UC-NRLF S3D The Abridged Debaters' Handbook Series SELECTED ARTICLES ON GOVERNMENT OWNERSHIP OF THE TELEGRAPH COMPILED BY EDITH M. PHELPS MINNEAPOLIS THE H. W. WILSON COMPANY 1912 EXPLANATORY NOTE The question of governmental control of the telegraph has been discussed' for the last thirty-five or forty years, and is still under consideration at the present time. Postmasters-General Creswell and Wanamaker made vigorous efforts at various times to secure action from Congress, and, in his annual report for 1911, Postmaster-General Hitchcock recommended that a governmental telegraph be adopted as a part of our postal sys- tem. It is in this form that the question is debated in the fol- lowing pages. Necessarily, the reprints in this pamphlet are limited to brief discussions of the arguments for and against the question, and the student desiring a broader treatment 'of the subjects advised to read as widely as possible from the references listed in the accompanying bibliography. BRIEF Resolved, That the government should own* and operate a telegraph system in connection with the postoffice. INTRODUCTION I. It has often been declared A. That there are serious evils in our telegraph system which would be remedied by governmental ownership. B. That the United States is now the only large country still under private'ownership. II. It is generally admitted * A. That the telegraph system in the United States is vir- tually a monopoly. B. That the government'- ha ; rhV i>o;wer to establish a sys- tem in .connection with the postoffice. I. There are serious evils in our present telegraph system. A. The system is a private monopoly. B. The companies are greatly overcapitalized and rates are exorbitant. C. Facilities are inadequate and the service is poor. D. An objectionable influence is exerted over the press and over politics. E. Discrimination is practised. F. Modern methods and appliances are not used. G. Employees are unjustly treated. II. These evils would be remedied by a government telegraph operated in connection with the postoffice. A. Rates would be reduced. B. Facilities and service would be improved and ex- tended. C. Discrimination would cease. D. The benefits of the telegraph would be brought within reach of all. III. A postal telegraph is both practicable and expedient. A. Control of the telegraph is a. proper and necessary function of government. B. The post-office is well adapted to maintain and oper- ate the telegraph. C. There would be little financial difficulty either in its purchase or maintenance. D. The argument that it would lead to political corrup- tion is unsounc^ E. The chief opposition comes from -the existing compan- ies. NEGATIVE I. The so-called evils of our present telegraph system do not exist. A. The system is not a monopoly. B. Rates are not excessive. C. Facilities and service are much better in the United States than elsewhere. D. The companies are not overcapitalized. E. Labor is better paid than elsewhere and the system is more progressive. II. Government ownership of the telegraph would be unwise. A. It is not a proper function of government. B. It would not be as efficient as our present system. C. It would lead to serious political evils. 269811 D. It would be unjust to present stockholders and to the public generally. III. Government ownership of the telegraph would be imprac- ticable. A. There is no satisfactory way for the government to acquire the telegraph. B. The postal system would not administer it wisely. C. Government operation would result in a large annual deficit. BIBLIOGRAPHY A star (*) preceding a reference indicates that the entire arti- cle or part of it has been reprinted in this pamphlet. GENERAL REFERENCES *Annual Report of the Postmaster General. 1911. pp. 14-5. Bliss, William D. P. New Encyclopedia of Social Reform. See articles on Public Ownership and Telegraph and Tele- phone Services. Brookings, W. Du Bois, and Ringwalt, Ralph C. Briefs for De- bate, pp. 126-9. Bibliography. 1911. Encyclopaedia Britannica. Vol. XXVI. pp. 525-7. Telegraph Commercial Aspects. University Press, Cambridge. 1911. Meyer, Hugo Richard. British State Telegraph. The Macmil- lan Co., New York. 1907. New International Encyclopaedia. Vol. XIX. pp. 96-7. Ringwalt, Ralph C. Briefs on Public Questions, pp. 174-83. Bibliography. 1908. *United States. Industrial Commission. Reports. giCCIII- CCXXV; 182-274. Western Union Telegraph Company. Proposed Union of the Telegraph and Postal Systems. i28p. 1869. Magazine Articles *Arena. 15:250-65, -17:9-31. Ja.-D. '96. Telegraph Monopoly. Frank Parsons. Century. 59:952-6. Ap. 'oo. Success of the Government Tele- graph in Great Britain. W. S. Harwood. Current Literature. 29:235. Ag. 'oo. Government Telegraph in Great Britain. Equity Series. 8:16-22. Ja. '06. Plans for Establishing a Gov- ernment Telegraph. Forum. 9:450-60. Je. '90. Public Control of the Telegraph. Bronson C. Keeler. *Harper's Weekly. 55:22. D. 9, 'n. Industrial Securities: Telephone and Telegraph Group. Franklin Escher. Independent. 63:460-1. Ag. 22, '07. National Ownership of the Telegraph. Nineteenth Century. 48:108-17. Jl. 'oo. Sixpenny Telegrams. J. H. Heaton. North American. 143:35-41. Jl. '86. Should the Government Own the Telegraph? William A. Phillips. Outlook. 94:598-9. March 19, '10. Send Your Letters by Tel- egraph. Public Opinion. 43:399-401. F. 4, '88. Government and the Telegraph. World's Work. 12:7478-9. My. '06. Our Dwarfed Telegraphic Service. See also the annual reports of the Postmaster General, and of the Western Union and Postal Telegraph Companies. AFFIRMATIVE REFERENCES Arena. 26:519-20. N. '01. Why the Government Should Own the Telegraph and Telephone. Walter Clark. Arena. 27:179-87; 28:188-92. F., Ag. '02. Governmental Own- ership of the Telegraph and Telephone. Frank Parsons. Arena. 36:555-6- N. '06. Public Ownership versus Private Ownership of Public Utilities. Arena. 38:373-84. O. '07. Will Public-Ownership Increase or Decrease Political Corruption. Clarence A. Royse. Congressional Record. 34: Appendix 210-2. Postal Telegraph and Telephone : Speech of John J. Lentz in the House of Representatives, February 20, 1901. *Congressional Record. 42: 4688-90. Ap. 13, '08. Naval Ap- propriation Bill: Speech of William J. Cary in the House of Representatives, April 13, 1908. *Congressional Record. 42: Appendix 292-9. Postal Tele- graph : Speech of Samuel W. Smith in the House of Repre- sentatives, May 30, 1908. *Congressional Record. 44: Appendix 168-76. Postal Tele- graph: Speech of Samuel W. Smith in the House of Representatives, July 19, 1909. Reprinted from his speech delivered May 26, 1906 and printed In the Congressional Record. 40: 7484-91. May 26, 1906. *Forum. 4:561-72. F. '88. Government and the Telegraph. Shelby M. Cullom. *Gunton's. 20:305-22. Ap. '01. Government Ownership of Quasi-Public Corporations. Edwin R. A. Seligman. North American. 149:44-53. Jl. '89. Telegraph Monopoly. Richard T. Ely. North American. 179:741-7. N. '04. Australian Telegraph System. Hugh H. Lusk. Outlook. 100:150*-!. Ja. 27, '12. Postoffice and the Telegraph. Popular Science Monthly. 19:400-3. Jl. '81. Union of the Telegraph and Postal Service. Review of Reviews. 27: 337-8. Mr. '03. Government Telegraph and Telephone in Australia. Hugh H. Lusk. Review of Reviews. 30:731-2. D. '04. Government Telegraph in Australia. NEGATIVE REFERENCES American Journal of Sociology. 12 :328-4O. N. '06. Public Own- ership and Popular Government. William H. Brown. *Arena. 15:245-9. Ja. '96. Why I Oppose Governmental Con- trol of the Telegraph. William L. Wilson. Municipal Affairs. 1 :245-89. Je. '97. No Government Should Operate an Industry. Allen R. Foote. *North American. 139:51-66. Jl. '84. Government Telegraphy. D. McG. Means. *North American. 149:569-79. N. '89. Are Telegraph Rates Too High? Norvin Green. Political Science Quarterly. 3 :572-9i. D. '88. Public Business Management. Arthur T. Hadley. United States. 42nd Congress. 2d Session. Senate Mis. Doc. No. 86. Memorial of the Western Union Telegraph Com- pany Remonstrating Against the Passage of the Bill to Connect the Telegraph with the Postal Service, and to Reduce the Rates of Correspondence by Telegraph. United States. 42d Congress, 3d Session. House Mis. Doc. No. 73. Postal Telegraph : Proceedings of the Committee on Appropriations in the Matter of the Postal Telegraph. January 28, 1873. REPRINTS Annual Report of the Postmaster General. 1911. pp. 14-5. Postal Telegraph Service. The telegraph lines in the United States should be made a part of the postal system and operated in conjunction with the mail service. Such a consolidation would unques- tionably result in important economies and permit the adop- tion of lower telegraph rates. Post offices are maintained in numerous places not reached by the telegraph systems and the proposed consolidation would therefore afford a favorable opportunity for the wide extension of telegraph facilities. In many small towns where the telegraph companies have offices the telegraph and mail business could be readily handled by the same employees. The separate maintenance of the two services under present conditions results in a needless expense. In practically all the European countries, including Great Britain, Germany, France, Russia, Austria and Italy, the telegraph is being operated under government control as a part of the postal system. As a matter of fact, the first telegraph in the United States was also operated for several years, from 1844 to 1847, by the government under authority from Congress, and there seems to be good ground why the government control should be resumed. A method has been already prescribed for taking over the tele- graph lines by section 5267 of the Revised Statutes, which provides that the government may, for postal, military or other purposes, purchase telegraph lines operating in the United States at an appraised value. It is hoped that ap- propriate legislation will be enacted in harmony with this law providing for the taking over by the government of the existing telegraph systems at terms that shall be fair to their present owners. Every reason for the transmis- sion of intelligence by mail under government control can be urged with equal force for a similar transmission of telegraphic communications. Because of the more exten- sive organization maintained by the postal service and the freedom from taxation and other charges to which a private corporation is subject the government undoubtedly will be able to afford greater telegraphic facilities at lower rates to the people than the companies now conducting this business. Forum. 4: 561-72. February, 1888. Government and the Telegraph. Shelby M. Cullom. It is urged that the government has no right to inter- fere with, or to carry on, a private business; but it must be admitted that the transmission of intelligence is, in the strictest sense, a public service. The United States Supreme Court has declared that "A telegraph company occupies the same relation to com- merce, as a carrier of messages, that a railroad company does as a carrier of goods. Both companies are instruments of com- merce, and their business is commerce itself. They do their transportation in different ways, and their liabilities are, in some respects, different; but they are both indispensable to those en- gaged to any considerable extent in commercial pursuits." From the beginning, the telegraph was recognized as be- ing naturally and properly an adjunct of the postal service, and the action of Congress in the construction and operation of the original line was strictly in harmony with the general idea of the functions of the Post-office Department which prevailed when the government was organized. The objection most seriously urged against a postal tele- graph is, that its establishment would place too much power in the hands of the political party in control of the gov- ernment, by adding enormously to the already large patron- age of the Post-office Department. This objection has not prevented the extension of the postal service hitherto, and will not in the future. The army of employees in the postal service is increasing constantly. The telegraph is properly a branch of the postal service, and there is no more reason to be alarmed at the increase of officials from the addition of a new branch to that system than from the extension of branches now in operation. Practically, there is less reason for alarm on this account in establishing a postal telegraph than in extending the present system. It requires special training and fitness for the work to be a telegraph operator, 8 and these places could not be given as rewards for political service, as is the case in the post-offices. Besides, as was well said by the late Postmaster-General Howe: "The increase has doubtless been exaggerated. At a very large percentage of the offices the telegraph operator would not supple- ment the postmaster, but would supplant him, and that would result in giving to the administration of not a few offices men who have learned to do one thing in place of those who have never learned to do anything." Congressional Record. 44: Appendix 168-76. Postal Telegraph: Speech of Samuel W. Smith, July 19, 1909. The Western Union Telegraph Company has repeatedly asserted that rates is a matter of distance, and that the distances are greater here than in England, France, Belgium, and Switzerland, and tables of distances and charges have been presented from time to time for the purpose of proving this assertion, but I will be glad to know what reply they have to make in this connection when rates, distances, and population in Australia are compared with rates, distances, and population in America. Through the kindness of the publishers of the North American Review I am permitted to use an article on "The Australian Telegraph System," by Hugh A. Lusk, barrister, which appeared in that popular magazine in the November number of 1904: "The telegraph lines now owned and operated by the Federal Government for the people of Australia have a length of fully 48,000 miles, while the length of the wires is considerably more than a hundred thousand miles. For town and suburban messages suburban meaning practically a radius of 10 miles beyond the city limits the rate fixed is 12 cents for a message not exceeding sixteen words, which includes the address and signature. For messages to any point within the same state from which they are sent the charge is fixed at 18 cents for the same number of words. For messages to any other state within the Commonwealth the charge for a message of similar length is 24 cents. In all cases the charge for extra words beyond the sixteen is a uniform rate of 2 cents a word. Delivery is made within a radius of i mile from the receiving office, and for this there is no extra charge. "In the newer, poorer, and far less thickly settled country of Australia there are fully 6,000 post-offices to meet the requirements of 4,000,000 people, or I to every 666 people; and more than 3,000 of these are also telegraph stations, being I to about 1,300 persons. If every second post-office in this country were also a telegraph station, the public would be nearly as well supplied with the means of rapid communication as the settlers in Australia now are, instead of one-third as well, and they would also be saved a great deal of money. In America it would then be, as it now is in the commonwealth of the South Pacific; each telegraph station would be at the natural center of population, where it would require no separate offices and no separate staff of clerks and operators, except in cities of considerable size. Every country postmaster or clerk would in that case be required also to be a competent telegraph operator, and thus an endless duplication, both of offices and officials, would be avoided. "Three years ago the American people sent, as nearly us possible, one message over the telegraph wires for each inhabitant. In Australia population is more widely scattered than in America and vastly more so than in England, yet three years ago two and a half messages for every in- habitant of the country passed over the telegraph wires of the government." The Western Union Telegraph Company was incorporat- ed under act of Wisconsin, March 4, 1856, and act of New York, April 4, 1856, through consolidation of "Erie and Michigan" and "New York and Mississippi Valley Printing Telegraph" companies, with a united capital of $500,000. Its present capitalization is $97,370,000, having increased its capitalization almost $97,000,000 in fifty years. The National Board of Trade (by report of executive committee November 15, 1882) says: "In 1858 the Western Union had a capital of $385,700. Eight years later the stock had expanded to $22,000,000, of which $3,322,000 was issued in purchase of competing lines, while nearly $18,000,000 was is- sued as stock dividends. This was the first attempt to spread out an increased paper capital which should hereafter afford a plausible pretext for imposing on the public an op- pressive tariff of charges. The next step was the purchase of 10 the United States Telegraph Company, for which purpose $7,216,300 of stock was issued, an amount alleged to be five times the true value of the property. Next came the ab- sorption of the American Telegraph Company. The stock of that company was almost as much inflated as that of the Western Union and amounted, water and all, to $3,833,100, yet $11,833,100 of Western Union stock was issued to get possession of that line." The following statement of Western Union transactions will give a good idea of their methods: Table 1. Original investment $ 150,000 Original capital (1852) 240,000 Capital stock (1858) 385,700 Brownsville line, worth $75,000, bought by issuing stock 2,000,000 1863, Western Union plant, worth $500,000, stock 3,000,000 Stock dividends (1863) 3,000,000 Total stock (1863) 6,000,000 Stock to buy other lines 3,322,000 Stock dividends 1,678,000 Total (1864) 11,000,000 Stock dividends 11,000,000 Total (January, 1866) 22,000,000 Stock to buy United States Telegraph Company, worth $1,443,000 7,216,300 Stock for American Telegraph Company, worth perhaps $1,500,000 11,833,100 Total (1866) 41,049,400 Stock dividends 5,060,000 Stock for American Union and Atlantic and Pacific companies (worth, together, about $3,232,000. aside from the franchises), over $23,000,000, but as Western Union already owned over $4,000,000 of Atlantic and Pacific the new issue was only 19,080,000 Stock dividends 15,000,000 Total (1884) 80,000,000 Stock for Mutual Union, worth about $3,000,000 15,000,000 Total stock (1895) 95,000,000 Zachariah Chandler, from the Committee on Commerce, in the Senate of the United States, in 1872, said: "The policy of the Western Union Telegraph Company from the beginning of its existence to the present time has been of a uniform character. "It has been to ridicule, belittle, cripple, destroy, acquire, con- solidate, and absorb all rival lines, until now it virtually controls the telegraph business of the whole country. The statements made in the report containing the history of this company, its unparal- leled growth, and future possibilities are eloquent with meaning ~beyond that expressed in the words. With its network of wires covering the face of the land it holds the incalculable commercial II interests of the people of this nation in its grasp as securely as the spider holds the struggling prey in the meshes of its web." The Postal Telegraph and Cable Company is only a side show and I say it respectfully to the main performance, to wit, the Western Union Telegraph Company, for in the main, where they have offices in the same locality, rates are identical. A comparison of rates from Washington to points all over this broad Union shows but few slight, if any, differ- ences in the rates charged by these two companies, leading one to believe and understand that this is not purely acci- dental, but that there must be some common understanding between these two great corporations, and if these condi- tions exist elsewhere, as they doubtless do, you will at once see that we are not enjoying any advantages by reason of competition, but we are led to the certain conclusion that these two great corporations are in collusion for the purpose of extracting from the people every dollar which they pos- sibly can in order to add to their dividends. The Western Union and the Postal Telegraph will be found to be the only visible opponents in this effort to se- cure for the people their just rights. It is an undeniable fact that the present telegraph com- panies are honeycombed with rust and inefficiency, loaded with immense amounts of watered stock, and -hampered by the most stupid exhibitions of nonprogressiveness to be seen in this enlightened age. It is literally true that in this electrical age, in this electrical country, telegraphy is the only thing touched by electricity that is still in the ox-cart condition. "Telegraphy is still pounding along with hand labor, very much as Morse devised it nearly seventy-five years ago. It can never be cheap or fast until machinery is used to prepare the messages and to hurl them at higher speed over the wires." I have no hesitancy in saying that, notwithstanding for many years over the doors of the telegraph companies has been written the legend, "No inventors or scientific men wanted," inventive genius has perfected, tried, and approved machines for telegraphing, which, if put into use, would revolutionize present conditions, and the fact that these 12 modern inventions are not utilized by the telegraph com- panies is evidence to me that if they were used it would be apparent to all that telegraphy could be greatly cheap- ened. Congressional Record. 42: Appendix 292-9. Postal Telegraph: Speech of Samuel W. Smith, May 30, 1908. The telegraph service of the United States is the poorest, slowest, and most expensive of any commercial nation. It is likewise the only great telegraph system under private control. If it were necessary the direct relation between these facts could be convincingly shown. The average charge per message in this country, 31 cents, is "three times the average rate in all other countries under post-office telegraph service." In other countries the excessive and restrictive charges of private telegraph corporations and the right of the people to enjoy the benefits of electrical communication at cheap rates has been recognized by statesmen, and governments have purchased private lines and extended the service. Sir W. H. Preece, for many years engineer in chief of the Brit- ish telegraph service, says: "Telegraphy became * * * so closely allied with other modes of communication that pub- lic opinion in 1868-69 forced the government to purchase and absorb all the telegraph companies." The rates were im- mediately reduced one-half, and note this equally impor- tant fact the time of transmission of messages between cities in England has been reduced from two to three hours in 1870, when the government took control, to seven to nine minutes. We need not discuss the annual British deficit a deficit, by the way, which has saved the British public more than $150,000,000 since it began to accumulate but Vice-Presi- dent Clark of the Western Union testified that, in his opinion, "It was the policy of extending the telegraph to unprofitable places that caused the deficiency." This exten- sion for the benefit of the people is precisely what govern- ment can do in response to demands, and what private own- ership will not do. 13 To argue that government can not conduct business as well or as cheaply as private corporations managed for profit, is contrary to experience. If the people want a gov- ernment telegraph they will take measures to have it well conducted, and opponents of the jdea need not cherish so many misgivings on the political side. Authoritative con- firmation of the conviction thus expressed has since been given by Sir William Preece. He says: "The telegraph bus- iness of this country (Great Britain) has reached its present dimensions because the work has been done well, and it has been done well because the mode of doing business has been so well and so thoroughly supervised by the public. "It is amusing after this length of time to read the argu- ments that were adduced against the absorption of the telegraphs by the state. The objections raised were: 1. It was not the Government's business to telegraph. 2. There would be a loss if it did. 3. The telegraph would be better conducted under pri- vate enterprise. 4. The Government rates would be higher. 5. The use of the telegraph would decrease. 6. The Government service would be nonprogressive, with no stimulus to invention, etc. 7. The secrecy of messages would be violated. 8. The telegraph would be used as a party machine. 9. The Government could not be sued. 10. To establish a public telegraph would be an arbitrary and unjust interference with private interests. The com- panies had risked their capital in the new enterprise, and just as they were about to get their reward the Government was going to take the business away from them. Private enterprise experimented and the people wanted to steal the fruit "Every reason has been proved wrong, every prophecy has remained unfulfilled. I can say this with good grace, for I was one of the prophets. The advantages of a state-con- trolled telegraph system have been amply shown. There has been established a cheaper, more widely extended, and more expeditious system of telegraphy; the wires have been erected in districts that private companies could not reach; the cost of telegrams has been reduced not only in their transmission, but in their delivery; the number of offices opened has been quadrupled; a provincial and an evening press has been virtually created." The average rate for telegrams in this country has ad- vanced from 31 cents in 1902 to 33.7 cents in 1907. Proof that the charges are too high is shown by the relatively small proportion of the people who use the telegraph. Pres- ident Green stated that the proportion of social messages in this country was about 8 per cent. In England the pro- portion is ten times as large, and on the Continent social messages constitute two-thirds the entire business. It is thus evident that there is in this country an immense volume of telegraphic business that has not been developed and which awaits only adequate rate reductions to come forth. The effect of changes in rates in different countries is well shown by the following quotations, taken from good sources: Great Britain. A reduction of 33 per cent on three- tenths of the messages and 50 per cent on the remainder caused an increase of 100 per cent in about two years. The social business is said to be four times as large as in this country eight times as large in proportion to pop- ulation. Canada. A reduction which applied to less than 10 per cent of the business augmented it 25 per cent in the first year. Belgium. These reductions have caused four times the number of dispatches that would have been sent at the old rates. Switzerland and Belgium. A reduction of one-half in the rates produced a double business in one year. Australia. Australians send more than twice as many messages over the lines at the lower rates as Americans do at the present prices. Prussia. A reduction of 33 per cent in the rate was fol- lowed by an increase, in the very first month after the change, of 70 per cent in messages. Switzerland. The Swiss inland rate was reduced 50 per cent * * * and in the first three months there was an increase of 90 per cent in messages. If the statistics possess any significance whatever, they reveal immense possibilities in telegraph development in this country through cheapening the tolls. People can not afford to use the telegraph freely when they must pay from 25 cents upward for ten words. The minimum charge possible with improved methods and profitable returns to an operat- ing private company is lower than the world has yet ex- perienced, and would lead to a volume of correspondence by wire impossible to estimate from any known data. At the same rates a Government system would pay for itself in a few years. President Green stated that 46 per cent of the Western Union business was brokerage and exchange, the kind known as speculative; i2 per cent was press business, 34 per cent legitimate trade or general commercial business, and only 8 per cent social. Thus it appears that the companies are not serving the public generally, but only a small part of the public that can afford to pay the high tolls because of the nature of the business done or the absolute necessity to use the telegraph. Referring to the statement of President Green that 40 per cent of the business of his company was stockjobbing and speculative deals in futures, it ought to be considered that this kind of business is the kind that the Western Union has specially fostered, even to the extent of subor- dinating to it the regular commercial business. It is the only business that is done with telegraphic promptness, and presumably it is the most profitable. Arena. 16: 70-84. June, 1896. Telegraph Monopoly. Frank Parsons. The ninth evil of our telegraphic system is discrimina- tion. Sometimes the discrimination takes the form of re- fusing to render certain services to certain persons. Some- times the company refuses to receive any messages at all from certain persons or for certain persons, or declines to allow certain messages to go over its wires. At other times the discrimination consists in delay, confinement of market reports or other news to a few favored individuals for an hour or two, transmission by devious routes, violations of the due order of transmission, unjust distinctions as to rates, 16 giving rebates to favored individuals, persecuting others to compel their submission to the telegraph managers or to punish them for a personal difference. The Washburn committee reported that "rules of prec- edence in the transmission of messages are systematically disregarded by the leading American company". "Stock exchange business has the right of way over the wires in preference to any communication of a personal or social nature". The directors and managers of the Western Union are stock speculators and they favor their own class. By means of discrimination in rates or service or both, the telegraph company can turn the tide of business and prosperity toward a locality or an individual, or it can hinder the growth of a city and ruin a tradesman or a newspaper by excessive rates or delaying messages, governing persons and places somewhat as a railway does by means of freight and passenger rates, the supply or non-supply of cars, and the quickness or delay of transportation. This brings us to the tenth evil of our present system of distributing intelligence, viz., the infringement of the liberty of the press. The Western Union and a number of leading newspapers have formed a sort of double-star monopoly for mutual advantage and protection against competition. The understanding between the telegraph company and the press associations secures to the latter low rates and the power of excluding new papers from the field, and to the former a strong influence upon press dispatches, the sup- port of the papers in such associations, and the exclusive right to transmit and sell the market quotations. Besides the force of direct agreement and the powerful motives of mutual support that naturally develop between two individu- als or corporations working together year after year with an ever-present consciousness in each of the vital relation to its prosperity that is sustained by the other, besides all this, the men who run the Western Union control a number of papers directly, and can control others whenever it may be thought best. The Western Union not only has the power of causing serious loss to newspapers that oppose it, it has millions with which to buy the stock of an obnoxious paper, so capturing the fortress entire and spik- ing the guns or turning them against its enemies. 17 United States. Industrial Commission Reports. 9: 190-1. Telegraph System. Frank Parsons. The treatment of labor by our telegraph system is, I think, one of the most objectionable features of the manage- ment. According to the testimony of telegraph employees in various investigations and congressional hearings, a sys- tematic policy of reducing wages has been pursued by the telegraph monopoly. They have put boys to work in the offices to learn the business, and then if the operator re- signed or moved away or did not prove satisfactory, or if for any other reason his office became vacant, they would offer the place to this young student or apprentice at $5 or $10 less than the salary formerly paid; and in that way and in other ways they have reduced the wage so that, according to the testimony, it was reduced 40% from 1870-1883. The great strike of 1883 throughout our telegraph system was largely due to the low wages and long hours. They asked for an increase of pay of 15 per cent and for 8-hour work, and no salary lower than $50. These requests, mod- erate as they were, were refused, and the great strike was fought out at a cost altogether of over $1,000,000, and after the strike, according to Western Union testimony, the result was that the company was able to get about one-third more work out of the men for the same pay. The hours of opera- tors are in many cases very long, the work is very trying, and they are apt to be affected by consumption and other diseases unable to continue many years under the strain. They also blacklist their employees, I understand from the workers, so that the man who meets with their disap- proval is practically unable to get employment in the coun- try. They try to shut out the unions of the men, and they even deny them the privilege of petition. The men say that the leaders in presenting a joint request for the amelioration of conditions if found out, are almost sure to be discharged from employment. The company [Western Union] goes into politics to a certain extent. It has distributed favors among various legislators and among Congressmen, and Western Union testimony is explicit as to the benefits they have received. Long ago the president of the Western Union said: 18 "The franks issued to government officials constitute nearly a third of the total complimentary business. The wires of the Western Union Company extend into 37 states and 9 territories within the limits of the United States and into 4 of the British provinces. In all of them our property is more or less subject to the action of the national, state, and municipal authorities, and the judicious use of compli- mentary franks among them has been the means of saving to the company many times the money value of the free service performed." Gimton's. 20: 305-22. April, 1901. Government Ownership of Quasi-Public Corporations. Ed- win R. A. Seligman. When we come to the telegraph, what has been said of the post-office applies in the main also to the telegraph serv- ice. Unfortunately, in this country the telegraph service is not used by everyone. The charges are apparently so high and the conditions are such that the telegraph is used chiefly for business purposes, and only to a very slight extent for social purposes. In other countries, where the telegraph is an ad- junct to the postal system, and where the rates are lower and the facilities greater, the people use it, as everyone knows, to a far greater extent in proportion to the intelli- gence of the people, than we do. Therefore, from the point of view of possible widespread social interest, the telegraph service ought to be put on a par with the postal service. In the United States postal charges are lower and telegraph charges are higher than abroad. Secondly, as regards the capital invested, while in the case of the telegraph the neces- sity for the application of capital is somewhat greater than in the case of the post, it is slight as compared with other in- terests. All that is necessary is to procure enough capital to put up poles and to string the wires, and possibly also to secure certain rights of way. If the government were to attempt to buy out the telegraph lines there would there- fore be a capital outlay, but still an insignificant one as com- pared with that invested in ordinary enterprises for other means of transportation. Finally, in the case of the tele- 19 graph, the complexity of management would also be a slight factor. Naturally there will be from time to time new in- ventions in telegraph apparatus. The experience, however, of even such sleepy administrations as those of France and England shows that the telegraph service does contrive to keep on a level with the new inventions. And while the telegraph operators may in some respects be compared to the postal clerks, the government telegraph generally man- ages to secure a high level of efficiency in its officials. Congressional Record. 42: 4688-90. April 13, 1908. Naval Appropriation Bill: Speech by William J. Gary, April 13, 1908. Now, let us turn to some of the other advantages of a Government telegraph. In the mere matter of office rental there would be a saving of perhaps a million five hundred thousand dollars a year, inasmuch as the telegraph, being a part of the postal system, would be operated from the Federal buildings in which the post-offices are located. The greatest advantage, however, would be its freedom from bonded indebtedness and stock issues upon which the tele- graph companies now pay dividends. Take, for example, the Western Union, which pays a 5 per cent dividend upon one hundred millions of stocks and 4 l / 2 per cent upon thirty- eight millions of bonds. It must earn for this purpose nearly $7,000,000 a year in excess of its sinking-fund require- ments. But this is not all. If it be estimated that the Western Union is paying an office rental of $1,500,000 a year in ex- cess of what the Government would pay, it will be seen that a Government-controlled telegraph would save at least $8,000,000 a year that the Western Union Company must now earn over and above operating expenses and cost, also of maintenance and repair. And this vast sum, which is a practical tax upon the people, would be saved to them. To this sum also should be added the annual tax upon all their properties imposed by many of the states, to say nothing of the cost of light and heat in their vast chain of offices, from Maine to California and from the Great Lakes to the 20 Gulf, from all of which the Government would be exempt. In these circumstances the Government could reduce the tel- egraph tolls at least one-half between all points and pay its employees 20 if not 30 per cent in excess of what they are now receiving, and give at the same time a greatly improved service. Harper's Weekly. 55: 22. December 9, 1911. Industrial Securities: Telephone and Telegraph Group. Franklin Escher. In the industrial progress of the country during the past ten years, there is to be found nothing more striking than the growth of the telephone and telegraph business. A glance at the situation as it stands today shows three main companies in the field. In the first place there is the West- ern Union incorporated sixty years ago, and controlling by stock-ownership or lease a large number of telegraph com- panies all over the United States. In the second place there is the Mackay Companies, a concern organized eight years ago to act as a holding company for the stocks of the Postal Telegraph and the Commercial Cable companies. Thirdly, there is the American Telephone-Telegraph Com- pany, the outstanding share capital of which is over a quarter of a billion dollars and which holds stocks in companies scattered all over the country amounting to $356,000,000. Besides these, there are, of course, a large number of in- dependents, but by the "telephone and telegraph group" the security market understands these three great combinations which have been mentioned. As for the relation of these companies one to the other, American Telephone and Telegraph controls Western Union, and Western Union and the Mackay companies are competi- tors. Two years ago, when American Telephone acquired a controlling interest in Western Union, the Mackay com- panies sold out their holdings of American Telephone. Since that time it has been a contiuous fight for business between Western Union and the Mackay companies, or, as the public better knows the latter combine, the Postal Telegraph and the Commercial companies. 21 With business conditions as they are, earnings are holding up remarkably well, and all the time there is developing a strong tendency on the part of business men to make freer use of "wire" facilities. By the introduction of the "night- letter" and the "day-letter," and the hooking up of every Bell Telephone with the Western Union Telegraph system, it has been brought about that long-range business, to a greater extent than ever before, is being done by telegraph and telephone instead of by mail. Arena. 15: 245-9. January, 1896. Why I Oppose Governmental Control of the Telegraph. William L. Wilson. The question of governmental control of the telegraph as a part of the postal system has been under discussion for the past quarter of a century and more, and possesses an attractiveness that will always keep it in some form before the public mind. More than one president and suc- cessive postmasters-general have felt called upon to con- sider the question and to express opinions on one or the other side. Much instructive material is consequently stored away in their messages and reports, especially in the hear- ings before congressional committees charged with the con- sideration of proposed legislative measures. Two post- masters-general, Mr. Creswell in 1873 and Mr. Wanamaker in 1890, each with a different scheme, have made vigorous efforts to secure action from Congress. A .review of this long agitation in the light of these public documents indi- cates that, in the country at large, it reached its highest stage during and just after the great telegraphic strike of 1883, when the New York Herald and other influential jour- nals took it up and urged it with force and persistence. Up to that time propositions for a postal telegraph had contemplated, as a rule, either the acquisition of existing lines by purchase, or the construction of a government system. Such action was beset with so many difficulties, as well of policy as of business detail, that it naturally found but occasional and spasmodic advocacy in Congress, from men whose opinions were influential there or in the country. 22 Mr. Wanamaker sought to avoid the main objections by proposing a "limited post and telegraph," by the establish- ment of a bureau in the postoffice department for the deposit, transmission, and delivery of telegrams through the medium of the existing postoffice service. Many saw in this proposal but an entering wedge to a complete purchase or administration of the telegraphic ser- vice by the government, and for that reason stoutly opposed the first steps. Fully recognizing that both the telegraph and the telephone have become, more and more, a part of the equipment of our modern industrial and social life, they cling to the vital idea of our federal polity as a guardian of liberty and a guarantor of justice, and wish to limit its operations to these ends and to those activities which are really governmental. To paternalize the government or make it more bureaucratic is in their judgment to repress private enterprise and to imitate the monarchical systems of the old world. Here the cost of any business enterprise carried on by the government is greater than it would be in private hands. The postoffice department is no exception to this rtHe, al- though much of its work is done through contracts with private persons. The ninety millions now expended, won- derful and grand as are its results, would produce better results if the service could be organized and everywhere administered as our most successful railroad corporations manage their affairs. Nothing is more certain, were the government to under- take the control or monopoly of the telegraph, than that we should have, at any rates ef service the people would expect, a heavy annual deficit, to swell the regular deficit of the postoffice department. There is to-day immense room for the increase and per- fection of our postal facilities, but, policy aside, there is no room for the assumption by the treasury of vast un- known liabilities and of a service to be administered at a yearly loss. Reviewing the controversies of the past thirty years, and acknowledging as I do the merits and attractions of Mr. Wanamaker's scheme, I find myself in accord with the conclusion reached in 1883, by Judge Gresham, especially as that conclusion had been more comprehensively stated 23 by Postmaster-General Denison years before, in a report to the Senate: "As a result of my investigation under the resolution of the Senate, I am of opinion that it will not be wise for the government to inaugurate the proposed sys- tem of telegraph as a part of the postal service, not only because of its doubtful financial success, but also its question- able feasibility under our political system." North American. 139: 51-66. July, 1884. Government Telegraphy. D. McG. Means. The proposal that the Government should add the busi- ness of telegraphing to that 'of carrying the mails, is listened to with a great deal of favor. It is highly probable that if the proposal were submitted, to a popular vote it would be adopted by an immense majority. Most people do not stop to consider either the details or the consequences of such a change. They are very generally prejudiced against the .great corporation that controls the telegraphs of the country with how much reason we need not now consider and they believe that the Government would do the business cheaper and better than it is now done. If they were asked for reasons for this belief, they would say: The Govern- ment has succeeded very well with the Post-office, and it would therefore succeed with the telegraph if it were to undertake it. There are two assumptions involved in this reasoning: one, that the Government is successful in the management of the Post-office; the other, that the business of sending telegrams is so much like that of sending the mails that. the Government can do the former as well as the latter. Neither of these propositions is so self-evident as to be admitted without argument. The Star-route trials showed that a great deal of corruption may exist in the Post-office for a long time before it is discovered; and a very little reflection will suggest many differences between the transmission of letters and telegrams. Although our Post-office is not in so bad a state as that of England forty years ago, it is certainly not desir- able to add to its burdens until it is reformed. To place 24 the telegraph in charge of the Government can be justified only upon the ground that it will be likely to manage it better than it does the post, or else that the general inter- est imperatively requires the change to be made. We shall briefly state some reasons for supposing that the Gov- ernment will be very much less successful with the tele- graph than with the post, and for holding that public interest will be prejudiced by the change. Whenever the operations of Government require the ex- penditure of capital in permanent works, there is always a terrible waste. The Post-office requires very little expendi- ture of this kind; but with the telegraph the case is far otherwise. It is not easy to tell what amount of capital has been really invested in the business, but it can hardly be less than $50,000,000, and it may be double that sum. A very large part of this is invested, and must continue to be invested, in patents, a class of property which it would be particularly undesirable to have the officers of Govern- ment concerned in. The art of telegraphy is highly pro- gressive, and to introduce the routine which is the only safety of Government, would be fatal to its further progress. It is not easy to see how the Government could begin its operations without either confiscating or purchasing the patents under which the business is now carried on. To confiscate them would be an odious act of injustice to private persons; but to purchase them would infallibly occasion a frightful expense to the public. The mere transmission and delivery of messages could be performed as well, al- though not as cheaply, by the Government, as by private persons; but the remainder of the business could be done only at far greater expense. If the Government of the United States is to go into the telegraph business, three questions will meet it upon the threshold. Will it extend its lines all over the country, or will it confine them to a few favored regions? Will it have a monopoly, or allow competition? Will it hire or buy the existing lines, or erect its own? And back of these is a still more formidable one will it manage the business upon business principles, charging equal rates for equal services, and making the charges pay the expenses, or will it delude the people by low rates, making up the deficiency by other 25 taxation? The first of these questions can be answered in but one way. The only justification for the interference of Government is that the interests of the whole people de- mand it. It must be maintained that it is as much the duty of the Government to enable all its citizens to communicate with one another by the telegraph as by the post, and as non-paying post-routes are supported on this ground, so must non-paying telegraph routes be supported. The an- swer to the first question takes with it the answer to the second. If the Government allows competition it must lose money. The private companies will abandon to it the non- paying routes and confine themselves to the paying routes. But the only possible way in which the system can be made self-supporting is by applying the profits made upon the paying lines to the support of the others. The Govern- ment must buy out the existing companies. Consider- ations of justice forbid that it should prohibit them from prosecuting their business, and business considerations for- bid that it should allow them to do so. It is impossible to contemplate this prospect without grave apprehension. The probable expense is so vast, and the difficulty of the business so great, that the extravagance and impotence of the department of the navy would cease to be remarkable. There are emergencies when the public interests demand Government interference at whatever cost. In this case it is impossible to show that the public would not be prejudiced by such interference. It is probable that on an average every person in the country receives fifty pieces of matter a year through the mail, while he receives but one telegram. The mail is, of course, principally used by the well-to-do classes, but it is a blessing to the poor as well. The telegraph, however, is used exclusively by wealthy persons. Probably the majority of the inhabitants of this country have