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Ř \ §§§{}}{{{IŲIIIIIII #ff;// ¿ } J §N\\ ||||||||||||||||||} | ſº!!！! } =~~~~ *~*~*=~ ！ »！«■2，ºg ººr！！！·- §§§§§§§∞==- multitutiºn mill Tillºlilill º Tiiminutmºnºmūlīm Iſillº l; Fi ſííſíſae } APR 3 1914 The Postalization Of the Telephone and the Telegraph. SPEECH OF HON. DAVID J. LEWIS, . . " o F M A R Y L.A. N. D." ... • IN THE House of REPRESENTATIVEs, January 16, 1914. The BIOuse, being in Committee of the Whole House on the state of the Union, had under consideration the bill (H. R. 11338) making appropriations for the service of the Post Office Department for the fiscal year ending June 30, 1915, and for other purposes. Mr. LEWIS of Maryland. Mr. Chairman, in approaching the subject I pro- pOSe to present to the House to-day—the telegraph and the telephone agencies Of the Country—it is appropriate, I think, that they should be treated not as Imere ephemeral incidents of legislation, but with a view to those more funda- mental truths which determine our actions in disposing of the most serious problems of government. What is the relation of the public and the post office to the telegraph and the telephone, those great agencies of communication between the people, which now equal, if they do not eclipse, the postal system in the taxes levied upon national communication ? - - Do they differ from the post office in the function they perform ; and if not, how do they differ from industrial activities consigned by general consent to private Control 2 Is there something in their nature which distinguishes them from the farm and the retail store, some difference which reaches the dignity. Of a principle of classification, assigning one to the domain of postal action, while leaving farm and store to the field of competitive control? Mr. Chairman, there is a science of political economy; it speaks with an authority, not to Say With a thoroughness of analysis and breadth of view Which I could not claim. It speaks, too, with a responsible Sense, a knowledge, Of those perplexing varieties and COImplexities Of modern Society and industry. It knows that Society has never governed itself Well with merely a single truth Or principle, whether it be laissez faire, unqualified individualism, socialism, or Communism ; that Society is not a one-idea or a One-fingered institution, but pos- sesses aspirations and organic attributes and powers which it is its duty to utilize to promote its welfare. Now, what does it say on the subject before us, first as to the natural division defining those activities which should and those which should not, On economic and SOcial grounds, be assigned to the control of the individual? I quote from the WOrk Of Prof. Adams, The State and Its Relation to Industrial Action : CLASSICS OF INDUSTRY. All industries fall into three classes, according to the relation that exists between thc. increment of product which results from a given increment of capital or labor. These may be termed industries of constant returns, industries of diminishing returns, and in- dustries of increasing returns. The first two classes of industries are adequately con- trolled by competitive action ; the third class, on the other hand, requires the superior control of State power. Omitting in the necessary brevity of this address his analyses of classes 1 and 2, of which the retail business and the farm are quoted as examples coming under the effective control of competition, I shall quote his Statement as to class 3, which does not, but is monopolistic : TIII RD CILASS—INCREASING RETURNS, The peculiarity of those industries belonging to the third class, which we now come to consider, lies in the fact that they conform to the law of increasing rather than to the law of constant or decreasing returns. The increment of product from an expanding onterprise is greater than the increment of capital and labor required to secure its ex- pansion. Adopting the algebraic formula, as before, if 2x capital give 2y product, an economic application of 3x capital will give more than 3y product. * * * The important thought in this connection is that where the law of increasing returns works with any degree of intensity the principle of free competition is powerless to exercise a healthy regulating influence. This is true, because it is easier for an established business to extend its facilities for satisfactorily meeting a new demand than for a new industry to Spring into Competitive existence. Such businesses are by nature monopolies. ... We certainly deceive ourselves in believing that competition can secure for the public fair treatment in Such cases or that laws compelling competition can , ever be enforced... If it is for the interest, of men to combine; no. law, can, make them compete. For all industries, therefore, which conform to the principle of increasing 26707 °–12691 289604 2 * returns the only question at issue is, whether, society shall support an irresponsible extra-legal monopoly or a monopoly, established by law, and managed in the interest Of the public. In this latter way may the benefits of organization in the form of monopoly be secured to the people, and in no other. Now, sir, what is meant by the “benefits of organization in the form of monopoly ’’? Briefly, it is that the product per unit of labor and capital em- ployed, the result per dollar expended, will be greater because, say the political economists, such a monopoly admits: - - a. Unity and exclusiveness of organization ; b. Details of management being well worked out ; e c. Facility for extension by mere duplication of existing structures; . . d. A social demand for the service which is widespread and constant; e. Adequate ability in authority; f. Service at less cost than if broken into groups, because— e . Assured and definite demands for service admit of closest calculations; . Extent of demand admits of most minute divisions of labor; . Absence of rivalry reduces to a minimum the Capital and eXpenSe DeC- essary for performance of the Service; . Speculative management is eliminated; and, . Thus, with the public-service motive, . The maximum of output per unit of expenditure is rendered possible. ; . - THE PUBLIC-SERVICE MOTIVE. Mr. Chairman, what is meant by the private-service motive? Well, briefly quoting from the political economists again, they say that with a monopoly the degree of social service to be rendered, the output, is a question of the motive active in its financiering. Private financiering : A private business is managed to secure a profit, and, other things being equal, the higher the price secured for any service rendered, the higher will be the profit. The rule of private financiering therefore is to maintain, the price of goods or services at the highest price which has no tendency to curtail profitable business. Public financiering : The rule of public financiering, on the other hand, conforms to an altogether different principle. It is the purpose of government to render Services at the lowest price consistent with efficient service. Price equals cost. This is true, because the State, being the manager of the business, has no motive in acquiring riches. Even if private persons possessed an absolute monopoly, yet they must fail to render the greatest public service, because the public-service motive Would be absent. They would naturally conduct the monopoly with the object of profit, and usually the higher the price charged the greater the profit. An illus- tration of this may be given : The Chicago & Milwaukee Telephone Co., doing business between those cities for many years, charged a rate of 15 cents for 10 words, and 1 cent per additional word. After the American Telephone & Tele- graph Co. secured control of the Western Union, it managed to gain control of this lesser company, and raised its rates to 25 cents and 2 cents per Word. Under the low rate in 1909 the service rendered the public amounted to 103,248 telegrams. In 1912 under the 25-cent rate the number of telegrams fell to 57,689. By this raise in the rate the Bell Co. gained the salaries of two oper- ators and two messengers, whom it was able to discharge, by reducing the service to the public One-half. But by the same proceeding it raised the pro- ductive cost per telegram from about 14 cents in 1909 to 24 cents each in 1912. What the Bell Co. did in that case was according to the rule of private finan- ciering. Under postal control, and the public-Service motive, the 15-cent rate, while it paid expenses—and it did—would have remained to insure the maxi- mum social service. There is no such motive unless the public or the postal system is itself owner— Mr. MADDEN. How does it operate in England, then? Mr. LEWIS of Maryland. In what respect? - Mr. MADDEN. The gentleman says it has only one motive, and that is to serve the public. How did it get along there; did it make any money, and did it serve the public? Mr. LEWIS of Maryland. I want to say that as a whole the English postal system is the most profitable in the world. In 1910 its receipts were $130,145,- 874, and expenditures $107,815,457 in round numbers, showing a surplus of $22,330,417. If the gentleman refers to the telegraph, then I wish to suggest that its personnel is not separated from the postal personnel; their efforts are devoted to both Services. Mr. MADDEN. I understood the gentleman was talking about the telephone Service. * - - 26707–12691 3 º sº, ſº Mr. LEWIS of Maryland. And the telephone service can not be fully Segre- gated, either. The only way to judge the efficiency of the postal institution is by its total results. You can riot segregate the mail, telephone, and telegraph expenses satisfactorily. • - *~ But to resume with the rules of private and public financiering. I am able to give an illustration of the public or Postal Service motive. The parcel-post rates on local and the 50 and 150 mile Zone in April last were 1, 3, and 4 cents a pound, respectively; and the number of shipments for two weeks in April last for the 50 largest cities, at these rates, from 1 pound and up, was 1,047,954, bringing a revenue of $133,530.06, of which $78,028.14 was profit. The Postmaster General reduced the rates from 1, 3, and 4 cents to a balf cent On the local alld to 1 cent a pound on the others, and as a result the traffic leaped up 61 per cent in October. The rate was reduced thus from 12.7 to S cents per average package in these zones; and yet after allowing 8 cents a ton-mile to the carrying rail- roads, which is more than the express companies pay, the profit in October was still $36,239.53. Mr. Chairman, it was just as natural for the Postmaster Gen- eral, acting under the rule of public financiering, to make these reductions, when he found them feasible, as for the Bell management to raise its telegraph rate from 15 cents to 25 cents; and it was just as natural under the Well-known laws of monopoly economics that the traffic should increase 61 per cent in the parcels as it was that the traffic in telegrams should fall 44 per cent. In the case of the parcel you have a public-service efficiency that has been raised 61. per cent, while in that of the telegram the service efficiency has been lowered nearly balf. - - - - OPERATIVE EFFICIENCY. A Mr. Chairman, this brings me to the point of operative efficiency. There is a widespread conviction that public operation is inefficient; that is, that employees will not work as earnestly for the public as when supervised by the self-interest of a private employer. Doubtless this is true in some kinds of employment. But there is a broad and fundamental exception; it consists of those monopolies in which the quantity of Work to be done by each employee can be systematically measured out in advance and assigned to him each day. Such, for example, is the rural and city carrier with his scheduled route and deliveries, and Šo almost the whole Postal Service. Such, too, are the tasks of telephone and telegraph operators and messengers, for when the flow of traffic becomes known the working capacity of each in number of calls and of telegrams per hour may be determined in advance, and the failure of a delinquent to “make good '' practically checked. So this objection of malingering does not apply to the postal institution, Whatever its merits when applied to some other public em- ployments. -- - - That this distinction proves true in practice is seen in the case of the tele- phone. The product per average employee of the Bell system in 1912 was 58,000 calls, while that of the public telephone employee in Norway in 1910 was 147,000 calls. - Mr. SHERLEY. Does the gentleman mean by that that he thinks a Norway Operator of a Government-owned telephone is very much superior to an operator under the Bell System 2 - Mr. LEWIS of Maryland. No ; but I do mean that the institutional efficiency of the System in Norway, measured in terms of product and personnel units elm- ployed to obtain it, is that much greater. It is the low rates in Norway, averaging less than a half cent a call, which account for the high efficiency of its employees. If the rate is but a cent I use the phone freely. If it be a nickel or a dime I use it sparingly. The Norwegians can fully employ the service, and so the plant and the perSonnel are utilized to the maximum and Inot left in idleneSS. 3. - Mr. SHERLEY. I may not quarrel with that conclusion, but the gentleman started out to demonstrate the fact that the general impression that Govern- lment employees did not do as much Work as private employees was not true. Mr. LEWIS of Maryland. Where the work can be assigned and checked— Mr. SHERLEY. I Want to know if he thinks it is true? tº Mr. LEWIS Of Maryland. Where the work can be standardized and meas- ured out in advance the institutional product per telephone and telegraph em- ployee is higher for the postal systems. In fact, the Bell system ranks but ninth and Our telegraph COmpanies about the lowest in Such institutional efficiency. But as this is SO important a feature Of the discussion, I. Shall take up all three—the mail piece, the telephone Call, and the telegraſſm—and submit the Comparative Operative experience of the different countries. - 26707–12691 4 Telephone operative efficiency. Phone calls Postal units €r €In- €ººl- Country. - . . . ployee per Rank. ployee per Rank. 8.IIIlúIIl. 8.DIllliſi. Norway------------------------------------------------- tº sº e 146,854 1 32,414 ’11 Russia...-------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 114,659 2 ------------ • * * * * * * * * * § e e s tº e = * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * is is a se w 98,715 3 85,819 l Netherlands (municipal). ---------------------------------. 92,251 4 ------------ e is e º ºs e º e tº º Sweden. --------------------------------------------------- 79, 142 5 35,837 9 Denmark (private).--------------------------------- e = * * * * ~ * 79,000 6 -----------. s s º g º C ºs º º ºs ¥ * * * * * * * * * * *s s º is - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 67,727 7 42,947 4. Netherlands (private).------------------------------------ 65, 181 8 ------------ • * * * * * * ºrd - tjmited states (Bell Co.).j...'.............................. 58, 1341- 9 || 60,651 2- Norway (private)...----------------------------------- * tº s is 50, 751. T 10 1------------ e is tº º ºs e º ºs º ºs Switzerland------------------------------------------------ 47,328 11 37,562 7 Netherlands (State)...... ---------------------------------- 38,912 12 53,621 3 France....--------------- * e e s m = * * * * * * * * * * * * * * * * * * * * is e º º ºs e s s 34,018 13 33,697 10 Luxemburg------------------------------------------------|------------ 14 40,321 5 Denmark. . . . . .---------------------------------- •º sº e º sº tº us tº es e i s = * * * * * * as gº tº e 15 - 38,930 (5 Germany. . . . . .----- ſº e º e º ºs e are e s sº tº e º e º 'º tº * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 16 37,236 8 Austria. . . . .------------- w is a e s s e º 'º e tº tº E tº º ºs º e º is as º ºs e º º is e tº * * * * * * * * * * * * * * * * * * 17 30,528 12 New Zealand............ tº º ſº º e º 'º º sº e º is tº e º ºs e g º sº tº e s tº gº tº • * p * * * * * : * * * * * * * * * * * * 18 28,696 13 Great Britain......------------------ * * * * * * * * * * * * * * * * * * * ~ * - I - - - - - - - - - - - - 19 26,056 14 Hungary-------------------- & © tº e º te tº * * * * * * * * * * e º ºs º e º ſº tº º E * * * * | * * * * * * * * * * * e 20 23,025 15 Japan. -------------- wº sº • * * * * *.se e s e s s = e i = • * * * * * * * * * * 21 21,820 16 In the column for phone efficiency the long-distance or interurban call is included and rated as equal to four local calls in its demands upon the per- Sonnel. The column for postal efficiency is inserted to show the performance of the postal personnel. For this purpose the postal-service unit is treated as the average mail piece and the telegram as equal in Service to 10 mail pieces, while the local call is rated as equal to one-half mail piece, or unit, and the interurban as equal to two mail pieces. All kinds of employees of the telephone and post are included in the statement. While these postal Service valuations are only assumptions, it is believed that they are approximately accurate, and certainly in no case unfair to the phone service, as may be seen in the Cases of Norway, Russia, and Belgium, where the phone performances per employee reach as high as 146,854, 114,669, and 98,715, respectively. Thus, among 16 countries our postal system ranks first, while the Bell system ranks but ninth in Operative efficiency. This has reference purely to the amount of institutional product per unit of labor, which is the correct func- tional test, I take it. Mr. SHERLEY. I am prepared to admit you may get a higher percentage on your basis, because of a more constant demand, but on the broad proposition that the individual in private employment does not do as much work as a Government employee I WOuld dispute the gentleman - Mr. LEWIS of Maryland. I understand the distinguished gentleman. Where the work is not standardized and the amount of the product required, or the task, can not be specifically defined, the Self-interest of a private em- ployer may be necessary to make the laggard do his part. But the point I make is that a régime Of postal monopoly in the telephone and telegraph Serv- ices permits of defining the tasks; SO that Society, as a model employer, can give the worker proper conditions and yet so organize and direct him as to secure a greater average product than the private employer. The telegraphic institution supplies another illustration of this principle. I call the attention Of the House to the following list of processes through which the telegram goes in the United States: HANDLING OF COMMERCIAL MESSAGES. THE TELEGRAPEI COMI’ANY. 1. Figures charges on telegrams. 2. Reads each message for purpose of properly deciphering it. 3. Marks on each message “time filed.” 4a. Enters each telegram on sheet “receiving clerk’s record.” 5. Turns in cash to local cashier. 6. Sends telegram. 7b. Puts time sent, numbers, sending and receiving operators’ signals on telegram. 8c. Checks off numbers on number sheet and initials sheet. RECEIVING OPERATOR. 9. Receives and transcribes telegram on proper, blank. 10d. Checks off number on number sheet and initials opposite the number, 26707–12691 “5 ** = * DELIVERY CLERK. 11e. Makes wet copy of telegram. 12f. Puts º number on telegram. 13g. Makes out delivery sheet for messenger. 14h. Enters telegram on “delivery clerk's record.” 15. Incloses telegram in envelope and addresses envelope. 16i. Examines delivery sheet to see telegram is properly receipted for. 17.j. Collects cash from messenger to cover “collect received ” telegrams. 18k. Turns in cash to local cashier. *- MESSENGER BOY, 19. Delivers telegram to proper addressee. 201. Secures receipt for telegram on delivery sheet. 21. Collects cash on “collect ’’ telegrams. - 22m. Returns delivery sheet and cash to delivery clerk. RECEIVING OPERATOR (RELAY POINT). . 23. Receives and transcribes telegram on proper blank. 24n. Checks off number on number Sheet and initials sheet. SENDING OPERATOR (RELAY POINT), 25. Sends telegram. *.. 26O. Times- telegram, etc. - 27p. Checks off number sheet. - * Here, then, are 27 acts or processes, for 16 of which (the lettered ones) an argument of elimination might Well be made With the introduction of the stamp and other simplified postal methods. - But whatever may be thought of the Susceptibility to elimination of half of the above items, it is believed that the following, all accounting processes, would give way under public management to the prepaid or postage-due stamp. We find it safe to intrust nearly three hundred millions of postal revenue to Such Stamps In OW. - OPERATIONS IN THE ACCOUNTING DEPARTMENT. • * - CASHIER (LCCAL). - Checks up and balances “receiving clerk's record,” of messages. Checks up and balances “delivery clerk's record ” of messages. Checks up and balances money-order clerk's sent-and-received record. Checks up “charge accounts "... weekly or monthly bills of customers for messages. Turns over above four accounts to bookkeeper. Checks up receiving clerk's record, branch offices. Checks up delivery clerk's record, branch offices. BOOKIKEEPER (LOCAL). -8. Records cash received, daily receiving clerk's record. - .- 9. Records cash received, daily delivery clerk’s record. 10. Records cash received, “sent " money orders, record. 11. Records cash received, “regeived money orders record. 12. Records cash received, receiving clerk's record, branch offices. 13. Rocords cash received, delivery clerk’s record, branch offices. 14. Records all charge accounts. 15. Records payment of charge accounts. 16. Makes out Weekly balance Sheet. CHARGE ACCOUNT CLER [K. 17. Makes out charge accounts (weekly and monthly). 18. Balances with bookkeeper. 19. Sends out bills of charge accounts. AUDITOR'S OFFICE (LOCAL). 20. Balances with cashier “receiving clerk’s ” record. 21. Balances with cashier “delivery clerk’s ” record. 22, Balances with cashier receiving clerk's record, branch offices. 23. Balances with cashier delivery clerk's record, branch offices. 24. Checks up number sheets of main and branch offices. 25. Keeps book record of branch office receipts. - 26. Inspects “sent messages" to see that they all bear number, time, and operator's i signature. - º Makes daily record of messages on forms supplied for “Sent paid,” “Sent collect,” “Received paid,” “Received collect,” for public, press, and Government accounts. 28, Statement of Government messages Sent paid, for Government, for general auditor. 29. Statement of Government messages Sent Collect, for Government, for general auditor. 30. Statement of Government messages received paid, for Government, for general uditor. &l 31. Statement of Government messages received collect, for Government, for general auditor. ... -- ~~~~ *. 32. Statement of messages upon which there are other line tolls, for general auditor, `` 33. Makes daily check sheets for each city (amount of tolls), 34. Makes statement of “deadhead '’ messages. - 35. Makes monthly statement of uncollected messages. 36. Sorts all messages as to Cities. 37. Sorts all messages as “Sent paid.” 38. Sorts all messages as “received paid.” 39. Sorts all messages as “sent collect.” 40. Sorts all messages as “received collect.” 41. Figures amount of tolls on each message. 42. Files all messages by dates. - 43. Answers all check-error sheets. * - . 44, Makes daily statement of “sent" press report (number of words and city). 26707–12691 § 45. Counts number of words in “sent ’’ press matter, 43. Makes daily, statement,of," received £ollect” press matter. 47. Counts number of words in “received collect " press matter. If it is objected that all these are very little things, let it be remembered that SO, too, is the telegram ; and that if it is to be loaded down with an accounting burden Only to be compared with the accounting applied to a carload lot of freight in railway transportation, as the express companies have done with their packages, the 25-cent minimum of the railway and of the express com- pany and the like minimum of the telegroph company become logical enough, even if economically indefensible for a mere electrical letter. It is exactly accurate to Say that merely affixing the stamp to the letter re- places these 47 accounting processes with the individual telegram under postal practice; that is, the Postal System realizes the first great canon of a publicly financiered monopoly. Its “details of management have been well worked Out.” This is, indeed, one of the greatest advantages of the postal form of monopoly, and compared with it the Operative economy of the express companies and tele- graph companies is little loss than a joke. Let us compare our telegraph With New Zealand. Naturally these companies do not maintain offices at points that do not pay, and the result is that the Commercial telegraph Offices have a traffic Of 39 telegrams per day, while New Zealand has but 12, and yet with less than one- third the traffic per Office the postal telegraph employee Over there has 10.1 telegrams per day to his credit, while the American institution has but 8. The following table compiled from the experience of these countries is now , presented : - Traffic density and efficiency. Telegrams per em- Telegrams per op- ployee. erative office. Country. - r Per an- Per da Per an- Per d Ilúl Iſl. Y. num. er day. New Zealand.--------------------------- ----------------------- 3,700 10. 1 4,380 |2 Norway-------------------------------------------------------- 3, 115 8. 7 2,097 6 Belgium. ------------------------------------------------------ 3,063 8.6 5,451 15 United States.------------------------------------------------- 2,933 8. 0 14,332 39.3 Sweden.-------------------------------------------------------- 2,370 6. 6 1,495 4 Netherlands---------------------------------------------------- 1,607 4.4 4,774 13 Switzerland.--------------------------------------------------- 1,596 4.4 2,454 7 What boots it that our companies can work their employees longer hours, and can have three times the traffic per Office by denying us six-Sevenths of the local accommodation accorded in New Zealand, and other postal telegraph and telephone countries? Mr. Chairman, let me explain the significance Of these conditions. Recur- ring to the analysis of industries placing merchandising in Class I, with its law of constant returns; farming as Class II, because of its law of diminishing returns; and such industries as the post, the express service, and the telegraph and telephone in Class III, under the law of increasing returns; now, what do we find 2 That in the United States Classes I and II—the store and farm and factory, privately financed, according to their natures, and acting under circumstances of struggle and Competition—are unquestionably among the most economically conducted of their kind among nations. That our Postal Service, publicly financed, in spite of our high price levels, is giving rates the lowest prevalent in the world, and possesses the very highest working efficiency, while the two examples of the third class—the telegraph and telephone monopolies, like the express companies, subjected unnaturally to the rule of private finan- Ciering—rank among the very lowest in Working efficiency and among the highest in the rates exacted from the public. TFIE RATES-TELEGRAPHS.” Mr. Chairman, with the single exception of Japan, Our postage rates are the lowest among all countries, and these rates are now more than paying the cost of the service. This under the rule of postal monopoly and of the public financier. There is no real occasion for the lowering of our postage rates, but with respect to the electrical letter, the telegram, the following table gives the rates in other countries where the service is postalized, as compared with 26707–12691 * - each country: 27 * 3 e - our own, as also the degree to which such rates permit Rate and number of telegrams per capita. of use by the people in Minimum rate per Telegrams per telegram. Capita. . Number Rate— * * * * * * * Country. of Words. Each Rank. |Number: | Rank, Por Word - message. exira. Luxemburg * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * I e = * * s sº as as a s 1 30.067 $0.0067 9 0.84 11 Prance-----------------------------------. 10 . 0.965 . 0096 l 1.65 4 Japan-------------------------------------|----------|----------|----------|---------- . 60 14 Norway.---------------------------------. J () . 134 . ()134 11 1. 48 --- 5 Belgium. --------------------------------- 15 0.965 . 0193 2 1.25 7 Netherlands------------------------------. J0 1005 . 0201 3 1.19 8 SWeden.----------------------------------- 10 134 . 0134 10 .80 12 New Zealand... --------------------------. 12 12 . 01 6 8. 01 1. Great Britain. ---------------------------. 12 1217 . (31015 7 2. 18 2 Switzerland-------------------------------|- . . . . . . . . . 2.0579 . C048 4 1. 75 3 Germany--------------------------------. 10 119 01.19 5 . 92 10 Italy-------------------------------------- 15 . 193 . 01015 I2 55 16 Denmark--------------------------------. 10 . 130 . 013 8 1. 31 6 Austria-----------------------------------|----------|----------|-------------------- . 73 13 Hungary. ...---------------------.... * * * ~ * | * - - - - - - - - - I - - - - - - - - - - I - - - - - - - - - - | * * * * * * * * * * . 59 15 Russia------------------------------------|---------- 2.075 2.025 13 . 24 17 United States. ---------------------------- 10 . 25 . O2 14 1.-10 9 P0------------------------------------|---------- . 30 .02 . . . . . . . . . --|----------|--------- & P0------------------------------------|---------. . 35 .02 ----------|----------|--------- sº Po------------------------------------|---------- . 40 -.03 || ----------|----------|---------- Po------------------------------------|---------- . 50 .03 ----------|----------|--------- & P0------------------------------------|---------- ~ , 60 .04 ||--------------------|--------- sº Do----- - - - - - - y - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . 75 .05 ! ----------|----------|---------- P0------------------------------------|---------- 1, 00 .07 ----------|----------|--------- sº ! Each telegram. * Fixed charge per telegram plus charge for each Word. Although we rank first in postal rates, we rank fourteenth and last as to telegraph rates and only ninth in resulting social service. We have but 1.1 telegrams per capita as against S in New Zealand, a country whose social Condi- tions and wage levels Compare Compares with another. with ours about as one State in our Republic Mr. MADDEN. I was wondering whether the gentleman attributed the lack of the use of the telegraph to the fact that telephones are in such universal use and in so much more systematic use than in any place in the Old World? Mr. LEWIS of Maryland. Well, if you combine the interurban and long- distance telephone messages with the telegrams in the United States, both together amount to 4 per capita, as against the S telegrams in New Zealand. The CauSe Of Our telegraph Even in low-waged Germany both together number 6 per capita. the low service is unquestionably the high American charges. rates run from two to four times as high as in postal-telegraph Countries. They average 12 cents and a cent per additional word there ; here they run from 25 and 2 cents to $1 and 7 cents per additional word; here— Mr. MADDEN, FO1 the Sanne distance? Mr. LEWIS Of Maryland. any distance. The rates given in the table are flat, good for In Australia, whicle compares with the United States in extent, they have a State rate of 12 and 18%, and an interstate rate of 24%, good for any distance, namely, a shilling against a dollar for our extreme distances. The telegram Obviously corresponds with the interurban Or long-distance tele- phone talk and not with the local call. Mr. SHERLEY. If the gentleman will permit, a great deal of the telegraphic communication in England is right in the city; in London you will find this is so. Mr. LEWIS of Maryland. Yes; but that is a special condition which does not Obtain in New Zealand. TOLL TELEPHONE RATES. But, Mr. Chairman, the telephone long-distance rates are even more abnormal than the telegraphs. There has never been any competition as to them and obviously can not be. What is the result? They run from four to eight times the rates prevailing on the Continent of Eu rates for a three-minute conversation: 26707–12691 rope. Here is a table giving the 8 * Continental rates for long-distance compared with American rates. Country. 25 miles. | 100 miles. 300 miles. 400 miles. 500 miles.| 700 miles. 8weden........ ---------- - - - - - - - - - - - - - - - - - $0.04 $0.08 $0.13 $0.20 $0.20 - $0.34 Norway----------------------------------- . 07 . 09 .34 .40 l. --------- * = us tº º tº sº me s tº France------------------------------------ .05 . 10 . 35 43 || 53 te Italy.------------------------------------- ... 10 . 19 38 38 38 l--------- * Belgium ---------------------------------- . 10 • 19 |----------|--------------------|--------- ge Denmark. -------------------------------- . 07 . 20 54 ----------|-------------------- Germany--------------------------------- . 06 . 24 24 .36 36 . 48 Austria----------------------------------. . 12 . 31 38 38 38 |-------- tº $ Hungary....... S. - - - - - - - - - - - - - - - - - - - - - - - - - . 10 19 38 38 38 --------- te Average continental rate------------------ . 07 . 16 . 36) . 36 . 37 .45 Bell rate. --------------------------------- .25 . 60 1. 80 2.40 || 3.00 4. 20 The Bell toll or long distance rates are based on a scale of 6 mills per mile—that is 60 cents for a hundred-mile Conversation. The railways receive an average of 73 mills a mile for carrying a ton of freight. Gentlemen may realize how weighty their conversation is over one of these wires. It Weighs about a ton. [Laughter.] Doubtless the telephone managers honestly think that this rate yields them what private financiers naturally look for—the high- est profit—even if it condemns the plant and personnel to comparative idleness. Only 8 per cent of the theoretical time value of our interurban lines is utilized as a result of these prohibitive rates, while in Germany the utilization equals 19 per cent. I say that we do not censure these private monopolists for seeking the highest rate of profit, although their rates are the scandal of public-service rates the world Over. But have not the people a right to Censure us—the GOV- ernment—for neglecting to discharge the Constitutional function of communi- cation, and subjecting them to less than half services for more than double pay? LOCAL TELEPHONE RATES. Mr. Chairman, there are three countries only in which the average charge for a local call exceeds the letter rate. The United States is One of them. In all the others the local rate runs much lower, while in our cities the rate runs with the street car fare, and is often twice as great. Mr. MADDEN. Will the gentleman tell us, if bis figures are correct, why it happens that in England there is only 1.4 telephones and in London 2.8 tele- phones to every 100 people, and that it is impossible to get a telephone after 8 o'clock at night? * i Mr. LEWIS of Maryland. I will say, in answer, that in England, up to Jan- uary 1, 1912, nearly all the local telephone services were privately managed, the interurban and One exchange in London alone being postalized. The telephone service there now is in a State of transition from private to postal management, the British postmaster general personally told me. However, England is not a fair example of either private or postal management, for neither institution there in their COnflict with each Gºther, have had a fair chance to do their best. It is true, however, that there are more phones per capita here than anywhere in Europe. That is because in the United States a very much larger percentage of the people are Well to do, and in Spite Of Our abnormal rates can afford the luxury of a phone. Mr. Chairman, I now insert a table giving the average charge per local tele- phone call for the different countries. - Letter and local telephone rates. Hºr Local | Lettor 18te Country. Rank. - exceeds atc. rate 3. T3, g phone \ rate e Per cent. Norway (private).-------------------------------------......... 1 $0.004 $0.026 Sweden.-------------------------------------------------------- 2 005 , 0.26 420 Japan---------------------------------------------------------- 3 005 .015 200 SorWay-------------------------------------------------------- 4 006 .026 333 Russia--------------------------------------------------------- 5 007 , 0.36 414 Hungary------------------------------------------------------. 6 |. 009 . 020 122 Denmark (private).-------------------------------------------- 7 010 . 026 160 Austria----------------------------------* - - - - - - - - - - - - - - - - - - - - - - 8 011 . 020 80 Italy.---------------------------------------------------------- 9 013 . 028 115 Germany------------------------------------------------------ 10 . 015 , 020 33% Netherlands-----------------------------------------------.... 11 . 015 . 020 33% Belgium------------------------------------------------------- 12 1.015 . 020 33; Switzerland............. .* * * * * * * * * * * * p e º se. * * * * * * * * * * * * * * * * * * * * * * * 13 . 017 . 020 17 United States (Bell Co.) . . . . . . . . . . . . . . . . . . .-------------------- 14 . . 021 . 020 2 5 Luxemburg----------------------- ----------------------------- 15 . 024 . 020 220 *rance--------------------------------------------------------- 16 . 024 . 020 220 sº 1 Belgium, 1911. * 2 Phone rate exceeds letter rate. 26707–12691 -: 9. Thus the Bell system gives us a rank of fourteenth among 16 countries, although our postal rates virtually rank us first. But our telephone rates are really much more abnormal than they appear in the above table, which repre- sents the average receipts per call and not the tariffs. When they are con- sidered, especially for the greater cities, we find that in New York City the subscriber’s rate for a service limited to about 15 calls per day is $228, or greater in amount than the combined rates of London ($82,79), Paris ($77.20), Berlin ($43.20), and Stockholm ($24.44), for their unlimited services. Table giving annual tariffs (flat-rate service) for leading cities of different countries. Christiania - - $21.44 | New Haven $84. 00 . Stockholm ! - 24. 44 || Oakland, Cal 84. 00 The Hague 26. O0 Xhicago 9–– - i 84. 00 Copenhagen 32. O0 || Philadelphia--- 1 90.00 Tokyo -- 34. 00 | Seattle 90. 00 Auckland, New Zealand ... 34. 00 || Cincinnati - 100. 00 Amsterdam - 36. 00 | Boston 125. 00 Rotterdam 36. 00 || Denver 138.0%) Berlin 43. 20 | Washington - 168. 00 Budapest 57. 90 | Baltimoro 8 174. 00 Paris 77. 20 | San Francisco - 180. 00 Tuondon . 82. (9 || New York 8 • , 228. 00 American average exceeds foreign average 300 per cent. In many of Our cities, such as New York and Washington, the business phone rate is $48 for the first 600 calls, or 8 cents a call. You can send a 4-pound shipment from Baltimore to New York for 8 cents, have it delivered, and the pOstal System makes nearly a cent profit after paying the railway and other expenses. I now insert a table showing the measured service rates for eight American as COmpared with eight foreign Cities: - - Rates per call for measured service in principal cities of the world. Por Call. Country. 2,000 calls. 5,000 calls. 10,000 calls. Switzerland, Berne. . . . . . . . . . --------------------------------------. $0.0140 $0.01.16 so. 0100 Covington, Ky. ...--------------------------------------------- .0450 . 0360 . 0238 Belgium, Brussels................. --------------------------------- .0184 . ()100 .0060 altimore, Md. . . . . .------------------------------------------- . 0500 .0336 .0312 Australia, Sydney-------------------------------------------------. . 019.7 , 0.106 .0086 Washington, D. C. --------------------------------------------- .0490 .0366 .0283 Italy; Rome. --------------------------------------------. ---------- . 0200 . 0140 . 0120 eW Orleans, La. . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . 0400 .0280 .0240 Austria, Vienna. . .------------------------------------------------- . 0200 .0160 . 0100 Cincinnati, Ohio.----------------------------------------------- .0450 .0360 .0330 Germany, Berlin. ... ----------------------------------------------- . 0216 4.0086 4.0043 Boston, Mass.-------------------------------------------------- .0450 .0360 .0330 France, Paris------------------------------------ > - - - - - - - - - - - - - - - - - - . 0240 4. 0154 4.0077 New York, N. Y. . . . . . . . . . . ... --------------------------------- . 0555 . 0420 . 0400 Denmark, private...---------------------------------------....... .0294 . 0197 • 0171 San Francisco, Cal........................................... .* * * ,0648 .0487 ,0265 Average postal telephone rate...................................... , 0.197 . 0123 .0085 Average American telephone rate----------------................... .0493 .0371 . 0300 American rate exceeds postal §. Cent). . . . .… 167 200 215 American rate exceeds Australian (percent)........................ 150 250 250 º The rule of the private financier in the United States means local rates about. three times those under the postal management of other countries. COMPETITION. Mr. Chairman, the recent surrender of the Bell system to dissolution under the antitrust law, which many people believe to have been a mere coup d’état to prevent the effectuation of the Postmaster General's recommendation for postalization, has been accepted in Some quarters as possibly containing SODne 1 Competition. 2 Recently this rate raised to $125; competition presumably removed. 8 Baltimore and New York limited to 5,400 and 5,700 calls. 4 Computed on flat rates. 26707–12691 10 relief through the agency of competition. It can not, of course, have such a result on the interurban or long-distance service, because there is no duplica- tion of these lines. Nor can it be now expected to lower telegraph rates in such a way. We have had some of it in the local telephone service, and it may be of interest to ascertain the results. Sir, I now present a table giving the Bell rates for 60 American cities, the letter “C” after the rate indicating the cities in which it has competition : • * * * * e Popula- & Popula- No. City. º. Rate. No. City. }. Rate. 1 | New York, N. Y.........[2,331,542 $228—a || 31 | Norfolk, Va..............| 67,452 $60 2 | Chicago, Ill--------------- 2, 185,283 125-c || 32 | Savannah, Ga............ 65,064 60 3 Phila elphia, Pa. ----. ...]1,549,008 90–c || 33 | Portland, Me..... -------- 58,571 60 4 || St. Louis, Mo. . . . . . . . . . . . 687,029 78–c || 34 || Johnstown, Pa............] 55,482 30 5 | Boston, Mass............. 670,585 125 35 | Altoona, Pa.. . . . . . . . . . . . . 52, 127 66 6 || Cleveland, Ohio.......... 560, 663 84-c || 36 Springfield, Ill..... ** * * * * * 51,678 48 7 | Baltimore, Md. ..........] 558,485 153—a || 37 Mobile, Ala.............. 51,521 78 8 || Pittsburgh, Pa........... 533,905 189—a || 38 || Springfield, Ohio......... 46,921 48–C à | Buffalo, N.Y........I. 423,715 84–C || 39 || York, Pa................. 44, 750 48—b 10 | San Francisco, Cal....... 416,912 165—a || 40 | Sacramento, Cal.......... 44, 606 72 11 || Cincinnati, Ohio. . . . . . . . . 364, 463 100 41 || Berkeley, Cal............. 40, 434 84 12 Washington, D.C........ 331,069 168—a || 42 | San Diego, Cal........... 39,578 60–c 13 | Los Angeles, Cal. . . . . . . . . 319, 198 (9–c || 43 | Dubuque, Iowa.......... 38, 494 48 14 | Seattle, Wash. ............ 237, 194 90 44 | Tampa, Fla- - - - - - - - - - - - - - 37,782 54—b 15 || Indianapolis, Ind. . . . . . . . 233,650 54-c || 45 Roanoke, Va............. 34,874 48 16 | Providence, R. i......... 224, 326 216—a || 46 || Jackson, Mich..... . . . . . . . 31, 433 36—c 17 | Rochester, N.Y.......... 218, 149 48–C || 47 || Decatur, Ill. . . . . . . . . . . . . . 31, 140. 36—c 18 Denver, Colo............. 213,381 138—a || 48 || Lynchburg, Va.......... 29, 404 48 19 | Portland, Oreg........... 207,214 96–c || 49 || San Jose, Cal............. 28,946 60 20 || Toledo, Ohio............. 168,497 60–c || 50 | Newport, R. I........... . .27, 149 60 21 | Oakland, Cal... . . . . . . . . . . 150, 174 84 51 | Fresno, Cal............... 24,892 60 , 22 || New Haven, Conn....... 133,605 84 52 | Everett, Wash. . . . . . . . . . . 24,814 48–C 23 Memphis, Tenn.......... 131, 105 §6–c || 53 | Burlington, iowa.........] 34,334 48 "24 || Scranton, Pa............. 129,867 60–c || 54 Alameda, Cal - - - - - - - - - - - - 23,383 || 84 - 25 | Richmond, Va........... 127,628 72 55 | Oswego, N. Y........... . 23,368 36 . 26 | Hartford, Conn.......... 98,915 84 56 | Stockton, Cal............ 23,253 60 27 | Trenton, N. J. ........... 96,815 36—c || 57 | Kenosha, Wis............ 21,371 42–b 28 Springfield, Mass-----.... 88,926 75 || 58 || Winona, Minn........... 18, 583 42 ‘29 || Wilmington, Del......... . 87,411 60–c || 59 | Helena, Mont. ........... 12, 515 60–c 30 || Des Moines, Iowa........ 86,368 60 60 | Iowa City, Iowa.......... 10,091 36. NoTE.—a denotes measured service, rate computed for 5,700 calls; b, denotes Independent Co. rate; all other rates, Bell system; c denotes competition. New York includes Manhattan district only. The above rates are taken from original sources, and collectively show that 36 cities averaging 202,941 population under no competition, pay $89; while 24 cities averaging 305,975 population, with competition; §. only $62. Even where competition is absent there does not appear to be any rational order of rates. Stockton, Cal., with 23,253 population, pays the same rate ($60) as Des Moines, Iowa, with 86,368, and pays twice as much as Johnstown, Pa., with 55,482 population, and only $24 less than Cleveland, Ohio, under competition, with 560,063 population. - - - Now, sir, what do we learn from this experience? Two lessons, I think. First, that even though competition does lower the rates it is ineffective, be- Cause to get the benefit of the full service the user has to have two phones and pay both rates. This is so obvious that telephone economists universally condemn competition as a wrong both to subscribers and telephone capital. The Second lesson is equally important, if not quite so obvious. The competitive net- works could be operated more economically under one ownership. Accordingly, the difference between the rate in a competitive city and a monopoly city gives Some measure of the excessiveness of the charge in the monopoly City, where the populations are about the same. Mr. Chairman, by Way of summary of the preceding facts, I present a table in which the letter, telegraph rates, local and long-distance rates, as well as the efficiency in product per employee, is stated progressively for the different countries, the relative rank of the United States being indicated by a continuous line, printed on page 16 of this pamphlet. Gentlemen, these facts speak for themselves. They distinctly support the conclusions reached by political economists as to the relative efficiency in Social Service Of the public and the private financier, as to a monopoly falling within the domain Of the postal function. Mr. Chairman, rates from two to six times normal is too great a price to pay for the privilege of neglecting to fully discharge our constitutional functions. Mr. MADDEN. If the statement of the gentleman is correct, I Want to ask how it is that in Gréat Britain there are only 17.7 per cent of messages sent by telephone, 1.8 per cent by telegraph, while 80.5 per cent of messages are sent by mail; and in the United States 58.7 per cent of messages go by telephone, four-tenths of 1 per cent by telegraph, and 40 per cent by mail? - 26707–12691 - - ii Mr. LEWIS. It is a question of social wealth and ability of people to have telephones. But this question naturally brings me to the future of the tele- phone itself. TEIE BENEFITS OF POSTALIZATION. Mr. Vail, president of the American Telephone & Telegraph Co., has said, “There is a road to every man’s house; there ought to be a telephone inside.” This is, I think, a correct ideal, and the parallel is indisputable, but he neg- lects to observe that it was Society, with its public-service motive, that built these roads and not a privately financed monopoly. We can state without offense that a telephone financier is naturally prone to confine his investments to points yielding the desired profit, and is not inclined to apply any excess profits from such points to other points which do not promise remunerative returns. Alld SO it is that the COuntryside and the farm which need the Service most have received but little attention from the Telephone Trust, but have had to rely mainly for such limited service as they get upon the “farmer lines’’ Or Cooperative enterprises. - As a matter of fact, the limitations of the development of our telephonic network by private capital have been practically attained with its extension to the prosperous offices and well-to-do homes of the country. Of the present Service, Mr. Vail correctly remarks in the Bell report: - Instantaneous and immediate transmission of electrical communications is as yet a convenience and luxury, although under modern methods of business and commerce it is an economical alternative to the cheaper mail service in business operations. The use of the telegraph may be a popular convenience, but it is not a necessity and is confined Still to the comparatively few, and for that reason should be at the cost of the few that find benefit and profit in that use. In effect, this means that the masses, without the wealth to enjoy the luxury, or the commercial affairs to justify the payment of these abnormal rates, must go unserved. But the fathers of the Republic intended that they should be served, and the Constitution directs Congress to make provision as to the great function of communication. And why should they not be served? Does not the farmer need this communication in marketing his products? Does not the town consumer need it, too, to buy from the farmer direct? And when the plain citi- zen's child is sick does he not need a physician as quickly as his richer brother? The benefits to come from the application of postal rates, extension and ef- ficiency, to electrical communications, “a plıone in every man’s house,” are difficult to describe or even to exaggerate. Certainly all things should be done to make farm life as attractive as may be, and this is at least One of the rational and practical methods. If in spite of our distances and nondensity of population we can have mail piece rates among the very lowest, who, in the face of our marked postal efficiency, our experience with the parcel post and the intimate relationship of the telephone and telegraph monopolies, can not see that Our Postal System could give us as low rates for the telephone and telegraph as other countries? Mr. Chairman, I present a statement showing the financial results where the postal institutions are exercising the telephonic and telegraphic functions in connection with the mail. Financial results, receipts, and cappenditures of postal Systems in ré3pect to mail, telegraph, and telephone Scrºvices. Country. Receipts. Expenses. Surplus. Germany------------------------------------------------------- $194, 272,463 $171,594, 102 $22,678,361 Austria-------------------------------------------------------- 37, 494,963 36,774,693 720,270 Belgium-------------------------------------------------------- 11, 276,039 7, 286,550 3,989,489 Denmark------------------------------------------------------ 5, 151,680 4,052, 103 1,099, 577 France--------------------------------------------------------- 60, 688,373 60,765, 607 8,922,676 Great Britain. ----------------------------------`-- - - - - - - - - - - - - - 130, 145,874 107, 815, 457 22,330,417 Hungary------------------------------------------------------- 18, 779,415 || 13,217,728 5,561,687 Italy----------------- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 22,922, 406 17, 580, 193 5,342,213 Japan.---------------------------------------------------------- 31,884, 235 | 16,557,372 15,326,863 ay - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3,819, 538 3, 242, 909 3. Netherlands...........----------------------------------------- 7,786,553 7,418, 162 368,391 ussia--------------------------------------------------------- 68,222, 406 33,590,294 || 34,632,112 Sweden.-------------------------------------------------------- 9,684, 515 8, 116, 610 1,567,905 Switzerland---------------------------------------------------- 14, 169, 411 13,673,772 495,639. New Zealand--------------------------------------------------- 5,805, 750 5, 112,762 692,988 Total.---------------------------------------------------- 631, 133,621 506, 798,404 || 124, 335,217 26707–12691 -12. ! - Such are the results with the postal establishment completely exercising their normal functions. Who can doubt that our so-called postal deficits simply represent the deprivation of those profitable functions which the express com- panies and the Wire agencies for 40 years have succeeded in diverting from our Postal System. - - - RECEIPTS AND EXPENDITURES. Mr. Chairman, it may be of interest to ascertain what the budget of 1912 would have been had the telephone been under postal management with the telegraph function Superimposed. The Bell figures are actual; the other esti- mates for the independents, and for the operator and messenger expenses in the transmission Of the telegrams. - IReceipts, 1912: Telegrams (300,000,000) $75,000, 000 Bell System, receipts ------------------------------------- 190, 172, 154 Independent companies, receipts - 81, 351, 989. Total receipts .--- 355,524, 143 Expenditures: Telegrams, 7 cents cach - - 21, 000, 000 Bell system, 1912— J Operation--------- 65, 246, 677 Current maintenance 31, 762, 636 Independents - Operation 26, 651, 000 Current maintenance - - 12, 586, 000 Interest, at 3 per cent on purchase-- - 27, 000, 000 Depreciation, at 5 per cent on purchase 45,000, 000 Total expenditures------ - - - - , *- 220,246. 313 R£SUMſ. Total receipts --------------------- P- 355, 524, 143 Expenditures, interest, and depreciation 229, 246, 313 Net balancC- * - 126, 227, 830 New Zealand has eight telegrams per capita with her low rates. The above statement assumes that We should have at least three, and that the zone min- imum rates, running from 12 to 48 cents, would produce an average rate of 25 cents, the present receipt being over 40 cents. Since there would be no sepa- rate telegraph plant, the Operator and messenger service would practically com- prise the telegraphic expense. The table assumes the present telephone rates, and the surplus roughly indicates what could be safely accomplished in rate re- ductions. The most careful study convinces me that we could develop tele- graph and telephone rates, like our mail rates, as low as in other countries; that is, a cent per local call, a reduction of one-half in telegraph rates, and rates for the long-distance or toll Services about one-fourth of those now pre- vailing. - - METHODS OF ACQUISITION. Mr. ANDERSON. I merely want to ask the gentleman if he intends to go into the method which he proposes to adopt in taking Over these institutions? Mr. LEWIS of Maryland. Of course, I think all will agree with the state- ment of Judge Moon, chairman of the Committee on the Post Office and Post Roads, that there is no question as to the right of the Goverlument to acquire the telephone network. It will not be necessary to take over the telegraph lines. Both telegraphic and telephonic messages go over the same wires simultaneously where the communications have been postalized. My judgment, after a year's study, is that the telephone network Should be condemned and appropriated and the properties taken possession of by the Postmaster General, say, as of Jan- uary 1, 1915, the rates to be gradually reformed as experience developed the wisest way. The interurban network represents approximately 200,000 miles of pole line and 3,000,000 miles of wires; the local about 16,000,000 miles of Wires and 8,000,000 pluones. - Mr. ANDERSON. I want to ask the gentleman whether his proposition embraces the taking Over of what are Ordinarily considered as farmer lines? Mr. LEWIS of Maryland. Not by statutory appropriation, but by agreement with the Postmaster General. The reason for leaving them to voluntary pur- chase is that they are mostly cooperative institutions and that their rates are ilow sufficiently low, less than a half cent per call. They should be allowed, • 26707–12691 - - - * * * * - - - - 13 of course, to articulate with the postal system. Is that sufficiently responsive to the gentleman's question? - Mr. ANDERSON. Yes. Now, I would like to ask the gentleman what he would propose to do in a city, for instance, where there was a competing line? I merely ask for information, as I want to get the gentleman’s idea. Mr. LEWIS of Maryland. I believe we should take both. We should not Want Competition in the telephone business; it is economically unsound and wasteful. The proposition is to take the whole telephonic network. I do not think it would be fair to act otherwise. Mr. SHERLEY. The gentleman speaks of taking over two competing lines Of telephones, because it would not be fair to take One and leave the other. DOes the gentleman think the Same rule would apply to taking over the tele- graph Companies, SO as not to leave the telephone companies in competition With thern ? Mr. LEWIS of Maryland. The gentleman raises a serious question of public ethics. A telegraph Company, let us say, fails to keep up with the progress of mechanical civilization, as elsewhere, and fits itself to discharge only one function, the telegraph meSSage, When it might have added the interurban and long-distance telephone messages with proper improvements. Another company builds a network ready for both functions, which the Government, finding fit for postal uses, concludes to purchase. The telegraph company now comes forward and asks to be purchased, too, On the grounds that postal competition would injure it. That presents one question of ethics. The other question of ethics is this: Should the innocent taxpayers of the country be required to go down into their pockets for $200,000,000 to make good the obsolescent losses of telegraph companies whose owners took their chances with the profits of the enterprise? I am free to Say that the question may be a debatable one, but my conclusion is that we would not be justified. Mr. SHERLEY. The gentleman has asked me a question. I am inclined to agree with the latter conclusion, but I can see no reason why it should apply in one instance and not apply to the Smaller fry in the other. Mr. LEWIS of Maryland. The question is a close one, I confess. But it is the telephone institution that we propose to take, and not the telegraphs. If we were taking the telegraph, I should advise taking Competing telegraph lantS. - - p Mr. Chairman, I come now to the finallcing of the acquisition, which, under the circumstances, I can treat only in the most Sparing way. In 1912 the outstanding stocks and bonds of the Bell System amounted to $620,760,654, and according to the last census the Bell System represented 71 per cent of the total telephone capital, and it probably represents more now, . This would indicate the total capitalization as being about $875,000,000. Mr. BUCHANAN of Illinois. Has the gentleman any information as to how much watered stock and counterfeit capital there is in that $621,000,000 of stock of the Bell Telephone Co. 2 Mr. LEWIS of Maryland. It seems there is not any water in the capitaliza- toin of the American (Bell) Telephone & Telegraph Co. Its officers make this statement with a degree of earnestness Which convinces me that its Stock does not represent water in any degree. Mr. Chairman, it is proposed to finance the acquisition by the issue of 3 per cent 50-year bonds. These would not need to be issued in block. While it is designed that the properties be taken on a single day, they would have to be valued by the Interstate Commerce Commission, plant by plant, and they would be paid for as the final awards were found for each distinct company, which would take about three years; meanwhile it is proposed to pay the owners 4 per cent pendente lite, so that their sources of income may not fall them during the period of transition. Mr. ANDERSON. If my recollection serves me right, there was a proposi- tion to take over the telephone companies in blocks, One block at a time. HaS the gentleman considered that proposition? - Mr. LEWIS of Maryland. Yes. At first that looks like the easy way, but I have concluded that it is not the Wisest Way, for reasons I do not now have the time to State. THE PERSONNEL. One of the reasons is that it would have a tendency to disturb the working organization of the personnel, of which the Bell had about 140,000 in 1912 and all companies about 200,000. It is, of course, proposed to take over these em- - 26707–12691 #4 ployees with the properties and put them under, the civil service. Gentlemen may think they see danger in this addition to the Government service. Let me Say Over half of these are girls, and that experience shows that they remain Only from three to four years in the exchanges, when they leave to get married, SO that in four years the exchange Operators have to be almost completely. replenished. This is a circumstance of the greatest importance. The “auto- matic ’’ or girlless phone has come, and is going into general use abroad and even here. It means that the personnel will be cut down by nearly half, since the subscriber makes his own connection in a simple and effective Way. I have heard complaints about the Slow Service abroad; for example, -England— Mr. MADDEN. They only operate there in the daytime, and not at night. Mr. LEWIS of Maryland. Well, the automatic phone can be used at any time and as quickly as the subscriber finds the number, and since taking over the telephone network the English postmaster general is putting the automatic in. It is an answer to such complaints as I have heard, and answers also the political fears of an unwieldly telephone personnel. -- . . . PARLLAMENTARY PROCEDURE. Assuming, gentlemen of the committee, that this step is to be taken, we ought to consider the measures necessary to make it effective. One of the things I wish to call to the attention of the committee this afternoon is this: A history of the subject in the United States shows that Some 17 times in the last general- tion committees of this House or of the Senate llave reported favorably to Congress measures looking to the postalization of the electrical communication. Not Once, not one single time, has one of these measures ever come to a Vote. They have been lost on the calendar with a thousand sisters and brothers, per- haps of unequal importance. And I want to say to this House to-day that if this great agency is to be postalized, there is no escape from the necessity, as a matter of parliamentary procedure, of placing it on the Post Office appropria- tion bill. If a great majority in this House, with a few exceptions, were favor- able to the proposition, such is the state of our parliamentary practice and procedure that it would be nearly impossible of accomplishment unless it wer incorporated in the appropriation bill, which can not be pigeonholed. ... • Mr. CLARIK (Speaker of the House). I want to disabuse the mind of the gentleman from Maryland, of whom I think a great deal, and who knows, I. think, more about postal matters than all of the rest of us combined, except the gentleman from Tennessee [Mr. MOON] and the other members of his com- mittee—to disabuse his mind of the notion that one Can not get a bill up for consideration. I am frank to state how the present Speaker of the House feels about it. If the Speaker believes there is a pronounced sentiment in this House amounting to a majority, or anywhere approximating two-thirds, in favor . Of the consideration of a particular bill, Whether it be a big or a little bill, I believe it is the business of the Speaker to recognize Some gentleman, under suspension of the rules, to call up that bill. - SOCIAL PRINCIPLES. Pu BLIC MORALITY, Mr. Chairman, the economists are right; there is a law of public finance; there is a law of private finance. Applied in its proper domain, each law Oper- ates with a fitness in human affairs. But we, Sir, have been violating one of those laws by allowing private financiers to encroach. On the public domain. The resulting injury involves more than national economics, great as that is. It involves national character. If these telephone monopolies are not to be postalized, then private franchises must continue to be granted, and in the struggle for them both private and public character must be demoralized. Compare the history of New York and Berlin as to street-railway franchises; and then that of London and San Francisco on the telephone, where a Bell Co., On the One hand, and a competitor and what is regarded as an intruder into its domain—the Home Telephone Co.—On the other, both bought up the city council, one to defend and the other to procure privileges and franchises which have been postalized in all the leading COuntries. Behold the consequences of our violation of Sound public econoliics and Of Our neglect to discharge the lmational postal Obligation—rates the highest in the World, and a public state of . morality fo shame uS. 26707–12691 15? Švach, sir, are the results of a business and economical survey, of the field of communication by electricity. In the domain of public morals the lesson is not different. The perversion of the laws of public and private financiering, by which public governments have been disinherited of their normal functions, has led to such corruption and demoralization—of the functionaries giving and the alien claimants receiving the despoiled inheritance—that cities like New York with its street railways, Philadelphia with its gas works, and San Fran- Cisco with its telephones, have shamed the Scions of Roman corruption in their most dishonorable days. The policy of weakening these governments by alien- ating their functions to ambitious private finance has made them despised and attractive only to such weak political Creatures as see Opportunity for indi- vidual enrichment. Compare them, sir, with the proud cities of other lands, undespoiled of their rightful attributes of public service and where public position gives honor, prestige, and respect. Sir, all other countries have granted their postal systems their full rights. Why has not ours? It is notorious that Since the Civil War the history Of Our COuntry has not been the narrative of social institutions, but a stirring story of the gigantic achievements of in- dividuals in the domain of private finance. YOu Can think of the names Of a half dozen such men quicker than you can recall the names Of the con- temporary Presidents of the Republic. Meanwhile the substantive powers of our national life have belonged not to the States or the Government, as repre- Senting Society as constitutionally Organized, but to private individuals and their personal empires, really great princes of finance with powers exceeding those of the States, and collectively directed, exceeding, too, the active re- sistant powers of the National Government. At some points their private activities have trenched over onto the Government domain, with the result that some of its functions have been partly diverted, and others suspended, in their interest. Such has been the masterliness Of their control that even the most popular national institution, the postal System, has had to yield two of its principal functions—the parcel post and the electrical method of com- munication. For 40 years it was deprived of the parcel function. Now like influences are trying to withhold its function of electrical communication. Their efforts raise an issue which partriotic Citizens will not longer ignore. It is: Which is now to be paramount in the country—the Government or certain ambitious financiers? [Applause.] - - --> SOURCES OF INIFORMATION, Statistics Generale du Service Postale. Journal Telegraphic (et Telephonic). - Tarifs Telephonic, 1905. Report of British Post Office. |United States Telephone Census. United States Telegraph Census. Reports of United States Post Office Department. Public Ownership of Telephones on Continent of Europe ; Holcombe. Reports of Bell System, 26707–12691 5. Relative standing of United States among principal countries with respect to postal, telegraph, and telephone charges, and efficiency of postal and telephone employees. |United States indicated by continuous line.] t Š Telephone. ºof serve •] g ce units per employee 3 Rank. ſº º Average Long distance charges. per annum. * 8. | & Charge. Čharge #. - –-sº § . iocaſcăii. 100 miles. 300 miles. 500 miles. 700 miles. | 1,000 miles. | Telephone. IPostal. }=\ Calls. Mail pieces. 1---------------------------------- $0.015 S0.09 riºr $0.004 $0.08 $0.12 $0.20 $0.34 ! $0.402 146,854 85,819 d i pr In Il j Il Il IIl IOl 0 2----------------- e = e º ºs e as a m we s m s = * * * .02 . 12 -- .005 . 10 . 13 .36 .38 : . 48 114,669 60,651. US f . Il f Il C d C Q1 || JS 3---------------------------------- .02 . 123 || .005 - 15 . 19 .38 .48 .54 estis I-ºx, C 2. 8, k € p C Il A 6 j 4------------- tº gº ºn se e º º sº e º ºs ºn tº dº * * * * * * * .02 . 134 .006 . 19 .24 . 39 . 58 . 58 92,251 42,947 d IOl Iſl p C h f f j p. 5---------------------------------- .02 - 14 .007 . 19 .30 .40 1. 25 : 1.37 79,142 40,321 C C Cl 0. f Iſl d 8, IOl i 6---------------------------------- .02 15 .009 .20 .34 - 50 1.26 6.00 79,000 38,930 f j h IIl In f r |US pr O O 7---------------------------------- .02 . 153 010 20 38 J. 60 4. 20 67,727 37,562 GD g Il pr O O d - l LS p k 8---------------------------------- .02 157 011 .20 3S .82 65, 181 37,236 h ‘l Cl 8, &l prj C 9---------------------------------- .02. . 172 .013 .24 39 . 77 58,134 35,837 I g p l h Cl US Il 10--------------------------------- .02. 172 0.15 24 50 1.56 º 75t 33,697 - J & G C 8. g pr IIl f 11-------------------------- tº º ſº º sº º sº. .02 . 1S .015 .25 .50 3.00 47,328 32,414 k C J Cl Cl US ] & k ICl 12--------------------------------- .02 . 193 .015 .32 .54 38,912 30,528 l p A e r O - d 13--------------------------------- .026 . 205 .017 .36 . 72 34,018 28,696 IIl O k g | . l f 1 14--------------------------------- .026 .224 . 021 . 38 .80 26,056 - Il d º:- d r g 15.--- * * * * *** *** * * * * * = º ºs e am sº as .026 2, I−ºr . 39 1.08 23,025 O h l h g h 16--------------------------------- .028 .36 .024 , 60 1, 80 21,820 p Cl ſ |US US 8, 17--- à ºn is nº º sº e as .036 .44 : - Q 9.S., a=Japan. d= Austria. g= Great Britain. i=Netherlands. m= Norway. p=Italy. US= United States. e=Belgium. h=Hungary. z= Switzerland. n=Sweden. q=Russia. c= Germany. f= France. i=Luxemburg. l= New Zealand. o= Denmark. T= Australia. 1 Via telegraph circuits. * : Maximum rate for any distance. * 1911 data. pr Private. 3 9015 06453 1935 |||||||||| UNIVERSITY OF MICHEAN | × Z Aord Bros. 'M akers 2. 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