Fox that for the convenience of legal matters and for negotiations with Kellogg Credit and other loan services, Michigan Bell, local, and regulatory bodies, and stockholders, that Robert Godell be elected as President of Midway Telephone Company. Mr. Harris would remain as director and counsel under previous agreement. The above move was necessary to speed up expansion of the company. A motion was made, seconded, and carried, to remove Earle Harris from the presidency but he was to remain as director. Also, that Robert Godell become new president. September 24, 1959 meeting: motion made, supported, and carried to accept resignation of Earle Harris. October 8, 1959 meeting: a decision was made to purchase Golden Glow telephone line for $350, to be paid in stock. May 6, 1960 the First Annual Stockholders Meeting: fifteen people present. Board of directors elected were: Godell, Fox, Maki, Nordine, Collins, and Alex Anderson of Covington. During 1960, land for Watton CDO was purchased form Arvid Salli, Jr. Glenn Maki, P.E. was hired to draw up blue prints for the building. Several bids were received for the construction of the 14’´ 28’ concrete block building but were rejected by the board as being too costly, and a decision was made to have the company build it, using local labor, with director Alex Anderson supervising construction. February 5, 1961: Watton switchboard was cut into service. At the Third Annual Stockholders meeting in 1962, shareholders authorized the board to enter into loan agreements with Kellogg Credit Corporation, (subsidiary of ITT), in the sum of $100,000. During 1963 a decision was made to join the United States Independent Telephone Association. James McCartney, of Richardson and McCartney, Lansing, Michigan became the accountant for the company, which position he and his company hold to date. Also in 1963, a new CDO building and switchboard were approved for the Trout Creek exchange. April 20, 1965: Sixth Annual Stockholders Meeting. Board of directors authorized Midway to borrow $22,000 from Kellogg Credit Corporation for a new switchboard for Trout Creek exchange. At the January 25, 1967 board of directors meeting, Francis Collins tendered his resignation from the board. April 27, 1967: Eighth Annual Stockholders Meeting. Larry Reynolds of Ontonagon County Telephone Company was elected to the board of directors to replace Collins. During 1969, the following decisions were made: expand into the Robinson, Hardin, Silk, Paint, and Golden Lake area, seek authority to sell more stock to finance Golden Lake expansion, purchase land from Arthur Lindahl for CDO building, also transfer account from Ewen State Bank to Commercial National Bank of L'anse, (CBN), with additional borrowing from CBN of $31,000, and later, $11,000, to pay for the Golden Lake expansion. April 27, 1972: Board of directors meeting. Lydia Maki had resigned as office manager January 1, 1972, replaced by Alda White. The business office was moved from Maki residence in Kenton, to Watton telephone exchange building. A decision was made to apply for a rate increase. February 26, 1974 board of directors meeting: The board members were very much saddened by the death of M. F. Fox, Vice-President of the company and one of the company's staunch supporters. A unanimous decision was made to appoint Fred Fox's son, Robert, to a position on the board. April 2 1974: board authorized borrowing $100,000 fro CNB of L'anse, subject to approval by stockholders and MPSC. The borrowed funds were used to purchase material for expansion of lines in the Trout Creek and Watton exchanges. July 8, 1975, special board meeting: Present was the entire board, and Murrill Colburn, filed representative for Rural electrification Administration, (REA). Colburn explained the REA loan program, stating that Midway Telephone Company could qualify for a loan at an interest rate of perhaps 5% with a thirty-five year payback. A motion was made and carried to apply for an REA loan in the amount of not less than $700,000. Retained as legal counsel was Albert Thorburn of Cummings, Butler, and Thorburn, of Lansing, Michigan. The CPA firm of Richardson & McCartney was also retained to represent Midway Telephone Company as auditors and counselors in all financial matters, and will prepare all financial statements, tax returns, loans applications, and rate construction of a new combination office and CDO in Watton, and new CDO building in Golden Lake, in the amount of $195,678 was approved. Mr. Harris Digerness, REA field engineer, and George Orphan, were present at board meetings to study the bids, to assure that they meet REA guidelines. On, June 28, 1977, MPSC held two hearings on Midway's loan application and rate increase at the Tri-Town Lions hall at Covington. No subscribers appeared before the PSC group at the 1:30 hearing, but twenty four people attended the 7:30 P.M. session. Two persons spoke against the rate increase and one spoke for it. The commission, on September 9, issued an order authorizing Midway Telephone Company to borrow $1,490,000 at 2% interest from REA, and the company's requested rate increase on local service. On April 22, 1978, Golden Lake's new switchboard was cut in to service, followed by Watton on December 14. In April of 1980 the board of directors made another positive decision, which was to adopt a 'cost' method of settlement for toll calls originated by Midway subscribers. The firm of Ernst & Whinney, of Tacoma, Wa., was hired to do a preliminary study, which indicated that a beneficial fiscal return would be gained by going on cost settlement. The same firm was then retained to do a full study of costs incurred by Midway in furnishing toll service capability to its subscribers. The Federal Communications Commissions (FCC) present rules state that operating telephone companies which identify their costs of providing toll service are entitled to be compensated for these costs plus a reasonable rate of return, which is Bell systems authorized rate. The other method for settlement is the average costs of all companies operating within FCC jurisdiction. The monies to pay these costs come from a nationwide pool, consisting of the charged on calls made by all users of long distance service. 'Average' companies compensation is a flat percentage of calls, originating from their exchanges. 'Cost' companies get reimbursement based on their costs, as previously explained. Ernst & Whinney's final study substantiated the findings of their earlier one. An application was made to MBT for Midway to go on 'cost', which was accepted, and the result is a much improved financial position for Midway. Midway's dividend policy has been geared to the company's financial condition. During the formative years, the board of directors felt that it was necessary to plow earnings back into the company. A modest dividend of 30 cents per share was paid in 1965, $1.00 per share in 1976, and $2.50 in 1982. The company has also invested $10,000 in Class C stock of the Rural Telephone Bank, which is a source for additional loans. Additional Notes: The above are excerpts from minutes as recorded by Anton Maki, Secretary. Reference is made to Covington Township Committee. The committee had been very active in trying to locate someone who would provide rural service in their area. Customers were solicited and located on maps that were prepared, covering Covington Township. The records we have found indicate the membership to be as follows: Robert Godell, Chairman Edwin Sikkila, Vice Chairman Alex Anderson, Jr. Secretary Waino Autio, Treasurer Members; Raymond, Maki, Arthur Ketola, Conrad Stenson, G. F. Biekkola, County Agriculture Agent, gave the committee much assistance. There may have been other members. Trout Creek had a similar committee, but we have no record of names or activities. Toll station: a crank type phone powered by internal dry cell batteries. On incoming calls the subscriber was alerted by a coded ring, e.g. one long and two short rings would be for a customer whose telephone number was one-two. Any Variety of codes could be used, determined by number of subscribers on that particular line. Outgoing calls were made by turning the crank for one long ring to signal the operator, who the placed the call. All calls were made through an operator and were charged for, hence the name 'toll station'.