POSTAL TELEGRAPHY. 153 Mr. THURBER, of New York, on behalf of the Committee on Postal Telegraph, submitted the following report: To the National Board of Trade: In 1869, the English telegraphs were taken by the Government, at an appraised value, and added to the postal system of the country. The theory upon which this action was based was, that the transmission of intelligence was a governmental function; that the telegraph was coming into general use for that purpose; that under Government control, in connection with the postal system, its benefits could be extended to many small places where it would not pay private corporations to extend their lines, and that its usefulness to the general public would be increased thereby. ten years it has been operated in accordance with the same principle which has controlled the rest of the postal service, viz: The largest measure of accommodation and usefulness to the public, rather than immediate pecuniary returns, and the results, as given in the last official reports, are as follows: For During this time the Department has paid operating expenses, and a surplus, amounting in ten years last past to about two millions sterling, or ten millions of dollars, which has gone towards paying the interest on the bonds issued by the Government for buying the plant. The plant has, however, been largely increased, and the increase paid for out of earnings. But for this large increase in plant, it is probable that the system would have more than paid all the interest charges on bonds issued for the purchase of the telegraphs. The increase in plant is illustrated by the following statistics : The enormous increase in the value of the service to the public is, however, the chief feature. When the telegraphs were operated by private companies, rates were charged according to distance, and were very much higher than the rate established by the Government, which is one shilling, about twenty-five cents, for twenty words, besides date, address and signature, to any part of the kingdom. With anything like the same ratio of increase in the use of the telegraph, it is evident that a higher rate would have yielded large returns, which have inured to the public in the shape of reduced charges. The public was also benefited by the transmission of news, the number of papers served with telegraphic advices being increased from 173, in 1869, to 518, in 1880; the amount of news being largely increased, while the charge for this service was largely decreased. The private companies, previously to the acquirement of the lines by Government, sent out about 6,000 words of news daily, when Parliament was in session, and 4,000 at other times. Under the Government, 25,000 words of news per diem are sent when Parliament is in session, and 21,000 at other times. In the United States, our telegraph service, like that of operating railways, has been delegated to corporate organizations, and in the absence of proper supervision and control serious abuses have crept in, and the public has been taxed much higher for the use of these inventions (which it may be said have become necessities of commerce) than is necessary to yield a liberal return upon the capital actually invested. This is illustrated by the following brief chapter of telegraph history: In 1858, the Western Union Company 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 the purchase of competing lines, while nearly $18,000,000 was issued in stock dividends. What actual value this enormous dilution may be supposed to have represented, can be judged of from the fact that the stock was not then worth twenty-five cents on the dollar. This, however, was the first attempt to spread out an increased paper capital, which should hereafter afford a plausible pretext for imposing on the public an oppressive tariff of charges. The next step was the purchase of the United States 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 absorption of the American Tele THE WESTERN UNION TELEGRAPH COMPANY. 155 graph Company. The stock of this Company was almost as much inflated as that of the Western Union, and amounted to $3,833,100; and yet $11,833,100 of Western Union stock was issued to secure possession of that line. This brought the stock of this Company up to about $41,000,000, while the bonded debt exceeded $6,000,000. Previously to the death of President ORTON, it was believed that the policy of this Company was to use a portion of its surplus earnings to purchase and retire its enormously watered stock, instead of using it as an excuse for maintaining high rates; but, on the death of President ORTON, a new policy was inaugurated by the VANDERBILT interest, which has been dominant in the Company, and in 1879 stock to the amount of about $6,000,000, which was in the treasury at that time, was presented to the stockholders in addition to the usual dividends. The Annual Report of the Western Union Company for 1880 states, as follows: "The capital stock of this Company is $41,073,410, of which there is in the treasury belonging to the Company $58,855.50, leaving the amount outstanding, on the 30th of June, 1880, $41,014,554.50." The bonded debt at the close of the year was $6,096,229.64. In addition to this enormous amount, on which the public is expected to pay dividends, this Company has practically absorbed the Atlantic and Pacific Company with a nominal capital of upwards of $15,000,000, regarding which the Western Union. Company's report of 1877, says: "When pending arrangements are fully consummated, a common interest will govern the management of both companies, and it is expected that all the substantial benefits of an actual consolidation will accrue." Thus another illustration is furnished that in such enterprises competition always ends in combination, and the public are ultimately obliged to pay for the construction of duplicate lines which are not needed, and are only constructed for the purpose of forcing a "divide” of the enormous sums charged the public for a public service which is a natural adjunct of the postal service. Another movement in this direction is even now in progress; the American Union Company, controlled by Mr. GOULD, is constructing a system of lines, or rather is building through the agency of a construction company, analogous to that of the "Credit Mobilier," a system of lines, which will doubtless, in due course, be taken in as all its predecessors have been. The increase in the use of the telegraph is simply wonderful, and is illustrated by the following table, from the Annual Report of the Western Union Company for 1880: Statement showing the Mileage of Lines and Wires, Number of Offices and Traffic of the Western Union Company for each year, from June 30, 1866 to June 30, 1880: $ 1866 37,380 75,686 2,250 1867 46,270 85,291 2,565 5,879,282 6,568,925 36 3,944,005 63 2,624,919 73 1868 50,183 97,594 3,219 6,404.595 7,004,560 19 4,362,849 32 2,641,710 87 1869 52,099 104,584 3,607 7,934,933 7,316,918 30 4,568,116 85 2,748,801 45 1870 54,109 112,191 3,972 9,157,646 7,138,737 96 4,910,772 42 2,227,965 54 1871 56,032 121,151 4.606 10,646,077 7,637,448 85 5,104,787 19 2,532,661 66 1872 62,033 137,190 5.237 12,444,499 8.457,095 77 5,666,863 16 2,790.232 61 1873 65,757 154,472 5,740 14.456,832 9,333,018 51 6,575,055 82 2,757,962 69 1874 71,585 175,735 6,188 16,329,256 9,262,653 98 6,755,733 83 2,506,920 15 1875 72,833 179,496 6,565 17,153,710 9,564,574 60 6,335,414 77 3,229,157 83 1876 73,532 183,832 7,072 18,729.567 10,034,983 66 6,635,473 69 3,399,509 97 1877 76,955 194.323 7,500 21,158,941 9,812,352 61 6.672,224 94 3,140,127 67 1878 81,002 206,202 8,014 23,918.894 9.861,355 23 6,309,812 53 3,551,542 70 1879 82,987 211,566 8,534 25,070,106 10,960,640 46 6,160,200 37 4,800,440 09 1880 85,645 233,534 9,077 29,215,509 12,782,894 53 6,948,956 74 5,833,937 79 The profits, and how they were applied, for the last year, are shown by the following: For new property there was appropriated: For construction of new lines and erection of It will be noticed that large amounts are devoted to constructing new lines, purchase of patents, etc.; and elsewhere it is noted, in the same report, that "the addition of 543 new offices, with the cost of fitting up and equipping them with instruments, was charged to current expenses;" under the English system these improvements would be the property of the public; but on the system which we follow, they simply become the property of a corporation, and in due time will be made the pretext for another stock inflation, and this latter will be put forward as an excuse for high charges for telegraph service. The improvements which have been made in telegraphy are very great, and of themselves, if owned by the public, would result in much lower rates for this service. The principle of our patent law is that after an inventor has been rewarded by an exclusive grant for a term of years, the benefits of an invention belong to the public; but when great corporations acquire and monopolize inventions, it rests entirely upon their discretion what share of the benefits shall accrue to the public. As an illustration how much more carefully the public interest is now guarded in Great Britain than in this country, the Government reserves to itself the right to use the telephone as a means of transmitting intelligence, thus securing to the public the use of this new invention at the lowest practicable cost. The degree to which the great powers of steam and electricity have been allowed to pass into corporate hands, which employ them |