THE 
 
 PROPOSED CHANGES 
 
 IN 
 
 THE TELEGRAPHIC SYSTEM. 
 
 BY 
 
 GARDINER G. HUBBARD. 
 
 Reprinted from the North American Review, July, 1873. 
 
 BOSTON: 
 
 JAMES R. OSGOOD AND COMPANY, 
 
 Late Ticknor & Fields, and Fields, Osgood, & Co. 
 
 18T3. 
 
 ) 
 
University Press: Welch, Bigelow, & Co., 
 Cambridge. 
 
 r 
 
PROPOSED CHANGES 
 
 t<S 
 
 IN 
 
 THE TELEGRAPHIC SYSTEM. 
 
 The present age has witnessed greater changes in the habits 
 of the people, and the methods of transacting business, than 
 many previous generations. This is mainly due to the accu¬ 
 mulation of wealth in the nation, which has probably been 
 greater within the last twenty years than in all its previous 
 history, and to the increase and wide* dispersion of its popula¬ 
 tion. There is, undoubtedly, more wealth and comfort, espe¬ 
 cially among the laboring classes, than at any previous era, but 
 the tendency is to heap up enormous wealth and power in a few 
 hands and in large corporations. While we do not believe that 
 the poor are growing poorer, we do think the rich are growing 
 ;v richer, and that the disparity between the two classes is con- 
 \h tinually increasing. A few firms in the large cities transact 
 5 the largest part of the business in each, where formerly a much 
 ^smaller amount was divided among ten times as many firms. 
 -Two or three large manufacturing companies employ more 
 J hands and capital than did all our factories combined thirty 
 S years ago; while a few large railroad and coal-mining compar 
 nies control the anthracite coal mines, and set the price of one 
 half the coal mined in this country. The same tendency is 
 )- noticed in England and on the Continent of Europe. Mr. 
 in Gladstone has said that England has accumulated greater 
 wealth in fifty years than in the previous eighteen hundred, 
 and more in the last twenty than in the preceding thirty years. 
 The evil effects of this tendency are less felt abroad, since 
 along with this increase of wealth the influence of the laboring 
 
4 
 
 classes has been steadily progressing, and they are now felt as 
 a power, where fifty years ago their opinions were disregarded, 
 and their existence was scarcely taken into consideration in the 
 calculations of politicians. The laborer, in Europe, is gradu¬ 
 ally becoming of consequence and more independent. The 
 political character of our people is changing. We are becom¬ 
 ing more cosmopolitan. State boundaries and State rights are 
 less and less regarded, while the necessities and interests of 
 the people all tend towards forming a nationality. 
 
 This accumulation of wealth and dispersion of the popula¬ 
 tion are due in a greater degree to the introduction of steam 
 and the telegraph than to any other causes. By these agen¬ 
 cies remote places are brought closer together than were for¬ 
 merly neighboring towns. Europe is nearer New York than 
 was Boston thirty years ago. Transactions with China and 
 Japan formerly required a year for their fulfilment; now the 
 order is given and accepted in a day, and filled in less than 
 three months. Most of the large sales of cotton and wheat 
 are made by telegraph, and millions of money are annually 
 transferred by the same instrumentality, thus multiplying many 
 times the working-power of capital. 
 
 The prosperity and growth of city and country, of farmer 
 and manufacturer, of merchant and customer, depend on the 
 means of intercommunication. The market is generally far 
 removed from the producer or factory, and the necessity for 
 increased facility of intercommunication is the one great cause 
 of consolidation in our country. Without it we should be a mere 
 confederacy, and no nation. This necessity has led to the or¬ 
 ganization of a new class of corporations required by the necessi¬ 
 ties of the times and the growth of the country, which could 
 not exist in any other nation, or have arisen at any other period 
 of history. Their power is felt in the marts of trade, by the 
 press, and in legislative assemblies, controlling legislation at the 
 Federal and State capitals. This influence arises from the con¬ 
 centration of wealth in these companies, the large number of 
 their employees, and from the great ability of their officers. 
 They grow in power and influence daily. The benefits which 
 the people have received from them have been so great that the 
 power they have insensibly gained has not been generally un- 
 
5 
 
 derstood, while in many cases their interests and those of the 
 people have been identical. Yet these corporations have 
 steadily pursued a policy which has best subserved either their 
 own interests or that of their managers, — the interests of the 
 people being secondary and often entirely disregarded. The 
 farmer at the West already complains that the only use he can 
 make of his corn is to burn it for fuel; that no matter what 
 the prices at the seaboard are, the freights only rise and fall in 
 such a way that the result to him is the same. It is in vain to 
 hope that such evils will remedy themselves, or that these cor¬ 
 porations will voluntarily surrender any powers they have ac¬ 
 quired, or limit their rates by any other rule than the largest 
 amount they can exact. The time will come, and that soon, if 
 this policy is continued, when the people will rise in their 
 might and crush these monopolies. It is necessary that the 
 good men of both political parties, for all are directly or indi¬ 
 rectly interested, should take steps to correct the evil in these 
 corporations, that they may be reformed rather than destroyed. 
 Stockholders and officers do not or will not understand their 
 true relations to tjie public. They seem to think that their 
 franchises were granted by the State solely for their own bene¬ 
 fit, and that they can use these trusts in the same way they 
 would a charter for a strictly private corporation, as a cotton 
 or woollen mill. They forget that these are not private, but 
 public corporations which have received certain privileges from 
 the State, in consideration of their promise to perform certain 
 duties to the public in return. Just so far as they regard this 
 accountability, and only so far, do they subserve the interests 
 of the people, and the prime object for which their charters 
 were granted. If this responsibility were continually borne in 
 mind by the officers of these corporations, and acted upon, 
 their relations with the public would be very different from 
 those which now exist. The rights of stockholders in public 
 corporations are secondary, and are not entitled to the same 
 consideration as the rights of the public. But the stockhold¬ 
 ers control the affairs, and all the officers are chosen to care 
 for those interests exclusively, and see that they do not suffer. 
 The public have no representative, and their rights are often 
 overlooked or disregarded. Now, while it is vain to expect any 
 
6 
 
 progress unless capital is protected, it is as necessary that the 
 welfare of the people should also be cared for; the interests of 
 both must be conserved, for if the rights of either are sacri¬ 
 ficed, they will ultimately be avenged. 
 
 The two great interests which, within the memory of even 
 the young, have assumed such controlling power are the rail¬ 
 road and the telegraph. Kailroads were the first to begin to 
 be powerful, and they were fairly under way when the first line 
 of telegraph was constructed. Similar evils have been experi¬ 
 enced, and similar benefits conferred by each of these wonder¬ 
 ful inventions. Many small corporations were originally or¬ 
 ganized which constructed lines through their own neighbor¬ 
 hood ; then, by combinations and consolidations, they extended 
 their powers, until now the whole country is covered by a net¬ 
 work of rails and wires, which are controlled by very few 
 men. One instance of the growth of a railroad corporation 
 will illustrate the process. 
 
 The line between Albany and Buffalo was originally owned 
 by eight or ten different companies, their stock and indebted¬ 
 ness representing only the actual cost of the road. These 
 companies were by degrees merged into one, the capital stock 
 and bonded debt was very largely increased, and the conven¬ 
 ience of the public greatly promoted. The gain to the corpo¬ 
 rations was immense, by the saving of expense through a sin¬ 
 gle management, and by great stock and bond dividends. If 
 there had been no more stock dividends the evils would have 
 ceased, and the rates for passengers and freight would have 
 been reduced long ago; for the increase of business would 
 have enabled the officers to make a great reduction of rates 
 without any reduction of dividends; but just as rapidly as 
 the business and profits increased, the stock dividends in¬ 
 creased, until that company, which was originally represented 
 by fifteen or twenty millions of capital and debt, is now rep¬ 
 resented by nearly one hundred millions. The fictitious capital, 
 it is said, amounts to $ 110,145 per mile for the whole length of 
 the main line, upon which large annual dividends are declared, 
 and which is worth its par value in the market. This sum 
 does not represent money actually paid in by the stockholders, 
 but money extorted from the people by unnecessary and exor- 
 
• T 
 
 bitant rates. The same parties who control this line of rail¬ 
 road subsequently acquired possession of the Hudson River 
 Railroad, and other roads running from Buffalo around the 
 Lakes, and stretching across to Chicago ; and being still eager 
 for more, they have reached out until they control the Union * 
 Pacific Railroad, its roads traversing thousands of miles, and 
 its capital amounting to hundreds of millions. We have not 
 selected this line because its capital is more inflated than 
 others, or because its managers are more censurable, but sim¬ 
 ply as illustrating the tendency of corporate power. The stock¬ 
 holders and directors are not alone responsible for these evils, 
 for the public has witnessed this steady growth, has participated 
 in the benefits of these consolidations, and has ratified and ap¬ 
 proved them by silence. It is time that a change in the policy 
 of these corporations should be made, that the rights and 
 interests of the people should be recognized; and if the cor¬ 
 porations will not begin it, the legislators must, or the evils will 
 become intolerable. 
 
 But vast as the railroad power has become, and oppressively 
 as it is exercised, it is not yet absolutely unchecked; for com¬ 
 peting lines connect the East and West, and their managers 
 are constructing the Northern Pacific and the Texas Pacific 
 Roads, stretching out to the Golden Gate and the commerce of 
 the Pacific Ocean. A trial of strength, like the war of the 
 giants, may arise between these rival roads, and lower rates 
 may for a time be obtained, to the great benefit of the people. 
 Two new lines of travel from the Atlantic will soon be opened 
 to the Mississippi River, which may bring some alleviation. 
 
 The attention of the public is aroused to the importance of 
 the subject. In Massachusetts, Mr. C. E. Adams, Jr., has given 
 to it the best consideration of one of the most thoughtful 
 minds of a State prolific in great men, and has proposed a 
 novel remedy, which we trust will soon be tried in Massachu¬ 
 setts. In the Senate of the United States, a standing com¬ 
 mittee, with Mr. Windom, of Minnesota, at its head, — a man 
 of excellent judgment, cool and discriminating in his views, — 
 has been organized to consider this subject in its national rela¬ 
 tions, and others of our able men in the Senate and House and 
 throughout the land are striving to solve the problem. Organ- 
 
8 
 
 izations have been recently formed in some of the Western 
 States which portend only evil to these corporations, and pos¬ 
 sibly to capital as well. 
 
 The history of the telegraph shows a similar growth, but 
 offers no hope of relief through competition. The first tele¬ 
 graphic line was built at the expense of the government; but 
 the benefits of the experiment, which became a success, were 
 reaped by the projectors. As soon as the line between New 
 York and Washington was constructed, companies were organ¬ 
 ized in all parts of the country to build lines between the large 
 cities. The actual outlay required for their construction was 
 small; the nominal capital and the expectation of profits were 
 large, and entirely disproportioned to the cost of construction ; 
 one half of the capital stock being generally set apart for the 
 owners of the patent through whose instrumentality the lines 
 were built. These lines were constructed of poor materials, in 
 the cheapest manner, the constructors and managers having 
 little knowledge of the principles on which telegraph lines 
 should be built and operated. The rates were low, business 
 small, and expenses high. The correspondence was limited, 
 and the expenses greatly increased by the large number of 
 short lines owned by different corporations, each with its own 
 set of officers, operators, and repair hands, as every message 
 had to be repeated at the end of each line. This led to deten¬ 
 tions, inaccuracies, and irresponsibility. As if these evils were 
 not enough, the patentees and owners of the three patents of 
 Morse, House, and Bain constructed competing lines between 
 the large cities. A few of these companies, from peculiarly 
 favorable circumstances, made money; but failure was the in¬ 
 evitable fate of the great majority ; for they served neither the 
 interests of stockholders nor of the public. There were ten 
 times as many companies as at present, with scarcely one tenth 
 the number of miles of wire, or one tenth the business. Many 
 of the rates were lower than they have been at any subsequent 
 period; one time only ten cents being charged between Boston 
 and New York. 
 
 In the struggle, the weaker lines were gradually swallowed 
 up by the stronger, of which the principal were the Western 
 Union Telegraph Company in the West, and the American 
 
9 
 
 Telegraph Company in the East. Their managers became 
 conscious of the inherent evils of a system formed of segre¬ 
 gated and competing lines, and saw the necessity of a change 
 of plans and concert of action. The Western Union Company 
 occupied the territory from New York west to the Pacific Ocean, 
 with the exception of four or five States, where two allied 
 companies maintained an independent existence. The Ameri¬ 
 can Telegraph Company controlled the sea-coast and cotton 
 States. These companies formed an alliance offensive and defen¬ 
 sive, and seemed to he all powerful, and the era of prosperity 
 for the stockholders and increased rates for the people began. 
 
 A short history of the Western Union Company will illus¬ 
 trate the rise of these corporations. It was incorporated in 
 the year 1851; but it paid no dividends until the year 1858, 
 the profits being used in extensions, and purchase of other 
 lines, and, it is said, in the purchase of the stock of parties 
 who had become tired of waiting for dividends, either directly, 
 or by loaning money on the stock purchased. Then the few 
 remaining stockholders began to reap the fruits of their self- 
 denial in a very rapid increase of the capital. 
 
 In 1858 its capital stock was.$ 385,700.00 
 
 Subsequently, stock was issued for the following purposes: 
 
 1858-1866. For cash at different times .... 167,200.00 
 
 For bonds and fractions of stock dividends . 146,600.00 
 
 For other objects. 182,053.55 
 
 For stock dividends ..... 17,810,146.45 
 For lines purchased. 3,322,000.00 
 
 •January 6, 1866. Total capital . . . . $ 22,013,700.00 
 
 [In 1866 it swallowed the two other principal lines, —the 
 American Telegraph Company, occupying the Eastern 
 States and the seaboard route South, and the United States 
 Telegraph Company, a new line, competing with both the 
 Western Union and the American Telegraph.] 
 
 1866. 
 
 1869. 
 
 Stock for United States Telegraph Company 
 and United States Pacific Telegraph Com¬ 
 pany .. . . 
 
 Stock for American Telegraph 
 Company . . . . $ 3,833,100 
 
 For dividends to American Tel¬ 
 egraph Company . . 8,000,000 
 
 Total capital. 
 
 $ 7,216,300.00 
 
 11,833,100.00 
 
 $41,063,100.00 
 
10 
 
 1866-1872. Net earnings from July 1, 1866 to July 1, 1872, $17,116,694.00 
 
 These earnings average 7 per cent a year, divided as fol¬ 
 lows : — 
 
 Dividends .... $4,856,879.34 
 Interest and sinking fund . 1,898,401.98 
 
 Sundries, etc. . . . 1 0,361,412.91 
 
 Stock and Cash Dividends from 1858 to 1866. 
 
 Date. 
 
 Per cent. 
 
 Capital on which dividend Amolml „ f dilidend 
 
 April 22, 1858 
 
 414.40 
 
 $ 385,700.00 
 
 $ 1,598,300.00 
 
 January 16, 1862 
 
 27.20 
 
 2,349,500.00 
 
 640,446.65 
 
 March 15, 1863 
 
 100.00 
 
 2,979,300 00 
 
 2,979,300.00 
 
 December 22, 1863 
 
 331 
 
 5,962,600.00 
 
 1,988,100.00 
 
 May 11, 1864 
 
 100.00 
 
 10,066,900.00 
 
 10,066,900.00 
 
 April, 1866 
 
 25.00 
 
 21,484,400.00 
 
 537,100.00 
 
 Total stock dividends in eight years 
 
 . $17,810,146.65 
 
 Total cash dividends in eight 
 
 years . 
 
 4,157,242.00 
 
 Total dividends 
 
 . 
 
 . 
 
 . $ 21,967,388.00 
 
 Annual average 
 
 
 
 $2,745,922.00 
 
 On a capital of 
 
 . 
 
 • 
 
 $385,700.00 
 
 Besides all this 
 
 increase 
 
 of capital, a 
 
 bonded debt of 
 
 $ 5,198,295 was incurred in the purchase of the Russian Ex¬ 
 tension Telegraph and other lines. In the years 1864-65 Mr. 
 Collins, on behalf of himself and other stockholders in the 
 Western Union, began to build an overland line to Europe by 
 Behring Straits and Siberia. The work was begun without ade¬ 
 quate knowledge of the difficulties to be encountered, through 
 a barren, mountainous country, inhabited only by a few In¬ 
 dians and wild animals, with an almost polar climate; and the 
 attempt encountered unexpected difficulties. It was well un¬ 
 der way when its necessity was superseded by the laying of 
 the Atlantic cable. If it had succeeded, the separate organi¬ 
 zation would have been continued for the benefit of the cor¬ 
 porators ; as it was a failure, the loss was thrown upon the 
 people, and the bonds of the Western Union Telegraph Com¬ 
 pany were issued for $2,500,000, — a sum supposed to be equal 
 to the entire loss. This system was for a time a great finan¬ 
 cial success; but it served the stockholders much better than 
 
11 
 
 the public. Much of the correspondence required to be trans¬ 
 mitted over the lines of several companies, necessitating repeti¬ 
 tions, inaccuracies, and delays. If the customer complained, 
 it was impossible to determine which company was responsible 
 for any error or delay, and he was left without redress. The 
 elements of a national system were lacking. The companies 
 themselves were sensible of the inherent defects, and efforts 
 were made at different times to effect a union of the large 
 companies, but without success. 
 
 In 1864 the United States Telegraph Company was organ¬ 
 ized, with its head-quarters at New York, for the purpose of 
 establishing a national company, with wires extending north 
 and south, from Maine to Mexico, and from the Atlantic to the 
 Pacific. It was the first company started on a broad basis, 
 and provided for the economical, prompt, and accurate trans¬ 
 mission of all telegraphic correspondence. With capital, skill, 
 and time, its success was assessed at the expense of the other 
 companies. 
 
 The Western Union and American Telegraph Companies 
 realized the power of this new rival even more fully than did 
 its originators; for they knew its strength and their own 
 weakness. 
 
 The new company soon began to pay dividends, supposed to 
 be from earnings, but in reality from capital. Both of the 
 old companies made overtures to it: the Western Union was 
 successful in its negotiations, by offering many times its cost 
 or value. 
 
 It was merged into that company in 1866, each stockholder 
 receiving two shares of stock in that company for every three 
 of the other, which required an issue of $7,000,000 of stock 
 for the purchase “ of a few thousand miles of almost worthless 
 lines.” 
 
 This forced the American Telegraph Company into a consoli¬ 
 dation with the Western Union, which immediately followed 
 the other. Its capital stock of $4,000,000 was exchanged for 
 $12,000,000 of stock of the Western Union to equalize the 
 nominal value of the two. The Western Union system there¬ 
 by became national. 
 
 It is often said that, as competing lines can be constructed 
 
12 
 
 at a small expense, the public have a remedy for any evils be¬ 
 longing to the present system in their own power. 
 
 This suggestion has even been made by officers and stock¬ 
 holders of the Western Union Telegraph Company. The re¬ 
 sults of past experience show the entire fallacy of such a 
 remedy. Telegraph correspondence, like the mail service, is 
 with all sections of the Union, and no company can be suc¬ 
 cessful that is not national. 
 
 In this respect it is entirely unlike our railroad service, 
 ^liere a small local road may pay large profits, and serve its 
 immediate constituency better than a large company could. 
 
 The recent history of opposition companies confirms these 
 views. 
 
 At the close of the war this company required the aid of the 
 government in recovering and establishing its lines upon the 
 railroads of the South. It therefore procured the passage of 
 an act of Congress in 1866, which gave it the right to con¬ 
 struct, operate, and maintain lines of telegraph upon all the 
 post roads of the country. Foreseeing that the time might 
 come when it would desire to sell its lines to the government, 
 a provision was inserted in the bill that Congress should have 
 the right to take them at any time after 1871 at an appraised 
 valuation. The Western Union Telegraph Company was now 
 for the first time without a competitor, and was apparently 
 secure. But its lines were poorly constructed and equipped, 
 and but little business could be transacted upon them in com¬ 
 parison with the same length of European lines. According to 
 a report made by Mr. Cromwell Varley, an experienced elec¬ 
 trician, who came over from England in 1868 to examine their 
 lines, the insulation was scarcely one tenth as good as that of 
 the English lines, and “it is the favorable climate which per¬ 
 mits such insulation to pay.” In conclusion, he said: “ Your 
 insulation is horrible in wet weather, and getting worse. Take 
 in hand those lines which earn most of your money,— the Bos¬ 
 ton and Washington wires, for example, — reinsulate one half 
 or one third of these wires, and I expect you will find them 
 sufficient for your present traffic.” 
 
 At this time the corporation was in a critical condition ; its 
 lines were poor, and its capital out of all proportion to its prop- 
 
13 
 
 erty or business. With the same capital it now has, it then 
 had less than one half its present length of wire or business. 
 Its rates were nearly twice as high, the average being $1.40. 
 It could easily have been fatally crippled by rival lines, if par¬ 
 ties who had the means and the skill, and who were willing to 
 look for their profit to the investment, had constructed them. 
 
 New rivals entered into the field ; but they all inherited the 
 errors of the Western Union, and were started on wrong prin¬ 
 ciples, with capitals even larger in proportion to the length of 
 their lines or their business. In one of these companies each 
 mile of wire was represented by $ 800 of capital, while the cost 
 was probably not much over $ 100. The principal of these 
 were the Franklin, Atlantic and Pacific, the Pacific and Atlan¬ 
 tic, the Bankers and Brokers’, and one or two other smaller 
 associations. Competition was renewed, rates were reduced, 
 dividends fell off, and, according to the assertions of the West¬ 
 ern Union Telegraph Company, “ These competing lines have 
 not made money enough to keep their lines in repair.” They 
 have never paid any dividends, and their stock, it is said, has 
 no market value. Combination naturally followed. When a 
 business, from requiring large capital or other circumstances, 
 falls into the hands of a few persons, they are sure, in the end, 
 to avoid competition by combining. Hence, it is said with 
 truth that “ where combination is possible, there competition 
 is impossible.” Accordingly, the President of one of these 
 companies has recently testified that he had agreed with the 
 Western Union Telegraph Company to raise the rates, thus 
 putting an end to competition. This result may have been 
 brought about in consequence of large stockholders in the 
 Western Union Telegraph Company having become interested 
 in the other lines. The business, therefore, is now controlled 
 by the Western Union Company, which performs nine tenths 
 of it. The management of this company has not been retained 
 in the hands of its original stockholders, nor is it controlled 
 by those who have invested in telegraph stock solely with a 
 view to profit by the development of its business, but by the 
 same parties that operate the New York Central line of rail¬ 
 roads, — a combination which wields the most extensive rail¬ 
 road and telegraph systems in the world. This statement does 
 
 % 
 
14 
 
 not represent the full extent of its power. A great change has 
 taken place in the Western Union Company’s affairs since its 
 office was removed to New York, and Messrs. Orton and Palmer 
 became President and Treasurer, and the engrossing policy 
 then begun has been pushed with all their sagacity and energy. 
 No dividends have been paid recently, nor will any be for some 
 time to come. The profits have been applied to the repair, 
 extension, reconstruction of the old, and to the construction of 
 new lines, and in the purchase of the stock of the Company. 
 The stock so purchased has not been cancelled, but has been 
 transferred to the company, to be sold or divided at some future 
 time. Concessions have been made in the rates, the business 
 has doubled, the lines have been improved, the great dispro¬ 
 portion between the value of the property, its business, and its 
 capital has been to a considerable extent removed. Competi¬ 
 tion has ceased and can never be renewed. The results appear 
 in the market value of the property, which in January, 1869, 
 was $33 per share, and in January, 1873, $85, and is cheaper 
 at $85 than it was in 1869 at $33 per share. 
 
 What is the effect of this monopoly, with its inflated capital, 
 upon the rates and growth of business ? According to the 
 Company’s published statements, its average rates in 1868 
 were $1.10; in 1869, 97 cents ; in 1870, 83 cents; in 1871, 
 73 t 4 q cents; in 1872, 72 cents. The Company has earned 
 upon its nominal capital during this time an average of six 
 and a half per cent a year. If the capital represented the cost 
 of the property, the rates might have b6en reduced one third 
 and still have yielded six and a half per cent upon it. The 
 public pay, therefore, nearly $3,000,000 a year on fictitious 
 capital. The growth of the business is indicated by the number 
 of messages transmitted during each of these years, namely: — 
 
 
 Rate. 
 
 Messages. 
 
 Rate. 
 
 Messages. 
 
 In 1868, 
 
 $ 1.10 
 
 5,733,394 
 
 In 1871, .73^ 
 
 9,115,010 
 
 1869, 
 
 .97 
 
 6,548,465 
 
 1872, .72 
 
 10,271,935 
 
 1870, 
 
 .83 
 
 7,859,028 
 
 
 
 being an increase of eighty per cent. 
 
 This increase, large as it seems, is entirely disproportionate 
 to the growth of either the railroad or the mercantile business 
 of the country, and is less than that in other countries. 
 
 * 
 
15 
 
 Belgium affords a striking contrast to America in the policy 
 pursued and in the results obtained. In the year 1862,105,278 
 messages were transmitted, at one and a half francs. In 1863 
 the rates were reduced to one franc, and the business increased 
 to 188,825, or eighty per cent. In 1865 the number was 
 332,718. On the 1st of December the rates were reduced to 
 half a franc, and the next year 692,536 messages were trans¬ 
 mitted. The business has continued to increase in nearly the 
 same ratio, and in 1871,1,560,673 messages were transmitted, 
 giving an increase of five hundred per cent in six years. The 
 number of messages is one fifteenth of the number of letters. 
 This diminution of rates was followed by a reduction of the 
 net profits, but in no year have the expenses exceeded the 
 receipts, and the net profits are again increasing. The net 
 earnings have paid the entire debt incurred in the construc¬ 
 tion and extension of the lines. The reduction of rates was 
 not only followed by an increase of business, but by extending 
 the use of the telegraph to all classes of people. At the high 
 tariff seventy-seven per cent was on commercial matters, while 
 now thirty-eight per cent only is of that class, although the 
 number has greatly increased ; thirteen per cent was then on 
 social matters, now fifty-eight per cent. 
 
 The Republic of Switzerland soon followed the example of 
 Belgium. On the 1st of January, 1868, the rates were reduced 
 one half, and the correspondence, which had been increasing 
 at the rate of only four per cent a year, nearly doubled at once. 
 The number of messages transmitted in 1867 was 397,289 ; in 
 1868, 798,186; and in 1871,1,700,000. If as many telegrams 
 were sent in this country as in Belgium in proportion to the 
 correspondence, there would be about forty millions a year. If 
 as many in proportion to the population as are transmitted in 
 Switzerland, there would be nearly thirty millions. 
 
 It is said that those examples do not apply to our country, 
 and that it does not follow that because they use the telegraph 
 extensively, we should do so if our rates were greatly reduced. 
 The theory of the Western Union Telegraph Company is that 
 the business depends more upon the despatch obtained than 
 upon the rates; that the question of cost does not enter into 
 the consideration of its customers so much as that of time; 
 
16 
 
 and that greater promptness in transmission is demanded, 
 rather than lower rates. There is no doubt that this is true 
 under the present circumstances. The rates are exorbitant 
 and prohibitory of many kinds of business, ten per cent only 
 being on social matters. The experiment of low rates has 
 never been tried in this country, excepting between two or 
 three large cities in the East, and the results there have never 
 been published. With a reduction of rates the character of 
 the business would be changed, the number of customers 
 and messages would be greatly increased, and similar results 
 be obtained here as abroad. European statistics show that 
 with high rates the telegraph was used even less than with us, 
 and solely for commercial purposes, and that it is the reduced 
 rates that have increased the business. The effect would be 
 much greater here, because the value of the telegraph depends 
 upon the time gained in the transmission of correspondence. 
 If in Belgium, where there is only a gain of an hour’s time, the 
 growth of business by the reduction has been fifteen hundred 
 per cent in ten years, the effect would be greater in this 
 country, where the gain in time is from one hour to ten days. 
 
 While it is true as a general rule that the growth of the 
 telegraphic correspondence is so great that the net receipts 
 will be diminished by any reduction of tariff, yet it is also true 
 that any considerable reduction of rates will greatly increase 
 the business without a corresponding increase of expendi¬ 
 tures. European and American statistics both establish this 
 proposition. Striking and instructive results are afforded by a 
 comparison of the statistics of North Germany, Belgium, Hol¬ 
 land, and Denmark for the years 1865 and 1870. In North 
 Germany the increase in the number of messages was 259 
 per cent, increase of expenditures only 88 per cent; the ex¬ 
 penses increasing only one third as rapidly as the business. 
 In Belgium the increase of messages was 252 per cent; of 
 expenditures, 61 per cent; the expenses increasing one fourth 
 as rapidly as the business. Increase of messages in Holland, 
 142 per cent; of expenditures, 62 per cent, or one half as great 
 as the business. In Denmark the increase of messages was 149 
 per cent; of expenditures, 88 per cent, or only one fourth as 
 great. The same is true of the Electric and International Tel- 
 
IT 
 
 egraph Company, the largest English company, which in four 
 years, from 1862 to 1866, increased its business nearly 105 per 
 cent, while its working expenses were only increased 40 per 
 cent, and the net product 80 per cent. The statistics of the 
 Western Union show the same results, the business having in¬ 
 creased in five years 80 per cent, with only 2T per cent increase 
 of the expenses, and a reduction of only one per cent in the 
 net profits. It is therefore shown that a reduction of fifty per 
 cent in the rates will be followed by an immediate increase in 
 the business of about one hundred per cent, with an increased 
 expenditure of about one third, and that this immense devel¬ 
 opment of the business and of benefit to the public may be 
 gained without much, if any, reduction of the net profits. But 
 corporations will not make reductions in rates simply for the 
 public benefit. It is more difficult, and requires greater exec¬ 
 utive ability, to manage a large business with small profits on 
 each item than to conduct a small business with large profits. 
 It is in this that the difference between a corporate and a 
 postal service consists. The first looks only to realizing the 
 largest profits, and regulates its facilities and extends its 
 business with that view only, the public service being hut the 
 accessory. The other seeks the greatest extension of the 
 business which can be made without loss, the public service 
 being the chief object. 
 
 It is thus shown that the use of the telegraph has increased 
 rapidly abroad and slowly with us, when the very reverse ought 
 to be true. Scarcely any new lines are constructed there, while 
 here new territory is peopled, and an average of over twenty 
 thousand miles of wire are added yearly to our lines. Our hab¬ 
 its, business, social condition, national energy, and extended 
 territory, all favor a much more rapid increase in the use of the 
 telegraph here than abroad. The contrary result can only be 
 due to the fact that the business is managed in the interests of 
 monopoly. Where the telegraph is managed by the govern¬ 
 ment, the interests of the people are better regarded; the rates 
 are the lowest, the facilities the greatest, and this is obtained 
 without the imposition of any tax, those who use the telegraph 
 paying for it. These effects are due to the different systems 
 in operation, — in one the corporate, in the other the postal. 
 
 2 
 
18 
 
 The different theories of these systems have been very fully 
 set forth in a recent work, published by Sir James Anderson, 
 entitled “ Statistics of the Telegraph.’’ In this he enunciates 
 several propositions, which are the key to the whole matter. 
 First, that the normal growth of the telegraph is so rapid that 
 the net earnings, at a high rate, will be greater than at' any 
 reduced rate. Second, that a reduction of tariff for interior 
 traffic has in nearly every instance produced an enormous 
 increase of traffic, with only a slight decrease of the net prod¬ 
 uct, and that this deficit tends to diminish. Third, that the 
 only reason that can possibly induce the directors of corporate 
 companies to reduce their tariff is the single one of expediency. 
 The first two propositions he proves by the Belgian and Atlan¬ 
 tic cable statistics. The Belgian statistics show that if there 
 had been no reduction of rates during a period of nineteen 
 years, there would have been a much larger net product, while 
 the business would have shown a very small increase. Only 
 264,504 telegrams would have been transmitted in 1869, in¬ 
 stead of 1,584,413, the number actually exchanged, while the 
 net product for the same year would have been 502,000 francs 
 against 23,856 francs. The history of the Atlantic Telegraph 
 shows that if the average rate, £ 12.84, for the first eleven 
 months had been continued, the net result would have been an 
 annual dividend at the present time of twenty-seven per cent a 
 year instead of ten or twelve per cent, while the number of mes¬ 
 sages sent would have been 114 a day against 860. The third 
 rule has been faithfully carried out in the American system; 
 high, irregular, and arbitrary rates preventing the use of the 
 telegraph unless in exceptional cases, where the cost is of slight 
 consequence. Though the rates have been reduced atout 
 thirty-three per cent within the last five years, no general re¬ 
 duction has been made. It has been limited to particular 
 cases, where the rates were so high as to be almost prohibi¬ 
 tory. 
 
 Mr. Wells, in a pamphlet lately published by the Western 
 Union Telegraph Company entitled “ The Relation of the Gov¬ 
 ernment to the Telegraph,” says that the reduction caused by 
 the introduction of a system of charges according to the air¬ 
 line distances between country places instead of by the route 
 
19 
 
 actually traversed by the wires resulted in a loss equal to fif¬ 
 teen per cent, while the introduction of half-rate messages by 
 night was followed by another reduction in the net receipts 
 equal to sixteen per cent in the rates, and thus he accounts for 
 the entire reduction. In Europe, every nation has adopted 
 either uniform rates, or uniform rates for equal distances. 
 
 The appropriation of the lines of telegraph by the general 
 government has been recently the subject of discussion both in 
 England and America. The same system prevailed in each,— 
 high rates, limited facilities, and small growth. The contrast be¬ 
 tween the governmental and corporate systems in England and 
 on the Continent was felt by the English, and led to the pur¬ 
 chase of all the lines of telegraph by the government in 1870. 
 The business had increased under corporate management from 
 six millions in 1866 to eight millions in 1868, or fifteen per 
 cent a year. Though the British government reduced the 
 rates but one third, the increase was one hundred per cent in 
 three years, with a great increase in the number of offices, 
 against an increase of eighty per cent in five years in our own 
 country. These results have necessarily attracted much atten¬ 
 tion in our own country. The Western Union Telegraph Com¬ 
 pany have been forced to consider them, and have recently em¬ 
 ployed the ablest statistician of our own country, the Hon. 
 David A. Wells, to examine the European and their own sta¬ 
 tistics, to deduce from them his own conclusions. So short a 
 time, however, was allowed to Mr. Wells, that his examination 
 was limited, and his research does not carry the conviction 
 due to his eminent talent and fairness of mind. 
 
 The arguments advanced in favor of a change of our system 
 of telegraph are drawn from the high, arbitrary, and discrimi¬ 
 nating rates charged to the public, the limited facilities fur¬ 
 nished, and the little use made of the telegraph, and the great 
 power it confers upon a monopoly. During the past winter, 
 and while the discussion in Congress was pending, a great 
 reduction of rates was announced, which was intended as a 
 concession to the public demand for low rates. The reduction, 
 although apparently very great, gave no relief to the people, 
 for it was not a general reduction, but a simple lowering of all 
 rates above $ 2.50 to that sum, and of some rates of $ 2.50 to 
 
20 
 
 $ 2.00. The people cannot afford to pay either of these sums 
 for ordinary business or social correspondence. A reduction, 
 to be of public value, must be so great as to induce people to 
 use the telegraph regularly where they now use it occasionally, 
 and to increase its use by those who now use it in their regular 
 business. 
 
 The Western Union Telegraph Company divide the country 
 into three districts, — the Eastern, Central and Western, and 
 Southern. In the East the rates are thirty cents for oVer 
 twenty-five miles, and not over fifty miles; in the Central and 
 Western division, forty-five cents for the same distance; and in 
 the Southern division, fifty cents. That these rates are high is 
 evident when we compare them with the Belgian or English 
 rates, which are respectively ten cents and twenty-five cents for 
 the same distances ; double the number of words being trans¬ 
 mitted in England, and one half as many more in Belgium, 
 thus increasing the disparity ; and that they are as high as be¬ 
 tween our principal cities where the distance is from five to 
 eight times as great. These rates are so high as to prohibit all 
 business between country places excepting that which the par¬ 
 ties are compelled to send, and which they would send at even 
 greater rates. 
 
 There is one exception to the high charges of the Western 
 Union Telegraph Company. They boast that the rates to the 
 press are lower than in any other part of the world; 44 that 
 they deliver to the press of the United States annually, for less 
 than a million of dollars in currency, more telegraphic matter 
 than is transmitted by all the other telegraphs in the world ” ; 
 and Mr. Orton has said that 44 he would undertake to produce 
 an American journal, printed one thousand miles from the At¬ 
 lantic coast, that should contain more news from all parts of 
 the world in a single issue than could be gleaned from the 
 4 London Times ’ in a week,” and that 44 the press are perfectly 
 satisfied with the situation.” A statement of the arrangement 
 by which the press obtains these low rates will show that in 
 one point of view the press pays very dearly for them. The . 
 Associated Press of New York, in connection with the Western 
 Union Telegraph Company, collect the news from Europe, and 
 from all parts of our own country, forward it to some conven- 
 
21 
 
 ient centre for collation, preparation, and distribution, and then 
 transmit it to the various press associations in all portions of 
 the country. These associations are therefore dependent upon 
 this double-headed monopoly formed by the Telegraph Compa¬ 
 ny and the Associated Press of New York. No new associates 
 are admitted into any press association without the assent of 
 every other member. The news is delivered under an expressed 
 or implied engagement that the receivers shall neither encour¬ 
 age nor support any other telegraph corporation ; that they will 
 protect its interests, and will not criticise the telegraphic news. 
 Thus an offensive and defensive alliance is organized for the 
 protection of the telegraph company on the one hand, and of 
 the Associated Press on the other, by which, in effect, that 
 press is subsidized. The Western Union Telegraph Company 
 can afford to furnish news at low rates, to have the support of 
 the press in its extortions upon the whole people ; and the as¬ 
 sociations pay for this by defending the power which sustains 
 their exclusive privilege of furnishing news to the public. 
 The arrangement which Mr. Orton boasts of is therefore 
 simply a combination to victimize the public; for the sake of 
 which the Associated Press sacrifices its character and in¬ 
 dependence. 
 
 From time to time members of the press have advocated a 
 postal telegraph, or have criticised the telegraphic reports, but 
 they have quickly felt the power of the telegraph company, 
 and their fate has proved a sufficient warning to others not to 
 offend in like manner. The most noted are the “ Herald ” and 
 “ Alta California,” both of San Francisco, and the “ Petersburg 
 Index,” of Virginia. The California papers, the one in 1868, and 
 the other in 1872-73, offended by advocating a reform in the 
 telegraph service. They were promptly punished, — the “ Her¬ 
 ald ” by having the rates raised from six to fifteen cents per 
 word, and the “ Alta ” by the entire loss of the despatches. The 
 telegraph company assign as the reason for cutting off the “ Al¬ 
 ta ” that they had great difficulty in collecting their bills. The 
 Petersburg paper criticised the reports, and for a time lost its 
 despatches. The telegraph company can raise or reduce the 
 rates; and though they make contracts with the various asso¬ 
 ciations, they are generally terminable at thirty days’ notice. 
 
22 
 
 Its control over the press is therefore absolute. It has the 
 power of life and death, for the telegraphic news is the vital 
 breath of the daily newspaper. Such a power cannot exist 
 without its exerting a pernicious influence on public affairs, and 
 every observant public man has long perceived the demoraliz¬ 
 ing influence of this powerful, but subtle agency. 
 
 Let us consider the power of the telegraph as ah educator of 
 the people. The current history of the times is first given to 
 the country through the telegraph. “ Let me write the songs 
 of the people, and I care not who makes the laws,” is an old 
 saying. Here it would be truer, if less poetical, to say that 
 the man who rules the Associated Press is master of the situ¬ 
 ation ; for, if he has the ability to wield it, he has an instru¬ 
 ment for shaping the opinions of the millions, which, by the 
 constancy, universality, and rapidity of its action, defies com¬ 
 petition. The events which take place in all business, politi¬ 
 cal, and religious centres, together with the actions of public 
 men and their imputed motives, are all presented simultane¬ 
 ously to the public, from ocean to ocean, through this instru¬ 
 mentality. The agents who collect the news respond to the 
 central authority at New York, and are subject to removal at 
 its pleasure. Here is a power greater than any ever wielded 
 by the French Directory; because, in an era when public 
 opinion is omnipotent, it can give, withhold, or color the infor¬ 
 mation which shapes that opinion at its pleasure. It may im¬ 
 part an irresistible power to the caprice of an individual, and 
 the reputation of the ablest and purest public man may be 
 fatally tainted in every town and village on the continent by 
 a midnight despatch. It is incompatible with public safety 
 that such an exclusive power to speak to the whole public at 
 the same moment upon every subject, and thus to create pub¬ 
 lic opinion, should be under the absolute control of a corpora¬ 
 tion. The obstacles which the telegraph and these associa¬ 
 tions can throw in the way of any new journal amount to 
 virtual prohibition against publishing a first-class, independent 
 newspaper in the land, and thus the existing combination has 
 possession of the exclusive privilege of making the first and, 
 with many, the last impression of every event. 
 
 The abuses of this system are growing, and will increase 
 
23 
 
 rapidly until the government interferes to perform the duties 
 for which it was constituted, — to protect the people; until 
 the rates for the press are fixed by law, equal rights and privi¬ 
 leges secured to all, with rates so low that all can use the tele¬ 
 graph. Not until then will a free and independent press be 
 assured to the country. 
 
 These suggestions show that the telegraph may become a 
 controlling power in politics. It can ally itself—and probably 
 will at no distant day — with kindred monopolies, and aspire 
 to supreme power. Giving the word of command to the sup¬ 
 porters of these vast interests, and having exclusive and simul¬ 
 taneous access to the public mind, such combinations may at 
 critical moments seize the power of the government. 
 
 The telegraph should also be .considered as a means of spec¬ 
 ulation. The entire commercial news of the European mar¬ 
 kets is daily gathered in England, transmitted to New York, 
 and received about noon by the Commercial Bureau of the 
 Western Union Telegraph Company. They tolerate no com¬ 
 petition in this branch of their business, and allow no other 
 party to receive and forward the commercial news to associa¬ 
 tions of merchants. As soon as it is received, all business 
 upon the wires leading to the chief cities of the country is 
 stopped until the news has been forwarded to its agents in 
 each of these cities. Its agents, therefore, have the first 
 information of all commercial as well as political news; and 
 every one knows how sensitive are the markets. Is a report 
 circulated that the Secretary of the Treasury proposes to issue 
 more currency, stocks advance ; that the Pacific Mail is to be 
 investigated by a Congressional committee, they fall. It has 
 been said by members of Congress that a careful examination 
 will show that wherever the reporters favor a particular mem¬ 
 ber or measure, his speeches and the arguments for such meas¬ 
 ure are carefully reported, to the neglect of their opponents. 
 The control of the telegraph gives to its manager the ability 
 to speculate, without the possibility of loss, in any article in 
 every market of the world. 
 
 As it is idle to expose the evils of any system unless a 
 remedy is suggested, let us inquire whether there be any in 
 this matter. 
 
24 
 
 The Constitution gives Congress the power to establish post- 
 offices and post-roads. The object of this grant is to enable it 
 to transmit correspondence. The manifest intention of the , 
 Constitution was to confer full power over the whole business of 
 transmitting correspondence. Congress, having undertaken to 
 exercise that power, established the offices and routes, and 
 adopted each improvement in the means of transmission that 
 was discovered, and ought now to adopt this latest and greatest 
 improvement, the electric telegraph. It has not only exercised 
 this power in all other forms, but has always asserted its exclu¬ 
 sive right to carry on the business, and has punished severely 
 all who carried outside of the mails letters upon which the 
 postage had not been paid. The whole subject is essentially 
 national, and the fact that it is expressly intrusted by the Con¬ 
 stitution to the general government shows that it is not private, 
 but public business. That the framers of the Constitution 
 correctly understood its character is obvious on a slight con¬ 
 sideration. If the transmission of the mails had been left to 
 private parties, it would no doubt have been carried on between 
 the larger cities and in populous districts; but unless the gov¬ 
 ernment had kept up lines of communication between the ex¬ 
 tremities of the territory, and even between country towns, 
 there would have been no general postal system. In the popu¬ 
 lous regions the rates of postage would have been prohibitory 
 of extensive correspondence, because the business would have 
 fallen into the hands of the monopolists, as has been the case 
 with the telegraph. 
 
 There are but two questions : First, whether it is for the in¬ 
 terests of the people that the transmission of correspondence 
 should be intrusted to the government rather than to private 
 monopolists. Our forefathers in their wisdom, decided in the 
 affirmative, and gave Congress the conduct of the postal sys¬ 
 tem, in order to secure responsibility and good service, know¬ 
 ing that, though there would be abuses, there would be less 
 than if the people were left wholly to the only alternative, an 
 irresponsible monopoly. Congress, in the exercise of the 
 power conferred upon it, has already created post-offices and 
 post-roads in all parts of the country, and the mails are carried 
 to every village in our land. The free interchange of corre- 
 
 % 
 
25 
 
 spondence is a modern necessity, and has kept pace with the 
 advance of civilization and freedom. Exclusion from it is sep¬ 
 aration from the world, and, if it results from the imposition of 
 unreasonable rates, is a denial of a right. This right of corre¬ 
 spondence belongs to the people, and extends to all the modes 
 of communication now in use or which may ever come into 
 use. 
 
 Second, shall the telegraph, the greatest improvement for 
 the rapid transmission of correspondence, be open to the peo¬ 
 ple, or remain the peculiar property of the wealthy ? 
 
 The telegraph is now recognized as an important vehicle for 
 the transmission of correspondence, and, under legitimate con¬ 
 trol, will soon absorb a considerable portion of it. The gov¬ 
 ernment cannot, therefore, abdicate its control over this agency 
 with any greater propriety than it can surrender that over cor¬ 
 respondence by railroad or steamboat. All classes and every 
 individual in the community are directly interested in the tele¬ 
 graph ; it is of public concern, and not a mere private matter. 
 It is a national business, which recognizes neither State bound¬ 
 aries nor sectional limits. No State legislation can properly 
 regulate it; Congress alone possesses adequate power. 
 
 It is only an instrument for the transmission of correspond¬ 
 ence which before its invention was sent by mail. The same 
 organization which now furnishes the offices, keeps the ac¬ 
 counts, receives and delivers all other letters, will suffice, with 
 some increase in its force and efficiency, for the performance of 
 the same business for the telegraphic correspondence. We are 
 now maintaining two, and, in many places, three or four or¬ 
 ganizations for the same purpose, where one could perform 
 the whole, and afford ampler facilities for telegraphic corre¬ 
 spondence than are now provided, at an annual saving of be¬ 
 tween two and three millions of dollars. No one proposes to 
 surrender the transmission of the entire correspondence to a 
 corporate monopoly, or doubts what would be the results if 
 these corporations controlled the charges for postage. 
 
 Two methods have been proposed for exercising this power 
 and uniting the telegraph to the postal service. One, by the 
 present Postmaster-General, which simply copies the European 
 system, and provides for the reception and delivery by the 
 
26 
 
 Post-Office Department of telegrams transmitted over lines 
 constructed, owned, and operated by the Department at rates 
 fixed by Congress. The other, proposed by a former Post¬ 
 master-General (Randall), provides that telegrams shall be re¬ 
 ceived and distributed through the post-office as by the other 
 system, and transmitted like other postal matter by parties 
 owning and operating the lines, and contracting to perform the 
 service at rates fixed by Congress. The two plans were sub¬ 
 mitted to standing committees of the Senate and House of 
 Representatives of the last Congress, and after a full discus¬ 
 sion, at which all parties interested were represented, the Post¬ 
 master-General advocating the government plan, Mr. Hubbard 
 the postal system, Mr. Orton and other representatives of tele¬ 
 graph companies opposing any change, the committees con¬ 
 sidered the subject independently of each other, and were 
 unanimous in their rejection of the plan of the Postmaster- 
 General, and the adoption of the postal system advocated by 
 Mr. Hubbard. These committees, in carefully prepared reports, 
 submitted the measure to Congress. Owing to the want of 
 time during the last session, the bills reported to the Senate and 
 House were not considered; but it is understood that they will 
 be acted upon at an early day in the next Congress. As the 
 same advantages will be obtained by the public under either 
 plan, and as the one will cost many millions of dollars, and in¬ 
 crease the power and patronage of the Executive, no one will 
 be surprised at the conclusions at which the committees ar¬ 
 rived. The reduction in rates will be greater than that made 
 in England, where an expenditure of forty millions of dollars 
 was incurred in the purchase of the lines by the government; 
 and the rates will be as low as they could be under a purely 
 governmental system conducted without loss. By such an ar¬ 
 rangement the government will take the same charge over the 
 telegraphic branch of the postal service which it now exercises 
 over communications transmitted by rail or post-coach, without 
 investing in telegraphic lines any more than it does in rail¬ 
 roads and post-coaches, and will as effectually guard the citizen 
 against extortionate rates and unjust discriminations. 
 
 Various, considerations are urged against the transfer of the 
 telegraph to the Post-Office Department. Some think that the 
 
27 
 
 country which is the least governed is the best, and that no 
 business should be intrusted to the government which private 
 enterprise can transact, because every government performs its 
 work at a greater expense than corporations, and our govern¬ 
 ment is more extravagant than any other. There is no doubt of 
 the general truth of the first part of this proposition, and it can 
 be carried further, for all corporate work costs more than pri¬ 
 vate. Yet this fact does not prevent us from continually char¬ 
 tering new corporations, nor from intrusting certain duties to 
 the government. Our education, banking, and postal system 
 are conducted or regulated directly by the State and general 
 governments. It does not solve the question to say that gov¬ 
 ernment work is more expensive than corporate, but we must 
 consider for whose benefit is the greatest economy. Do the peo¬ 
 ple share in the benefit, or does it enure wholly to the stockhold¬ 
 ers of the corporation ? All experience shows that the same 
 self-interest which impels a corporation to have its work done 
 as cheaply as possible also leads it to get all it can out of the 
 people. The statistics prove that telegraphic management in 
 private hands does not result in either economy or efficiency of 
 service to the public. 
 
 All the telegraphs on the Continent of Europe are owned and 
 operated by the government. In England, before 1870, they 
 were managed by private corporations, as they still are in 
 America. The first cost of government works is less, the 
 rates are much lower, the facilities offered greater, and they 
 are planned on a comprehensive system, with reference to the 
 wants of the whole country, and not alone to those places 
 where it will pay best. The rates in the principal countries of 
 Europe are less than one half those in England under the cor¬ 
 porate system, or in America. The post-office is the only gov¬ 
 ernmental work in this country in which the people are directly 
 interested; the service it renders, in proportion to the facilities 
 furnished, the work performed, and the distance of transmis¬ 
 sion, is cheaper than that of any other country in the world, 
 and it will at least compare favorably with the express business. 
 The cost on each letter is a little less than two cents in Great 
 Britain, a little over three in the United States, while the num¬ 
 ber of letters in proportion to the offices is much less, and the 
 
28 
 
 average distance of transmission more than three times as 
 great. 
 
 But some who admit the evils of the present system and the 
 advantages of a postal system think that by the transfer of the 
 telegraph to the postal service the power of the Executive 
 would be so greatly increased as to outweigh all the benefits 
 that would result from it. All political influence arises either 
 from the patronage it would give the Executive, the ability to 
 send free telegrams, the control of the press, or the power of 
 espionnage over the correspondence. As these powers are 
 now held by a private corporation, the question is reduced to a 
 consideration of the expediency of leaving them to private and 
 irresponsible parties, of intrusting them to the Post-Office De¬ 
 partment, or of limiting these powers and dividing them be¬ 
 tween private parties and the Post-Office Department, so as to 
 secure the advantages of both systems. These objections ap¬ 
 ply with much greater force to the plan of the Postmaster- 
 General, which provides for governmental ownership, opera¬ 
 tion, and control of the business, than to the postal system. 
 Under it there will be no patronage, excepting that arising 
 from the addition of a few clerks and carriers, less in number 
 than the annual increase from the growth of business. The 
 free transmission of messages by passes, so constantly given to 
 members of Congress and others where they will “ do the most 
 good,” is not only prohibited, but both the post-office and the 
 company are directly interested to have every telegram fully 
 paid, and neither can send a free despatch without the conni¬ 
 vance of the other. There can be no control over the press, 
 for all will have the right to send and receive despatches at 
 fixed rates, and so low that every paper can obtain “ specials ” 
 cheaper than they now get the Associated Press news. 
 
 Espionnage , or the power of the postmasters, dependants 
 upon the Executive, to examine private telegraphic correspond¬ 
 ence, is severely punished by law, and is to a great degree 
 thwarted by the fact that the operators are employed and paid 
 by the company, and without their connivance the power would 
 be of little use; and, moreover, the number of telegrams will 
 be so greatly increased by the low rates and additional facili¬ 
 ties as to remove the possibility of any considerable tampering 
 with their contents. 
 
29 
 
 The postal system recognizes both the necessity of regulat¬ 
 ing the business and the importance of securing that economy 
 which private interests impart. It restrains the powers, cor¬ 
 rects abuses, reduces rates, increases facilities, confers no new 
 powers on the Post-Office Department, but simply extends its 
 operations by the employment of a new agency for the trans¬ 
 mission of correspondence. It provides for the purchase of all 
 existing lines at an appraised valuation, their incorporation 
 into a company which at its own expense will furnish and 
 operate the lines necessary for transmitting telegraphic corre¬ 
 spondence between the postal telegraph offices, depending upon 
 private capital, skill, and economy for success. The company 
 will derive its entire profits from the receipts of the business, 
 which are the only funds from which it can draw its income. 
 It will have a direct pecuniary interest to see that the post- 
 office performs its share of the work promptly and efficiently. 
 The present is substantially a railroad and not a postal system, 
 and at many offices the railroad business has preference over 
 all other. This places it on a distinct footing. The railroad 
 telegraphic business will be managed by those corporations 
 without interference by the government, and the telegraphic 
 correspondence by the Post-Office Department. 
 
 The telegraph is shorn of its power over private correspond¬ 
 ence and mercantile news by subjecting it to fixed and impar¬ 
 tial rules and uniform rates, so low that all can freely use it. 
 The power is divided between the department and corporation, 
 so that neither can use it to the injury of the public, while the 
 distinct interests of the two oppose combination. 
 
 The Postmaster-General has the same means for enforcing 
 the prompt and accurate transmission of this as of all other 
 correspondence. No monopoly is conferred, and any company 
 can transmit telegrams if they can do so more satisfactorily to 
 the public. The rates are fixed at twenty-five cents between 
 offices not over 250 miles apart, fifty cents between 250 and 
 500 miles, seventy-five cents between 500 and 1,500 miles, and 
 one dollar and a half for all greater distances. Letters are 
 generally written after the close of business hours and sent by 
 the night mail. To provide for this correspondence the rates 
 for night telegrams are fixed at twenty-five cents for distances 
 
30 
 
 under 1,500 miles, and seventy-five cents for greater distances. 
 These rates will be prepaid by telegraphic stamps sold at the 
 post-offices. The department will retain five cents for its ser¬ 
 vice, and pay the rest to the company as full compensation for 
 furnishing and operating the lines. The length of the tele¬ 
 graphic letter is increased to twenty-five words, including 
 address and signature. Every post-office near a telegraph line 
 is made a postal telegraph office, while others are established 
 wherever they now are or may be required by the wants of busi¬ 
 ness. This will make a reduction in rates of fifty per cent, 
 and an increase in the length of the message of eighty per 
 cent, and in the number of offices’of over one hundred per 
 cent. These great reductions and increased facilities will 
 bring the telegraph within the reach of all, and, when in full 
 operation, will give us the best telegraph system in the world. 
 
 The postal system recognizes the rights of property in the 
 owners of the existing lines, proceeding upon the ground that 
 to make any new plan successful it must avail itself of the 
 services and co-operation of the present able managers; that 
 this can only be accomplished by paying liberally for the prop¬ 
 erty it purchases of them, and that it will be much more advan¬ 
 tageous to the public to secure this harmonious co-operation, 
 even by paying a large price for its property, than to establish 
 a system at a very much smaller price, but in competition with 
 the Western Union Telegraph Company. 
 
 It is not contended that the postal system is free from de¬ 
 fects, but that it removes many of the grave evils of the present 
 system, without the introduction of new ones, and that the 
 balance of benefits greatly preponderates in favor of the cheap 
 rates, increased facilities, limited and divided powers of the 
 postal system. 
 
 Gardiner G. Hubbard. 
 
. 
 
 - 
 
 " 
 
 ■ 
 
 I'•7 
 
 ' 
 
 ' 
 
 ' 
 
 - 
 
 ;■ 
 
 
 

 
 
 
 <v