THE RELATION
OF THE GOVERNMENT
TO
THE TELEGRAPH;
OR,
A REVIEW OF THE Two PROPOSITIONS NOW PENDING BEFORE CONGRESS
FOR CHANGING THE TELEGRAPHIC SERVICE OF THE COUNTRY.
BY
DAVID A. WELLS,
Late U. S. Special Commissioner of the Revenue, Chairman of the Tax Commissiol     of the State of New York.
WITH APPENDICES.
J e~
NEW YORK.
S1873.
7 ill 
I I I
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J;. T     3   1   A,\ I
OPT   1 3   IC38
EXECUTIVE OFFICE,
mgeittter  2tnion ierap( 5ompatm,
NEW YORKE:, September, 1872.
Hion. DAVID A. WELLS.
Sir: The relation-present and prospective-of the existing telegraphic system of the United States to the Federal
Government, is a subject which is certain, in the future, to be
earnestly pressed upon the attention of both Congress and the
country; and, in view thereof, it seems eminently desirable
that there should be presented to the public a clear and
impartial statement of all the more important involved facts
and circumstances.
The Western Union Telegraph Company, fully recognizing
your experience in investigating matters pertaining to the trade,
commerce and industry of the country, and your method in the
presentation of results, would, therefore, request of you the
preparation of such a statement; and, also, as the result of
careful investigation, the expression of an opinion respecting the
expediency of the two propositions, looking to a change in the
character of the telegraphic service of the country, now pending
before Congress.
In furtherance of such investigation, all information in
possession of the Western Union Company will'be placed
without reserve at your disposal; but, in so doing, the Company
would disclaim in advance any intention or desire to anticipate
or influence conclusions. They ask nothing but what is right;
they trust that they shall not be obliged, through the exercise
of superior power in the hands of the Federal Government, to
submit to anything which is wrong.
I am, very respectfully, etc., etc.,
WILLIAM ORTON, President.
December, 1872.
To Ilon. WILLIAM ORTON,
Presi(dent iVestern Uniions Telegraph Co.
Sir: In accordance with your request, I have made the 
4
subject of the proposed relation of the telegraphic system of the
United States to the Federal Government a matter of careful
investigation, and herewith submit a statement of the essential
facts pertaining thereto, with such conclusions as in my judgment seem warranted by the combined facts and circumstances:
PRESENT CONDITION OF THE TELEGRAPH SYSTEM OF THE
UNITED STATES.
The telegraph service of the United States is at present
performed by an association known as the "Western Union
Telegraph Company "-the result, as the name indicates,
of the consolidation of most of the telegraph interest of the
country existing prior to 1866-and some ten othl)er and rival
companies, of much smaller capital and area of geographical
operation.
The more exact relations of the "Western Union" to the
other Telegraphic Companies of the United States may be thus
indicated:
On the 1st day of July, 1872, the Western Union Company
controlled and operated 62,032 miles of line; 137,190 miles of
wire, and 5,237 officers or stations.  Of this aggregate  1,212
miles of line and 2,742 miles of wire were in New Brunswick
and Nova Scotia, and 512 miles of line, bearing one wire, in
British Columbia; leaving 60,308 miles of line, and 133,936
miles of wire in the United States. The nominal capital of the
Western Union is $41,000,000, and its gross receipts for the
year ending June 30, 1872, were $8,457,095.77, derived from
the following sources:
From the transmission of messages.............. $7,040,803.53
It"  It"        press reports,......979,083.71
i'   it"        market  ".........    107,579.72
I" " weather".........    137,522.88
All other sources,*........................... 192,105.93
Total..............................$8,457,095.77
The statistics of all other and rival Telegraph Companies in
the United States were, for the year 1871, estimated as fol
* Premium on gold from tolls, accruing from cable business, commissions on
money transfers, etc. 
5
lows: 11,785 miles of line; 24,340 miles of wire; 773 stations;
nominal capital (estimated) $16,000,000. Since this date, however, there has been an increase in all of these lines, but to what
extent cannot be definitely stated.*
Aggregate.-For  the 1st of January,  1873, the telegraphic
system of the United States may be thus approximately estimated:
Aggregate  nominal capital, $60,000,000;  length of lines,
80,000 miles; length of wire, 180,000 miles; number of
stations, 6,300.
During the year ending June 30th, 1872, there were sent
over the wires of the Western Union Telegraph Company,
exclusive of messages sent by and for railroad companies,
between stations on the line of the roads, and service messages
of the Telegraph Company, 10,271,935 full  paid messages;
660,203 partially paid and free messages; and 1,512,361 press
messages;t making a total of 12,444,449.
RECENT INCREASE AND DEVELOPMENT OF THE TELEGRAPHIC
SERVICE OF THE UNITED STATES.
The recent increase and development of the telegraph service
of the United States, as performed by the Western Union
Telegraph Company, is shown by the following statistics:
* Of the companies competing with the Western Union the following are the
most important:
First. The'" Pacific and Atlantic," which had in operation, in 1871, 4,155 miles
of line; 8,280 miles of wire, extending from New York to St. Paul and St. Louis
by Chicago, and to New Orleans by Cincinnati and Memphis.
Second. The "Atlantic and Pacific," operating in 1871, in connection with the
telegraph of the Union Pacific Railroad, 4,155 miles of line, and 8,220 miles of
wire.
Third. The "Southern and Atlantic," extending from Washington, along the
line of the coast, to Montgomery, Alabama.
Fourth. The "Franklin," extending from Washington to Boston, 800 miles of
line; 2,780 miles of wire.
Fifth. The " Great Western," with headquarters at Chicago.
Sixth. The "Philadelphia, Reading and Pottsville," owned and operated by the
Philadelphia and Reading Railroad.
t The number of press messages given is an estimate obtained by dividing the
whole number of words sent for the press by thirty, that number being assumed
to be the average number of words embraced by ordinary commercial and social
messages. 
6
In 1866), subsequent to the consolidation of the majority of
the preexisting, Companies, the Western Union Comp)any owned
and operated 75,686 miles of wire; in 1867 the aggregate was
85,291; in 1868, 97,594; in 1869, 104,584; in 1870, 112,191; in 1871, 121,151;  in 1872, 137,191, thus showing an
increase in six years of nearly 79 per cent.
The gross receipts of the Western Union Company from the
transaction of business were, for the fiscal year ending June
30th, 1867, $6,568,925; 1868, $7,004,560; 1869, $7,316,918;
1870, $7,138,737; 1871, $7,637,448; 1872, $8,457,095.
The net receipts for the same period, after paying operating
expenses, but including no expenditure for construction, or for
any other purpose than the maintenance and operation of lines,
were, for 1867, $2,624,919; 1868, $2,641,710; 1869, $2,748,801;
1870, $2,227,965; 1871, $2,532,661; 1872, $2,790,232.
The increase of telegraphic business on the lines of the
Western Union Company since 1867 is also worthy of particular
attention, as affording to some extent a gauge or standard for
estimating the contemporaneous commercial and industrial
activity of the country.   Thus, from  1867 to 1868, the increase, measured in per cents., was 8'9 per cent.; from 1868
to 1869, 23'8 per cent.; 1869 to 1870, 15'4 per cent.; 1870
to 1871, 16'2 per cent.; 1871 to 1872, 16s81 per cent.
Such being in brief the actual condition of the telegraphic
system of the country, two propositions, each looking to a
radical change in the character of its service, are now being
pressed upon the attention of Congress and the public, and
their acceptance eagerly sought for by their respective
advocates.
THE GOVERNMENT PROPOSITION.
The first of these, originally brought forward by lion. C.
C. Washburn, of Wisconsin, in 1869, presented to Congress,
in the form of a bill, in 1870, and subsequently endorsed by the
Postmaster-General and the President of the United States in
his annual Message, December, 1871, proposes that the Federal
Government shall take possession and own the entire telegraph
system of this country, incorporate it with or make it an adjunct
of the existing postal system, and place the whole business of
transmitting and delivering messages, and of constructing and
operating lines, exclusively under the control of the Post-office 
7
Department. The right to enter into such possession, apart
from the right of "eminent domain," unquestionably vests in
the Unitedcl States, in virtue of an Act of Congress passed in
1866, and subsequently accepted by the Western Union and
other Telegraph Companies, which provides that all Telegraphic
Companies then in existence, or which shall be thereafter incorporated under State laws, may have the privilege of constructing
and maintaining lines over the public domain, over and along
any military or post roads, and across navigable streams or
waters, with the right to take from the public lands all necessary
building materials, and to preempt and use such portions of the
unoccupied public lands, not exceeding forty acres to every
fifteen miles of line, subject to the following conditions:  1st.
Priority in respect to the use of the lines by the Government and
its agents, at rates of compensation to be determined by  the
Postmaster-General. 2d. That the United States may, at any
time after the expiration of five years from the passage of the
Act, purchase all the lines, property and effects of the several
companies at appraisement. 3d. That no company shall avail
themselves of the privileges conferred by the Act until after a
written acceptation of its obligations and restrictions.
The bill reported to Congress in 1870 by Hon. C. C.
Washburn, the Chairman of a Select Committee of the House on
the telegraph, and which (with one exception, to be hereafter
noted) is understood to represent the present proposed scheme
of Government absorption of the telegraph, provides essentially
as follows:
First. That on and after a time specified the business of
transmitting telegraph messages in the United States shall vest
exclusively in the Government, and that any person or company
who shall transmit or receive any telegraphic message, device, or
information, except as authorized and permitted by the Postmaster-General, shall be liable for each such offence to a penalty
not exceeding one hundred dollars.
Second. That the United States shall purchase by appraisement the telegraph lines, property and effects of all existing
Companies.
Third. The tariff on all messages shall be fixed at a uniform 
8
rate, irrespective of distance, of twenty-five cents for each
twenty-five words, including date, address and signature, and
of one cent for each additional word; the rates to be prepaid by
stamps affixed to each message by the sender.
Other sections of the bill provide for the creation of a
Telegraphic Bureau in the Post-office Department; the appointment of a "Director-General," at a salary of $6,000 per annum,
and such other assistants and clerks as may be found necessary;
the extension of the telegraph to every post-office in the United
States, the annual gross receipts of which for postage are not less
than one hundred dollars; the authorization of special service
for the newspaper press;  the negotiation of contracts with
foreign companies for the interchange of international messages;
and, finally, with a view of securing for the Government the aid
of efficient and intelligent employ6s, that no removals shall be
made from offices created by the Act except for satisfactory and
sufficient cause, and that all promotions shall be regular from
the grades next subordinate.
THE SECOND OR " HUBBARD"  PROPOSITION.
The second proposition in respect to the future of the telegraph in the United States, which has been brought before
Congress and the country, is best known as the "Hubbard"
proposition, from the circumstance of its origination and special
advocacy by Gardiner G. Hubbard, Esq., of Boston, and has
its most recent embodiment in a bill reported to Congress
by the House Committee on Appropriations, December, 1872,
entitled "A Bill to connect the Telegraph with the Postal
Service, and to Reduce the  Rates of Correspondence by
Telegraplh."   This  proposition,  it  is  to  be  observed  in
the outset, is not like the first-a purely Government enterprise,
in which the telegraph is to be managed exclusively by the
Post-office Department; but, on the contrary, proposes the
incorporation of a private Company, which, in consideration of
certain special and extraordinary privileges, to be granted by
the Government, agrees to contract with the Post-office
NOTE.-In his report for December, 1872, the Postmaster-General proposes that
the tariff on all messages transmitted by the Government shall be at the outset at
an average of thirty-three cents for each twenty-five words throughout the United
States, to be reduced, after a "thorough-renovation of the lines, to an average of
thirty cents." 
9
Department for the transaction of the telegraphic business of the
country at certain specific rates, claimed to be more favorable
than  those now  existing.   In  other respects,  the  essential
features of this second proposition (as reported to Congress prior
to the present session) are as follows:
First. The Postmaster-General is reguired to contract with the
Company authorized by the Act, for a period of ten years, fobr
the transmission only (not reception or delivery) of telegraphic
messages, at a rate which shall not exceed twenty-five cents for
a circuit of two hundred and fifty miles, fifty cents for a circuit
of five hundred miles, and twenty-five cents for every added
circuit of five hundred miles, for each twenty words or figures,
including date, address, and signature; the rates, in all cases, to
be prepaid by stamps. The right to charge extra rates for
messages, the senders of which are willing to pay for "priority
of transmission," or, in plain English, the right to put one
message ahead of another for a consideration, is also expressly
stipulated and provided for.
Second. The Postal Telegraph Company shall provide lines of
telegraph to every city and village where telegraph stations are
now maintained, and to all other places which may have a
population of three thousand, and to the capital of every State.
The United States, on the other hand, are obligated to furnish
suitable and convenient accommodations at each postal'station for
all officers and instrumentalities required by thecompany for the
transaction of its business, including, by specification or legitimate inference, fuel, lights, clerical service, stamps and stationery; and shall also assume the expense, responsibility and
business of receiving messages, and also of delivering by messengers or mail  all such as by the wires may have been
transmitted.
Third. The compensation to be paid to the Company by the
Government shall not exceed ten per cent. per annum on its
authorized stock capital, over and above all operating expenses;
and in case the receipts for the transmission of messages are in
excess of the requirements for such payments, the rates for the
transmission of messages shall be reduced proportionally. And
in case the Company is assessed for any tax or license in any 
10
State or Territory, the Postmaster-General may increase the
rates on each telegram between the offices in such State or
Territory "until the increased amount equals such tax or license."
Fourth. The Postal Telegraph Company shall have power to
make special contracts with railway companies relative to
railway service, and with the press for the transmission of news;
the rates for which latter class of despatches shall not exceed
those paid by existing "press associations" for similar service.
Fifth. The capital stock of the Postal Telegraph Company
shall, at its organization, consist of 10,000 shares, of the par
value  of $100  each-total  $1,000,000-to  represent  "the
expenses of organization and connection of its lines with postal
telegraph offices;" and, in addition, the Company may  from
time to time issue new stock, to represent the actual cost of lines
that may be purchased or constructed.
Sixth. The Postmaster-General may, at any time after the
expiration of five years, purchase the property and franchise of
the Company, either by agreement or appraisement, or "upon
paying to the Company the actual cost, together with interest
thereon at the rate of ten per cent. per annum, deducting therefrom the full amount of any moneys paid to the stockholders
for or on account of dividends, interest, or earnings.".
REASONS WHY A CHANGE IN THE EXISTING SYSTEM IS
ADVOCATED.
Having thus given the essential features, as expressed in the
form of bills reported to Congress, of the two propositions
which look to an entire change in the existing telegraphic
system of the country, the question which next naturally
suggests itself is-why  is any  change  to be regarded  as
expedient?
On the part of those who advocate the exclusive possession
and operation of the telegraphl by the Government, it is said in
general "that the post-office and telegraph have but one and
the same object, and that it is for the interest of the people that
their management should be in one and the same hallds."  Thec
example of Europe is also appealed to in support of this theory, 
11
in every State of which, with the ex,eption of Great Britain,
the telegraph has, almost from the outset, been a Government
monopoly, and in Great Britain itself has also recently become
so through the sanction of Parliament, and the compulsory sale
to the Government of the property and franchises of all privately
organized and preexisting companies.  Other reasons, regarded
perhaps as even more immediate and important, and semiofficially put forth by the Government through its advocates,*
are: that  " the press demands  a reduction  of tariff for its
news reports, and a relief from the combined monopoly
of the telegraph and' associated press;'"" "that the interests
of the Government demand the entire control of the wires
for the proper transmission of the weather reports, and other
public business;" and, finally, "that the interests of the people
demand the extension of facilities, impartiality in the transmission of dispatches, and the reduction of tariffs to the minimum consistent with profitable working."
On the other hand, the sum and substance of the reasons put
forth in support of the so-called "Postal Telegraph," by  Mir.
iHubbard and his associates, may be concisely stated as follows:
Protesting, in the first instance, against an exclusive possession and  control of the telegraph by the Government, as a
measure wvholly " opposed to our institutions,"  but "in  harmony with the principles of arbitrary and monarchical Governments," they, nevertheless, take the position that. a partial
ownership and interference by the State would, on the contrary,
be both wise and beneficial. Professing further a deep interest
in the public welfare, and profoundly impressed with the
necessity that the people should enjoy greater  and cheaper
telegraphic facilities than they now  do, Mr. Hubbard and his
friends claim that this latter result can only be attained through
a cooperative union and partnership of the Post-office Department on the one hand and the Postal Telegraph Company on
the other, according to the manner and conditions specified in
the abstract of the bill before noticed.
Such, then, in brief, are the reasons put forth to the public
in support (,f the general theory that a change in the existing
telegraphic system of the country is immediately expedient.
* See speech of R, B. Lines before th I House Committee on Appropriations,
April, 1871. 
12
The test and analysis of the validity of these reasons comes
next in the order of this investigation, but before doing so it
seems desirable to present a clear statement of the manner in
which the telegraphic service of the United States has been and
is now executed.
THE TELEGRAPH IN THE UNITED STATES-PAST AND PRESENT.
It is curious to note that, at the inception of the telegraph, the
whole subject was regarded by Congress as one hardly worthy
of its serious consideration, and that when it was proposed
in the House  of Representatives  that  an  appropriation of
$30,000 should be made by the Government to test and promote
the invention, an amendment that one half the sum asked for
should be devoted to experiments in mesmerism was declared
by the presiding officer to be wholly germain to the subject.
Subsequently, when the first line had been constructed, and the
practicability of transmitting messages demonstrated, a bona fide
proposition by Professor Morse that the Government should
purchase the whole invention for the sum of $100,000, was
unceremoniously rejected; the Postmaster-General, Hon. Cave
Johnston, to whom the proposition was referred, reporting
as follows: " That the operation of the telegraph between IVashington and Baltimgre had not satisfied him  that under any
rate of postage that could be adopted its revenues could be made
equal to its expenditure." And when, more than twenty years
afterwards, a proposal was made to Congress to unite the postal
and telegraphic systems, Hon. William Dennison, the then
Postmaster-General, as the result of a careful investigation,
submitted a report, of which the following is the concluding
paragraph: " As the result of my investigation, under the resolution of the Senate, I am of opinion that it will not be wise for the
Government to inaugurate the proposed system of telegraph as a
part of the postal service, not only because of its doubtful financial
success, but also its questionable feasibility under our political system."
Thus formally and decisively neglected by the Government,
at a time when help and supervision, if ever to be given, was
most needed, the enterprise of telegraphic communication in the
United States, with all its risks and then unforeseen contin 
13
gencies, was taken up by individuals, and, through the personal
energy and private capital of comparatively few men, has been
expanded to dimensions which find no parallel in the experience
of any other one nation, and are surpassed only by the aggre gate constructions of all the States of Europe.
In the outset the telegraphic service of the United States
was performed by a very considerable number of companies,
which were gradually organized under charters granted by the
several States; but by 1866 most of the competing and connect ing lines had become consolidated under the one charter of
the Western Union Company. Since 1866 eight other rival
companies have been organized, the lines of one of which
stretch across the continent.   Congress, on the other hand,
except to authorize the building of lines across the public
domain, whereby Government communication with the Pacific
Coast and the various military stations of remote territories
might be facilitated, has hitherto steadily declined to pass any
acts of incorporation, or to legislate in favor of any one Company
as distinct from the rest, and has thus, to all intents and
purposes, distinctly recognized the policy of leaving the
creation and control of telegraphic companies exclusively to
the States.
Any review of the experience of the telegraph in the United
States would, furthermore, be imperfect, which omitted to call
attention to the circumstances that, while the railroad system of
the country has grown up under the stimulus of grants by
Congress of money and of millions of acres of its public lands,
superadded to subscriptions, bounties and exemptions innumerable from States, counties and municipalities, the telegraphl has
given rather than received favors from the public. For if we
add to the trifling donation made by Congress in the outset
to Professor Morse, the highest estimated money value of all
the privileges since granted by the Government to all the
Telegraph Companies, namely-the right to string wires along
military and post roads, to cross the wilderness of the plains, to
preebmpt land for actual occupation*-a right granted to every
citizen-it is capable of direct proof that, through work performed for the Government and never paid for, and through
services rendered to the public in time of war, flood, pestilence
* Not an acre has been preempted. 
14
and conflagration, to the coast survey and science generally,
for all of which payment was never asked or expected, the
WVestern Union Telegraph Company alone has made to both
Government and the public a compensation which, to say the
least, has been in the nature of a fourfold equivalent.
TAXATION OF THE TELEGRAPH IN THE UNITED STATES.
Again, while in all other countries the capital, franchise and
business of the telegraph has been carefully exempted from taxtion, in the United States, on the other hand, a rule of an exactly opposite character has been recognized.  Thus, from 1865
to 1871 the several Telegraph Companies of the United States
paid directly to the Federal Government, in the form of internal
revenue taxes, an aggregate of $1,549,000; and this, too, in
addition to onerous State and local taxes, and a system of
national customs taxes on materials of construction and operation, which last, in the case of wire alone-the leading article of
telegraphic consumption —nhances its cost sixty-twoper cent. (on
a gold basis) beyond what is paid for identically the same article in
either Great Britain, Belgium, S witzfrland or Holland.*  And,
although at the present time the national internal revenue taxes
on the receipts of Telegraph Companies have been repealed, the
aggregate of localt and customs taxes yet enforced are, in the
case of the WVestern Union Company, equivalent to ten per cent.
onfull one nieith of its total annual gross receipts for the transaction of business.  And yet we find the Federal Government,
wAhich in part upholds and justifies the continuance of such taxation, assuming throug,h its representative the position of a complainlant, and virtually saying to the several companies, "Because you do not transact your business cheaper we ought to
deprive you of the privilege of doing business at all."
DEVELOPMENT SINCE 1866.
Since the final consolidation of 1866 the telegraph facilities
* If we include premium on gold, freights, commissions, &c., the cost of wire
in Newr York is at least double the price for the same article in England.
+ In some instances the Western Union pays a tax as high as one thousand
dollars for the privilege of doing business within the precincts of a single municipality.
t 
15
of the United States have been increased by the construction of
more than 30,000 miles of additional line, 75,000 miles of wire,
and by the opening of more than 3,000 new stations, at which
messages can be transmitted and delivered. The expenditure
rendered necessary for this developement has been about twelve
millions of dollars, of which the Western Union Company has
paid about five millions, in addition to the contributions of railway companies included in its system, which amount to about
two and a half millions-the increase during the year ending
June 30, 1872, under the auspices of the Western Union alone,
having been 6,000 miles of line, 16,039 miles of wire and 631
offices.
REDUCTION OF RATES.
During the time referred to, moreover, not a single year has
elapsed in which there has not been a marked reduction of rates;
so that at the present time the average sum charged for the
transmission of messages is not in excess of one half that required in 1866 for the performance of similar service.
The assertion made by the Postmaster-General in his recent
report, that the average receipt per message of the Western
Union Company "has been increased eleven cents, or nearly 20
per cent. since 1867, notwithstanding the undoubted reductions
of tariff between important points," although finding some warrant in the publication of imperfect data in 1869,; is nevertheless entirely incorrect and deceptive-the average annual
tariff on all messages, excluding press and market reports, and
all railway and company service since 1868, having been as
follows:
1869, $0.92; 1870, $0.77; 1871, $0.73; 1872, $0.62.*
As a contribution to economic science, it may be further stated
that the average cha]e at which telegraphic messages are now
transmitted in the United States for the public is less than the
* The statistics published during the years immediately succeeding the consolidation of the various lines in 1866, and used in all the earlier discussions respecting the working of the telegraph in the United States, are now known to have
been exceedingly imperfect-necessarily so through lack of an organization like
that now existing, which has required years to perfect and develop.   The averages above given-the result of the most recent and careful investigation-are
believed to be as accurate as it is possible to state them. 
16
average cost for doing equivalent work in 1866, although since
that period there has been a marked advance in the wages of
employ6s in almost every department of service, and a very
great increase in the cost of wire, telegraphic poles and some
other materials. Thus, for example, it costs more at the present
time to transport telegraphic poles from the upper lakes to
Chicago than it cost four years ago for the poles delivered at
Chicago. The size and weight, and consequently the cost, of
the great portion of the wire now used for telegraphic construction is also considerably greater, on a gold basis, than it was in
1866 and the years anterior.
Attention is also asked to the fact that, in nearly every instance in which the Western Union Company has made a reduction of rates, it has been done with a full knowledge of the fact
that such a reduction would be accompanied by an absolute decrease of net revenue. Thus, when, in 1869, the present system
was adopted of estimating telegraphic distances by an "air line,"
rather than by the route actually traversed, resulting in an average
reduction of all rates of about 15 per cent., the loss in net earnings during the succeeding seven months was $419,295; and
again, when, in 1870, in addition to other reductions, a system
was adopted of allowing messages to be sent at night on all lines
in the United States and Canada east of Omaha, at rates one
half less than those charged by day, the net receipts of the Company declined in the succeeding twelve months from $2,748,801
to $2,227,965, thus entailing a loss in a single year of over a
half a million of dollars. That such reductions are likely to
prove ultimately advantageous to the Company, as well as to the
public, is not to be disputed; but the fact that the Western
Union Company have been willing, deliberately, and in repeated
instances, to submit to a very large and immediate loss, with the
expectation of future gain, through an increased use of the telegraph by the people, consequent upon reduced charges, shows
an amount of practical wisdom in dealing with the public interests, strikingly in contrast with the reluctant slowness with
which those intrusted with the government of the United States
have met every proposition for the reduction of taxes, which
only the exigencies of an active war could furnish an argument
for continuance.   The further circumstance should almost be
overlooked, that in the memorial addressed to the Senate of the 
17
United States, under date of February, 1872, the Western Union
Company state that work hlas been in progress for some time by
this Company preparatory to a reduction of rates, additional to
those already effected.
TELEGRAPH STOCK AS AN INVESTTMENT.
As a further contribution to the recent history of the American
telegraph, it should be stated that, during the period of develop ment under consideration, or from 1866 to 1872, the amount paid
in dividends to stockholders in the telegraph companies of the
United States has been about five millions, or less than ten per
cent. on their present aggregate stock capital, estimated at $60, 000,000. If it be said that the actual value of the franchises and
property of the several companies is less than the par value of their
stock, attention is asked to the circumstance that the Government
of Great Britain, three years ago, paid more than thirty-seven
millions in goll for a system of talegraphs in that country, operat ing 29,740 miles of line, and 2,000 offices, as compared with a
present aggregate inll the United States of 80,000 miles of line
and t;,30) offices. One million of dollars per annum agaiul would
be tin per cent.-the rate contemplated in Mr. hIubbard's bill on ten millions of capital; but this is less by two millions than
the sum actually expended by the telegraph companies of the
United States, indepe~.dently oforin connection with railroads,
during the latst six years, for improvements- and construction.
And if it be replied to this, also, that the amount derived from
receipts and expended in improvements and construction repre.
sents profits equally with the dividends paid directly to the
stockholders, it is a goof and sufficient answer that, if it be so,
it is profit that up to the present time has accrued wholly to the
public and not to the stockholders, antd that for an indefinite future a large annual expenditure for similar purposes will be absolutely indispensible to meet the demands of an increasing
population and new areas of territorial occupation. That the
companics have been willing to exercise this forbearance of any
immediate returns from their investments through an expectation of large future gains, as the country increases in wealth and
population, may be regarded as a correct assumption; but the
2 
18
fact that this is so, would certainly seem to constitute in itself a
valid bar to any immediate demand for a change on the part of
a public whic'i, for the present at least, is profiting exclusively
from such forbearance. But be this as it may, it is a matter of
certainty that the capital invested in telegraphs in the United
States is not now, and for the last six years has not been, in the
receipt of adequate compensation;  that any profit under the
Government scheme will be impossible; and under the Hiubbard bill, except at the expense of the Government, a matter
exceedingly problematical.
As a further illustration of this position, take the financial exhibit of the Western Union Telegraph Company for the year
ending June 30, 1872. Gross receipts, $8,457,095.77; total expendclitures, $5,666,863.16; apparent net profit, $2,790,232, or
68o per cent. on a capital of $41,000,000, or 9-, per cent. on a capital of $30,000,000. But out of this net gain or profit the company
constructed or purchased over 16,000 miles of wire additional,
all of which was nearly as essential to the accommodation of the
business and social interests of the country, as was the expenditure (not included in the surplus) of $930,000 during the same
time for the maintenance and repair of lines previously existing.
That the stockholders in the Western Union and other telegraph
companies may receive something better in the future is certainly
to be hoped; for if they do not the public may feel assured that
either the average of existing tolls will have to be advanced, or
no more lines will be built by private capitalists looking to
an average rate of interest on investment.
TELEGRAPH FACILITIES IN EUROPE AND THE UNITED STATES.
As has been already stated, the telegraph service of Europe,
with  the exception  of the various  submarine  lines, has
from  the  outset been  mainly  under  the ownership  and
control of Government.   On  the contrary,  in the United
States  the  construction  and  operation  of the telegraph
has been left exclusively to private enterprise. Under such
different circumstances of development the comparative results
have been as follows: In Europe, with a population approximating 300,000,000, the telegraph system in 1871 embraced 175,490
miles of line, 474,000 miles of wire, and 15,500 offices. 
19
In the United States, with a population which may be estimated at 40,000,000, there are about 80,000 miles of line, 180,000
miles of wire, and 6,300 offices.
The ratio of telegraphic facilities to the population in Europe
and the United States may therefore be approximately indicated
as follows:
UNI\TED STATES
500.
2922
6,365
3
EUROPE.
Number of inhabitants to each mile of lin            e........ 1,708
"1 " " " 11wir                                  e........ 631
1" I       t " office............. 19,351
I" " " messages sent..... 9
It will thus be seen that, as regards the facilities for telegraphic
communication furnished in Europe and the United States, the
latter are very far in advance of the former.
COMIPARATIVE RATES OF (APRGES IN EUROPE AND TIlE
UNITED STATES.
The average charges for the transmission of messages in Europe
and the United States also constitutes an important clement in
any comparison that may be instituted in respect to the relative
merits of the two systems.  On this point we quote the testimony
of George B. Prescott, Esq., the best recognized authority on
telegraphic statistics in the United States.  Hie says  "The tolls
for the transmission of messages are not the same in any two
countries in Europe; nor are they uniform for all classes of messages in any one country.  Telegraphic correspondence in Europe is divided into two general classes, called'internal' and
'international' messages.  The internal are those which are receivedcl, transmitted and delivered in the same country; the international are those which are received in one country and transmnitted into another country. As a general rule a low rate of
charges is adopted for the transmission of' internal' messages,
while a high tariff is imposed on'international' mnessages.  TI-he
telegraphic tolls in continental Europe in 1869 averaged 363
cents for internal messages, and $1.01 for international messages,
which is a higher average charge than is imposed in this country,
although it is well known that skilled labor is much more expensive here than in Europe."
It would seem as if an exhibit of such a character as above 
20
given would prove reasonably satisfactory to the public, and be
also regarded by them as embodying so much of promise for the
future as to warrant, at least for the present, a general opposition to any radical and sweeping interference with the existing
systeni.  That the public, furthermore, are either not dissatisfied
with the manner in which the telegraphic service of the country
has been performed, or take but comparatively little interest in
the subject, is sufficiently shown by the circumstance that up to
the present time not a single memorial or petition has been
presented to Congress fi-orl aliy Chlamber of Commerce,  Board
of Trade, Municipal Organization or Press Association which
sets forth the necessity or prays for the provision of any new
system, or which complains of and seeks redress for any existing
grievances.  But as, nevertheless, a changcre of a certain character
has, on the one hand, been recommended by the President of
the United States and some of hisprincipal advisers, and as, on
the other, certain citizens, of acknowledged ability and enterprise, seek from Congress aid and authority to inaugurate a system of an entirely different character, it is important to next
sulject to analysis the elements of the respective propositions,
and see how far they are worthy of popular consideration and
endorsement. And first as regards the Government proposition.
REVIEW OF TIIP G)VERNMENT PROPOSITION.
F,ist.-As the Fifth Amendatory Article of the Constitution
of tire United States provides that private property shall not be
taken for public uses without just compensation; and as the act
of 1866, in addition, specifically stipulates that if at any time
the United States shall decide to take possession of the telegraphic system for military, postal or other purposes, it shlall purchase all lines, property and effects of existing companies at a
fair appraisement, it is legitimate to assume that the people of
the United States will pay, at least, a fair market price for
whatever they propose to take possession.  But how much will
that price probably be?
In answer to this question we have first the result of an investigation, submitted to a Select Committee of the tIouse of Representatives on the Telegraph, by Gardiner G. Hubbard, Esq., who, 
21
as the principal advocate of a company contemplating a similar
purchase, would not naturally present an exaggerated estimate.
This gentleman's figures of the total primary cost likely to be
incurred by the GovernmeLt, as a consequence of the proposed
adoption of the telegraph, are as follows:
Estimate of appraisement of existing lines, $30,000,000.
But with a reduction of the rate of charges, as proposed under the
Government system-namely, twventy-five cents for every twenty five words-it is certain that the number of despatchles offered
for transmission would largely increase, and to meet this increase
new facilities in the shape of additional wires would be needed.
Mr. Hubbard estimates such extensions as requiring 270,000
miles of new wvire, at a cost (at $100 per mile) of $27,000,000.
Mr. Orton, of the WAVestern Union, on the other hand, as the
result of the experience of that Company, says 330,000 miles
would be needed,  at a cost per  mile  which  will approach
much  closer to $150 rather than $100.   Then,  again, the
bill for telegraphic absorption by the Government, endorsed
by  the Postmaster-General, proposes to establish a telegraph
station in connection with every post-office in the country, the
gross receipts of which for postages are not less than $100 per
annum. The estimate for such further extension is fixed by
Mr. l Hubbard at $6,000,000 additional, making the total first and
minimum cost to the Government of the proposed scheme not
less than $63,000,000.
It should, however, be  stated that the Postmaster-General,
in his recent report, December, 1872, expresses  an opinion,
as a result of his investigations, that a iiew system of telegralph, "equal in extent to the present" one, could be constructed by the Government for a total cost of $11,880,000.
But the utter absurdity of this official estimate becomes at once
apparent, when it is considered that at least an equal sumn has
been expended by the various telegraph and railway companies
for simply so much of the existing telegraphic system of the
country as has been constructed since the year 1866, and that
the cost of such labor and material as would be required in any
new construction has not since experienced any decline, but, on
the contrary, in some respects has been augmented
In a report submitted to the house of Representatives, Decemn
ber 20th, 1872, the Committee on' Appropriations, on the other 
22
hand, in discussing this subject, use the following language:
"The purchase and extension of lines necessary to transmit
annually the 30,000,000 messages contemplated by the Post master-General would involve the necessity for appropriations or
a bonded indebtedness which has been estimated to equal, at
least, $75,000,000."
To meet now the probable large expenditure  which would
b3 necessary, a new national loan would  therefore have to
be authorized; the Government  would be again placed  in
the position of a borrower; the whole necessitating a new
issue of bonds,  new  syndicates, new  suspicions of partisan
and Federal patronage and commissions, and an unavoidable
further continuance  of that  interferenlce with  the financial
interests of the country which has already given to the
Treasury Department a power and  an influence  whlichl the
framers of the Constitution never anticipated or intended.  And,
as illustrating further how one interference by the Government
with business that does not legitimately pertain to it naturally
tends to suggest and open the way for anothler, it may be mentioned that it has been proposed (unofficially) to establish savings banks all over the country in connection with the postoftee, and then use'the deposits to defray the expenses of telegraphic purchases and  constructions-a scheme whichl has the
taint of small, if not of fraudulent speculation, wvhichle involves
the dispensing of new patronage, and which would undoubtedly
cost the Government far more than any loan it could otherwise
negotiate.
It is also a matter of interest to review, in this connection, the
recent experience of so practical a niation as Great Britaiu in absorbing by purchase the telegraphic system of that country.
WhIen the project was first brought before Parliament, the estimate of cost, founded on the judgment of experts, was "twenty
years' purchase" of the net profits of the several British companies for the years 1867-8, predicated in the aggregate at ~2,200,000 or $11,000,000; but when the contract was once made,
and the actual results determined, it was found that the Government had in reality obligated itself to an expenditure of ~7,5189,5, or iecarly jboity m illiors of doltars.
Secoidcl. In the bill reported by lIon. C. C. Washburn fiom 
23
the Select Committee of the House on the Telegraph, July, 1870,
and which, at the time mentioned and subsequently, received the
approval of the Post-office Department, the rate for which the
Government proposed to undertake the transmission of messages
was 25 cents for each 20 words or figures, for all distances
within the territory of the United States. The opinion of Mr.
Orton, Mr. Prescott, Mr. Hubbard, and almost every other per son  who  had made  study of the telegraph in the United
States a specialty, was, however, to the effect that the sum
named could not by any possibility reimburse the Post-office
Department  for the expense of operating the telegraph  as
a system, to say nothing of the interest on the original purchase  and  investment.    Mr.  Washburn,  as  the result  of
his investigations  (claimed  to be most  thorough), thought
differently, and in his report made use of the following language:
"The Comimittee do not expect that on extreme distances the
low rate of 20 or 25 cents will be self-sustaining, but they do
expect that all such differences will be made up on shorter lines,"
and "they have made a calculation, based on reliable estimates,
showing a smnall profit."  (Report II. R. No. 2,365, p. 34.)  And
aoain, on page 54 of the same report, Mr. Washburn unqualifiedly asserts "that by Governmrent management and connection
with the postal service a large saving can be made in expenses,
and a reliable system established, which, at a uniform rate of
25 cents for any distance, will be self-sustaining." Anal yet, notwithlstanding these calculations, "based on reliable estimates,"
we find the Postrmaster-General, as the result of two years' additional experience, now proposing that the Government rate at
the outset shall be 33- cents, to be reduced, after a "thorough
renovation of the lines," to 30 cents.  It is, therefore, obvious
that the assumption of the Postmaster-General, if correct now,
places Mfr. Washburn in the position of urging in 1870 a scheme
upon Cong,ress, "based upon reliable estimates," which, if adopted,
would have entailed upon the Government  an average loss of
from 8 to 13 cents on every telegraphic message of which it undertookl the transmission.
CHEAP TELEGRAPHIC SERVICE UNDER THE GOVERNMENT AND
IN-CREASED TAXATION OF THE PEOPLE CORRELATIVE.
But that the idea of making the telegraph, any more tlhan the 
24
Post-office, self-supporting in the hands of the Government does
not really enter into the plans of those who advocate the scheme
of Federal interference, it is to be called to mind that, in one of
the earliest bills brought before Congress and earnestly advocated, namely, that reported by Hon. B. Gratz Brown in 1865,
it was seriously proposed that the Government should construct
telegraph lines and work them in connection with the Post-office
at a uniform rate of three cents per message-a proplositionthen, equally as the one now advocated, equivalent to saying, that
the necessity of affording to the people of the United States
cheaper telegraph service is so imperative and apparent as to dematid that the Government shall annually add to the already
heavy burden of taxes on the people a large additional burden, in
order that so desirable a result may be effected. But it does not
seem to have occurred to any or all of these gentlemen, whose
bosoms swell so readily with the idea of Government philanthrophy, that the Government has never aniything to give to the
people in the way of pecuniary aid or bounty other than what it
has previously taken from them under sorie form of taxation,witlh
some eight per cent. additional, to pay for the cost of the taking.
And again, that if it is to be an accepted principle of our national
policy that the Government is to furnish to the people such
things as are acknowledged to be necessary, it stands to reason
that such service should commence with those things which are
of prime necessity rather than with those which are secondary;
and that food and raiment, fuel, shelter, and education belong to
the first class, and telegraphic service to the latter. What the
annual deficit to the Government, transmitting telegrams at the
rate of three cents per message, would have amounted to neither
Mr. Gratz Brown or any other person has definitely stated; but
on the basis proposed by Mr. Washburn, with the concurrence of
the Post-office Department, of 25 cents per message, Mr. Hlubbard
has presented to Congress the following estimate:
First.-interest at 5 per cent. on national bonds representing
the cost of the lines, $3,150,000.
Secn(cl.-In Europe the cost of transmitting telegrams ranges,
according to Mr. Ilubbard, from 15-~  cents gol(l, (18 1 currency) in Belgium to $1.18 in Russia.   (Report II. 1. 41st 
25
Congress, 28th  Session, No. 2365, p. 146.)   And he adds:
"The  cost of transmission increases  with the length of the
message and the distance of its transmission,  though not in
the  same  proportion."   In  Belgium  andI Switzerland,  the
two countries of Europe where the charges for telegraph
service are least, the average distance to which messages are
transmitted is fifty miles, but iu the United States the
average is th)ee hundred  miles.       To  ascertain, therefore,"
continues Mr. Hubbard, "the cost in America, it will not
be safe to add less than fifty per cent. to the cost in Belgium for
the extra length and distance;"  which  moderate assumption
would give 27 7, currency, as the cost to the Government
of each message transmitted, and involving, on the basis of
25 cents per message, a direct loss of 2:-  cents on each
message, or of $1,080,000 per annum on the estimated volume
of business. To this must be added the annual expenditure on
account of extensions, improvements and repairs, also estimated
by Mr. IItiubbard at $2,560,000-making an annual aggregate deficit of $6,290,000.
But it must be borne in mind that when Mr. Hubbard takes
the experience of Belgium as his basis of comparison, he selects
a country  which, if we exclude Switzerland,  is altogether
exceptional in Europe, and one in which the wages of skilled
labor, and the cost of all the elements that enter into teleg(raphic
construction and operation, touch a very low figure.  And, as
strikingly illustrative of this exceptional character of Belgium,
we have the fact that while wages anid the cost of material are
equally cheap, if not cheaper, in Bavaria  and Austria, the
average cost of a telegraplhic message in the first of these
countries is twenty-two cents gold, and in the latter fifty-seven
cents, and that ill neither Bavaria nor Austria do the total
annual receipts from the telegraph approximate the aggregate
annual requirements for telegraphic expenditure: the deficit in
Bavatria for 1870 having been 75a1 per cent., and in Austria
28'2 per cent. (See appendix to the Review, marked B.) A
more reasonable estimate of the average cost of transmitting
Government  telegrams  in  the United  States, founded on
European data, would, therefore, more probably give us one
hundred, rather than fifty per cent. in excess of the average
of Belgiurm —carrying up Mr. Hubbard's estimate of the cost of 
26
each message from 27:7 cents to 36 2~ cents, currency; and the loss
on the same from 2-J cents to 11 2o cents, or 3 2 cents on latest
basis of 33 cents, advocated by the Postmaster-General. But
this average is not so favorable as has been already attained to
by the Western Union Telegraph Company, wvhen it operates
under conditions similar to those existing in Belgium, namely,
over limited areas, and through and between dense centres of
population, the charge for a message from New York to Boston
(a distance of 234 miles), or between New York and Phlila delphia, being,It present but thirty cents currency, with a
reduction of one half for messages transmitted by night. It is
curious to note, also, in this connection, how narrow is the margin
betwveen surplus and deficit under even Belgian conditions and
economy. Thus Ai. Vinchent, the Director of Belgian telegraphs, in a recent exhibit of the ten years' experience of that
kingdom, prior to and including 1869, shows that the excess of
receipts over expenditures  during that time, for teleg,raphic
operation, construction  and repairs, was only 581,844 francs
($116,000), out of an aggregate of receipts of 11,295,773 francs,
or at the rate of $11,600 per anlnum.   And that this small but
favorable annual average has  not since been maintained, is
proved by the Belgian statistics of 1870 (the last available),
which give an aggregate of $310,938 telegraphic receipts, and
$305,730 telegraphic expenditures; and out of this last sum
only $18,030 is credited to construction and contingencies.*
If we turn now to other countries in which, although possessing all the advantages of a strong centralized Government,
the same system, economy and intelligence whlich characterize
Belgium do not prevail, the results of telegraphic operation
under the exclusive auspices of the State are much more sig,nificant.  Thus, including in the annual expenditure the sums
disbursed for constructions and repairs, as well as for operating,
the accounts for the year 1870 exhibit the following results:
NORTii  GERMNANY. — Receipts,  $1,621,501; expenditures,
$1,721,855; deficit, $136,215, or 8'3 per cent.
*'I. Tamar, Minister of Public WTorks in Belgium, in a recent report, also makes
this statement, that "the net product of the Belgian Telegraphic System has
been diminishing for several years, and was reduced to a point at whichl there was
scarcely any profit in 1868." 
27
BAVARIA. —Receipts,  $162,248;  expenditures,   $284,835
deficit, $122,587, or 75'1 per cent.
DENMAARK.-Receipts,  $101,280;  expenditures,  $113,540;
deficit, 8'8 per cent.
SPAIN.-Receipts, $289,340; expenditures, $715,109; deficit,
147 per cent.
AUSTRIA.-Receipts,  $929,221;  expenditures,  $1,375,407;
deficit, 28'2 per cent.
In Great Britain, where the Governmental system is claimed
to be a success, the fiscal exhibit of telegraphic service for the
fourteen months prior to March, 1871, was as follows: Total receipts, ~798,580 ($3,992,900); total expenditures, ~1,397,389 ($6,986,945); deficit, ~598,809 ($2,994,045). The expenditures here
are returned in two classes, namely, capital expenditure, ~926,894, and wvorkiing expenditure, ~470,495; but under the head
of the former is included an expenditure of ~346,449 for poles,
arms, wires, insulators, instruments, batteries and tools; and also
the sum of ~377,449 for engineering, salaries, alteration of buildings, examining accounts, law expenses, telegraphic instruction,
and the like-all of which would seem to be annually essential
to the working of a system as large as that of Great Britain, so
long as it is maintained in a condition of effectiveness.
Of other telegraphic systems under Government control, those
of Hlungary, Norway, Sweden, Holland, Portugal, Roumania,
the Indo-European line, and the lines of British India,-all in like
manner exhibit, for the year 1870, a deficit of receipts as compared with expenditures; while only in Russia (where the average charge for the transmission of messages is $1.52), Belgium,
Switzerland, Italy and Turkey, is there a claim preferred that the
annual receipts from messages are equal to or in excess of the
expenditures necessary to work, maintain or extend the lines
necessary to transmit them.*
* Sir James Anderson, in a paper read before the Statistical Society of London,
June, 18752, presents the following statement of profit and loss contingent upon
the Government maintenance of the telegraph during the year 1869 in the following States of Europe-interest for construction only (and not average annual expenditure for construction) being included:
PROFIT.-Bavaria, ~7,657; Belgium, ~2,901; Italy (no data relative to construction being obtainable since 1861), ~25,966; Russia, ~120,010; Switzerland,
~92,541.
Loss.-Austria and Hungary, ~22,067; Baden, ~505; Denmark, ~7,219; France, 
28
With such evidence illustrative of Governmental management
of the telegraph in the Old World, what must be the economical
results of a similar system in the United States, where the Gov ernment, as a general rule, always pays from twenty to'ftty per
cent. more for whatever it purchases, in the way of service or
material, than private citizens; and vlwhere, with the possible cxception of the manufacture of small arms, no work that it has
ever undertaken, from the building of a ship to the printing of a
book, compares favorably in point of quality and economy with
the similar work of individual?  The total deficiency of six millions, which Air. iubbard estimates the people must be annually
called upon to pay by taxation, under Mr. Washburn's bill, for
the luxury of having the Government own the telegraph, will,
in all probability, have to be multiplied by two-possibly by
three-to represent the figures which will approximate the truth,
and all for the benefit of not over one thirty-seconcd part of our
population; that being the proportion which Mr. Palmer, of the
Committee on Telegraphs, reported to the House of Representatives, as likely to use the telegraph at the rate of three messages
per month, provided that, under the reduction of rates by the
Government, the whole number of messages should increase to
the extent of 40,000,000 per annum.*
It may be, however, that to some the addition of six, twelve,
or even eighteen millions to a present annual national expenditure
of about three hundred millions, will appear insignificaut in
comparison with the results promised or anticipated. If there
be such, the startling fact is commended to their attention, that
at the present tinme the ratio of increase in our national expenditures, for what may be called the civil service, is in excess of
that of any of the Governments of the Old World-and since
~34,520; Germany (north), ~57,888; Great Britain (Indo-European), ~57,G688;
Greece, ~11,685; Holland, ~23,627; Norway, ~6G,667; Roumania, ~13,209; States
of the Church, ~1,68 7; Sweden,  ~1, 7 8 2.
* Excluding press reports, the largest number of messages sent in any one
year (1872) was probably not in excess of thlirteenl millions. Th's aggregate, apportioned to a population of 39,000,000, would give one telegraph message  once
a year for every three persons, at an average cost to each of about 21 cents; and
yet it is for the purpose of relieving the people of this great burden that the
Government proposes to incur an expenditure of over $6,000,000 per annum. 
29
186(4 has been, on the average, in excess of eight per cent. per
annuni, while during the same period the ratio of increase of
population has not been equal to three per cent. per annum.
And also, as illustrating the influence of the present burden of
taxation on the strictly agricultural interests, the facts brought
out by recent investigations in Nevw HIampshire; which show
that in one of its most fertile and, at the same time, favorably
situated districts in respect to markets-Rockinghlam Countythe present average annual tax for State, county and local
purposes, apportioned to each farm producing on an average
an annual product of $680.40, is about fifty dollars, or, including national taxes, direct and indirect, approximately one
hundred dollars-causing a continued decrease in the value of
all real property, and a steady decline in population; or that
other circumstance, that to-day the future title to no inconsiderable part of the real estate of one entire State-Southl Carolina
-bids fair to be a title derived from the Shieriff for sales in
default of ability on the part of the landowners to pay the taxes
assessed upon them.  Surely, in view of such facts as these, it is
a matter worthy the most serious consideration of both Congress
and the people, whether there are any circumstances, short of
the preservation of the national honor or existence, which can
justify the smallest particle of increase in the weight of any
existing national burden.
In one respect, it must be admitted that the Federal Government would have advantages in constructing telegraph lines
not possessed by individuals or incorporated companies; for it
could purchase its wire sixty-two per cent. cheaper at the port
of importation; have its poles delivered at twenty per cent. less
on the borders; and be freed fromn the necessity of paying
annual taxes and licenses to the various States and municipalities. But what sort of consistency or, to use a stronger word,
decency" is there in a Government justifying, on the grounds
of expediency or necessity, the continual imposition and maintenance of such burdens on its citizens, and then not only refusing to be bound by them itself, but even pleading the privilege
of such exemption  as a good  and sufficient reason  vwhy it
should interfere with the business of such citizens.
There is another point of similar significance in this same con 
30
nection. Thus, for a period reaching back, at least, to the incep tion of the wvar-the one policy which more than almost any
other has characterized the F1'ederal Government, has been, that
all legislation should be in the direction of maintaining a higher
standard for the wages of labor in the United States than is
maintained in Europe.
Now, out of the whole amount paid by the Western Union
Company during the fiscal year 1872 for operating  the telegraph, nearly three fifths were disbursed on account of wages
or salaries; which wages or salaries were from two to four
times in excess of what are paid for similar services in Europe.
Thus, for example, while the London telegraph offices are
operated by females, at wages ranging from eight to twenty
shillings per week, the wages paid to the fifty female operators
in the office of the Western Union Company  at New  York
range from $40 to $65 currency per month, or, in more direct
comparison with the wages of the English female operators, from
40 to 66 shillings per week.  And what is true in respect to
comparative wages in this department of the telegraph is true of
every other; and yet the Federal Government now makes this
very state of affairs, which all its recent legislation is claimed to
have occasioned, the main cause of complaint against the existing
Telegraph Companies for not providing cheaper service; and
proposes, by absorbing the telegraph and making the postmasters
dclo duty as operators, to further condemn in practice what it still
justifies in theory.
TIIE QUESTION OF GOVERNMENT EFFICIENCY.
Thircl-But granting that the proposition put forth by the
advocates of the absorption of the telegraph by the Governmnent be true, namely, that the people are in present  and
urgent need of cheaper and greater telegraphic facilities, the
question is a most pertinent one, whether  the ends  sought
for are in any degree likely to be attained through the agency
of the Government?   That increased cheapness is only likely to be reached under Government, through increased taxation, has been already demonstrated; b(lt how about greater
efficiency?   To this question  a full andl  sufficient answer
would seen  to be afforded in the past and present record 
of the business which  Government has already monopolized.
Take as  one  illustration the  Post-office itself-the department which now proposes to extend its business by absorbing
the telegraph. Does not every one know that in point of efficiency, trustworthiness, and attention to the interests of the publie, the Post-office in the United States is far inferior to the postal
systems of Great Britain, Belgium or IHolland? Are there any
towns in Great Britain, of from 500 to 1,500 inhabitants, in the
midst of a densely populated district, which, like similar towns
in New England, have mail facilities limited to three times a
week?  Is there a case parallel under  any of the more highly
civilized governments of the world like that which now, and for
years past, has existed on the Pacific coast, of a whole community conforming to the strict letter of the law by placing an
U.S. postage stamp on their more valuable letters, and then, at
eight times additional Cost, confiding the same letters to a private
express company for transmission and delivery?  What a commentary on the honesty of its officials, and the integrity of its
civil service, does the Post-office Department itself confess when
it authorizes everywhere the publication of the followving notice:
"Valutabe  letters'hould invariabt;y )e talcen   to te Post-ofice an(]
registerecl. Thle registry fee to ctall pa2ts of the Unitecd ~S1ates s 15
cents " postage in addition.
Postoge at one penny, and the abolition of the franking privilege, became established facts in Great Britain as ftr back as
1840; but it was not until 1863, or twventy-thlree years subsequent, that the Post-office Department of the United States
could see its way clear to the adoption of a uniform rate of three
cents on every half ounce letter to all portions of its territory.
During the session of Congress which adjourned in ITay, 1872,
the use of the so-called "postal cards"-a roundabout device fo)r
effecting a reduction of postage without meeting the question
manfully, and withal equivalent to saying to the people of the
United  States, " If you  will write your letters so that the
Post-office officials may read  them, the postage shall be one
cent, but if otherwise, three"-was authorized by Congress; and
yet up to the present writing, December, 1872, the public have
derived no benefit from the authorization; and simply for the
reason that the experts of the Post-office Department, after a
year or more deliberation on'the subject, forgot to have the
31 
32
bill accompanied withl the essential provision of an appropriation necessary to put the device into operation.
And what is true of the business of the Post-office is true of
the business of almost every other department of Government;
the appraisement of goo.s liable to customs duties, the svstemrn
of entries and withdrawals, of storage in bond, the inspection
of vessel., the collection of customs revenue-in all of whlichl the
administration of imperfect, and what in most countries are obsolete laws, seems always in the direction of needless obstruction
and expense to the business interests of the community, and
rarely, if ever, in the direction of economy and convenience;
added to all of which is a tacitly recognized system of adjudication between citizens and the several executive departments of
the Government, whichl in all questions of doubt uniformly applies the benefit of the doubt to the Government, and rarely, if
ever, to the individual.
In short, were any individual or corporation to undertake to
do business in the same dilatory, expensive and vexatious
method as the Government of the United States to-day discharg,es all of its functions having relation to the production,
distribution anl consumption of the country, their existence, so
f'r as public patronage was concerned, would be exceedingly
limited; anid yet it is under just such circumstances that the
public are asked to seriously consider the expediency of transferring the entire telegraph system of the country to an agency
whose present business capacity is utterly inadequate to the
proper discharge of its present business responsibilities.
UNRELIABILITY OF TiE GOVERN-MENT ESTIMATES.
It is certain, furthermore, that if any additional evidence was
needed in support of these conclusions there could be no better
field to search for it than in the several reports which have been
made in favor of the Government theory of the telegraplh, since
its original conception in this country and first presentation to
the public; for no one can candidly examine these reports,
from the one made by ion. B. Gratz Brown, in 1865, down to
the last by the present Postmaster-General, wvithout being most
painfully impressed with a conviction that the Government is
being urged( to take action upon a most important, financial, 
33
political and social question, in respect to which its advisers
have only the most indefinite and inadequate information.
Thus, in 1865, Mr. Gratz Brown advised three cents per message,
for all distances throughout the United States, as the proper
tariff to be adopted by the Government in the operation of the
telegraph.  In 1868, Mr. E. B. Washburne proposed one cent
per word, exclusive of date, address and si,gnature, with three
cents f)r postage, and two cents for delivery of each message.
In 1870, Mr. C. C. Washburn was confident, "from a calculation
based on reliable estimates," that a tariff of from twenty to
twenty-five cents per message, inclusive of date, address and
signature, would afford the Government  a small profit.  In
April, 1872, MIr. R. B. Lines, of the Post-office Department,
in advocating the theory of Government ownership before
the House Committee on Appropriations, expressed an opinion
that "no reduction at all should be made until the lines had been
in possession of the Government for, at least, a year," and that
then discretion should be "left to the P,)stmaster-General to
regulate the rates within certain limits, according to the course
of business as shown by the books of the Department." And
now, in December, 1872, comes the Postmaster-General himself
with a proposition to make the rates at the outset thirty-three
cents on all twenty-five word messages within the United
States, and "after the lines have been renovated," thirty cents.
It is also to be noted that Mr. Hubbard, who first proposed
25 cents under his system, for a circuit of 500 miles, now
thinks 25 cents for a circuit of 250 miles a more prudent
assumption.  Now, it should not be overlooked that each of
these gentlemen has assumed to speak with authority derived from careful investigation, and that all have professed  confidence,  based  on  "reliable  estimates,"  that if
the  Government should  adopt  the  rates  by them  recommended, the realization of a profit on the business transacted would be reasonably certain. It is clear, therefore,
that somebody has blundered; but as the blunders involve
losses of only a few millions, and that to the National Treasury,
the matter may be passed over in these days of large taxes and
corresponding expenditures as of comparatively little consequence.
3 
34
Coming next to the report of the Postmaster-General for
December, 1872, we find that while he has found sufficient room
to present to the American public extensive tables of European
telegraphic statistics, he has not been able to afford space in the
same report for the statistics of the last year's business of the
largest company in the United States, which were furnished
promptly and in detail to him on application. Iet has, however, furnished a table, professing to exhibit the condition of
the telegraph systems of the United States and Europe, of
which the following is a partial analysis:
Under the head of Great Britain will be found the following:
"Complete returns for previous years not having been received, the
estimates of the British Post-office for the year ending March 31st,
1873, are used instead;" and this in the face of the fact that
complete returns of the British Government system for the
first fourteen months of its existence were officially published
in the summer of 1871, and have ever since been readily accessible.
Throughout the whole of this table, moreover, there runs the
mistake of adopting one standard of comparison for stating the
telegraph business of Europe, and another and different one for
stating the telegraph business of the United States. Thus,
while in the United States a message is only counted once,
whether it is transmitted one hundred or one thousand miles,
it is counted in Europe over and over again, in each'petty State
through which it is transmitted. In this manner the apparent
number of messages in Europe is greatly increased above the
number actually transmitted; and by not recognizing this fact
the tables of the Postmaster-General are made to present statements that, to say the least, will not sustain investigation.
Thus, for example, the average receipt for messages in Bavaria,
for 1870, is stated by the Postmaster-General to be sixteen
cents; but the official report of Bavaria for that same year
gives the following figures: Internal messages, 295,170; international, 197,016; total, 492,186. The receipts being $162,243,
the average per message of every kind was, therefore, not 16, but
327-~.  But by including in the aggregate 219,992 received messages, 212,067 transit messages, and 85,920 free messages, the
Postmaster-General's table swells the total number of messages to 
35
1,010,176, and thus reduces the average from thirty-two to
sixteen cents.
In Baden, according to Mr. Creswell's table, there were transmitted, in 1870, 629,201 messages for $85,008, being an average
of thirteen cents per message; while the actual number of messages sent in that country, exclusive of Government messages,
was 337,442; and had Mi-. Creswell had before him the "T arni
Ge,er&al des Correspondances T6lejraphiques," published at Berne
in 1869, by the Convention Te'legraphique International —and
without which important table his means of information must
have been singularly deficient-he would have read that the
lowest price at which an internal message can be sent within the
small State of Baden is eighteen kreutzers for ten words; or at
the rate of 21.4 cents for twenty words, while for International
messages another and still higher rate is adopted.
In Italy, also, according to the Postmaster-General's table,
there were transmitted, in 1870, 2,378,119 messages, upon which
the tolls amounted to $945,234, making an average rate per
message, as stated in the table, of thirty-two cents; but which,
according to the ordinary rules of arithmetic, should give thirtynine and eight-tenths cents per message.
The main object of the Postmaster-General, in common with
all the other advocates of the proposed plan of Government
absorption, is to show that the rates for telegraphic correspondence in the United States are, as compared with those of Europe,
extremely and unnecessarily high; but they either omit or fail
to give prominence to two circumstances, which are absolutely
essential to the determination of any correct conclusions. The
first of these is, "that while there are in the United States but
one kind of messages, there are in Europe three classes, called,
respectively, internal, international and transit. The internal
messages are those which are transmitted, received and delivered
in the same country.   The international messages are those
which are transmitted from one country into another. The
transit messages are those which are neither sent nor received
in the country in which they are reckoned, but are simply shot
through it in going from one State to another. In this way
small States like Bavaria, Be,lgium, Baden, etc., which really
send but a small number of messages, are able to show an ap 
36
parently large annual traffic. Countries so situated in Europe,
as a rule, have adopted a low rate of charges for their internal
messages, the deficit being made up by a tax upon international
and transit messages paid by surrounding States. Thus, for example, Belgium charges a minimum rate of half a franc for the
transmission, receipt and delivery of a message within her own
territory, while she imposes double rates upon both international
and transit messages, one class of which requires only one half
the service of an internal message-being simply either sent or
received from or into the country-and the other class requiring
no service at all, being simply sent through the air on its way
from one neighboring State to another.  The case would be
analogous to that of one of our States which should set up an
independent telegraph system of ier own, and should charge a
low rate for the transmission of messages within her own territory, and impose a heavy tax upon messages passing through
her territory between the other States of the Union. Suppose
the State of New Jersey," for example, was to establish an independent telegraph system, and fix the rates for messages passing
within her own territory at the Belgian rate of ten cents, and
then charge twenty cents for every message passing through her
territory.  The result would be very favorable to the finances
of New Jersey, as the tax upon the correspondence between
New York and WVashington alone would more than pay the entire cost of her own system."
The second circumstance, to which the- advocates of the
Government theory fail to give prominence, is the difference in
the relative cost of the telegraphic systems of Europe and the
United States-a difference which may be succinctly expressed
by saying that, as a general thing, owing to distances in the
density of population and area of geographical occupation, it
requires the construction of ten miles of wire in the United
States to one in Europe to do the same business, and that the
cost of everything in the United States, in the way of telegraphic
construction and operation, is on an average, full fifty per
cent. greater than in Europe. tIow entirely, however, the Postmaster-General puts a different complexion on this last proposition is evidenced by the statement of his tables, that while the
cost of constructing each mile of telegraph line in the United
States is $120, and of each mile of wire $30, the cost in Great 
37
Britain is $164 for each mile of line, and $41.22 for each mile
of wire.*
To show now the unreliability of all this, it is only necessary
to call to mind that the greater portion of the telegraph wire
used in the United States is made in England, and that England
is to-day the cheapest place in the world in which wire can be
purchased-the relative cost of No. 8 "' extra best best " galvanized
iron wire being at present 51 cents golan in Manchester, and  102cents currency in New York; and, also, that not a little of the
wire now in use in the United States, erected during the war,
has cost, from causes over which the telegraph companies could
have no control, as much as twenty cents per pound; and that
if the United States Government wvere now to construct new
lines, it would find that the simple conveyance of the wire to
not a few localities would require an expenditure equal, or more
than equal, to what the wire originally cost at the port of
importation.  The impossibility of instituting a fair comparison
-such as Mr. Creswell attempts-between the cost of telegraphic lines in Europe aind the United States, is further shown by
the fact that while the sizes of telegraph wire used in the United
States are of 6, 7, 8 and 9 gaug,e (none being employed smaller
than the latter), the wire used very largely in Europe is of No.
11 gauge, weighing but one half as much as No. 8, and costing
proportionately less. No. 6 wire, of whichl there is a considerable amount used in this country, weighs 550 pounds.per mile,
and( costs $57.75 per mile, delivered in the city of New York.
No. 8  wire wei,ghls, in round numbers, 400 pounds per mile,
an(tl, at 102 cents per pound, costs $42 per mile.  No. 9, the
smallest wire used in this country for telegraph lines, weighs
340 pounds per mile, and costs, at the place of importation,
$35.70 per mile.  It is, therefore, somewhat difficult to see how
it is that Mr. Creswell is able to state that wire costing fromrn
$35.70 to $57.75 per mile at the place of importation, can be
transported all over this broad continent, and erected along the
lines of the railway and post roads, at an average cost of $30
* In a note at the bottom of the Postmaster-General's tables it is stated that
the cost of' the lines and apparatus of the English lines ($164) is "estimated at
the average of Continental lines;" but if reference is made to the estimated cost
of Continental lines in the same table, the sum given will be found to be $170.72,
and not $164. 
38
per mile, to say nothing of the insulators, cross-arms and other
appurtenances necessary to its maintenance and operation.*
In the United States, according to Mr. Crcswell's tables, the
whole  number of messages transmitted by all the telegraph companies doing business in 1872 was 13,700,000, (including nearly
2,000,000 press messages), for which the receipts were $9,590,000,
or at an average of 70 cents per message. But in the statistics
farnished to the Postmaster-General by the Western Union Telegraph Company (but not publislecl) it was shown that this single
company transmitted in 1872 10,933,318 messages, exclusive of
press and wveather reports, for which was received $7,040,803.53,
less $220,395.75 refuinded to other lines and uncollectable;
or, $6,820,407.76, being an average of 62 cents per message; and
for the transmission of 1,512,361 estimated  press  messages,
$979,03. l71, making a total of 14,444,100 messages, and $7,799,
* The following analysis of the Postmaster-General's estimate of the past and
prospective cost of the telegraph system of the country is copied from the Journal
of the Telegraph:
"Thle majority of lines in this country," says Mr. Creswell, "have been built very
cheaply;  their entire cost, including patents, being probably much less than
$10,000,000. Data in possession of this Department show that many lines have
been lately built, probably not of the best quality, but fully up to the average
standard, for not more than $115 per mile of single wire line, and $30 per mile of
additional wire.  For equipment an allowance of $5 per mile is ample.  Were all
the wires to be strung at the same time, as they would be were the present system
to be duplicated by the Government. the cost would probably be much less.  The
cost of a new system, equal ia extent to the present, would, at the above rates, be
$11,880,000."
The extent of the system which Mr. Creswell states could be reproduced at a
cost of $11,880,000 embraces about 80,000 miles of line and 200,000 miles of wire.
The only estimate accompanying the Postmaster-General's Report, going to show
the cost of constructing a similar system in the United States, is one furnished by
Mr. Charles T. Chester, of this city. In this estimate Mr. Chester gives the cost of
constructing 75,000 miles of line and 175,000 miles of wire, including equipments,
at $18,253,625; provided the wire is imported free of duty.  This estimate, which,
by the way, is aotfooted in llr. Creswelt's report, doas not include cables for river
crossings, of which the Western Union Comrrpany, alone, has in operation 234+
miles.
MIr. Chester has achieved some notoriety as the manufacturer of a certain style of
telegraphic apparatus, but, ve believe, has never had any experience in constructing telegraph lines, with the single exception of the fire alarm telegraph of the City
of New York.  This system is embraced ill tho following inventory, for which we
are indebted to the President of the New York Fire Department:
INVENTORY OF LINES AND APPARATUS BELONGING TO THE NEW YORK FIRE
DEPARTMENT.
625 Miles of wire.
2,650 Telegraph poles.
2,500 Feet of submarine cable.
549 Street boxes.
84 Gongs. 
39
491.49 in telegraph receipts. Now, deducting the messages sent
by the Western Union Company from the total number stated in
Mr. Creswell's table as having been sent by all the companies in
the United States, and deducting also the telegraph receipts of this
company from the total telegraph receipts of all the lines, we have
the following most curious and remarkable result, namely: that
the several lines in the United States, in opposition to the Western
Union, sent during the year but 1,255,501 messages (of which
nearly 500,000 were press messages), for which they received
$1,790,508.51, being an average of $1.42 per message.   But
as the various opposition lines extend mainly over short routes,
where competition is supposed to have reduced the rates to a
minimum, the value and logical correctness of Mr. Creswell's
exhibit become sufficiently evident.
The disingenuousness of the Pl'ostmaster-General in discussing
16 Dials.
41 Keys and bells.
1,189 Cells of battery.
1 Recording register.
2 Repeaters.
2 Switch boards.
1 Testing instrument.
1 Wlieatstone's measuring instrument.
60 Galvanometers.
175 Lightning arresters.
61 Morse relays.
61 Morse keys.
2 Police dials.
9 Sets (Morse key, relay and bell).
For the construction and equipment of the above system Mr. Chesterrendered a
bill against the City of New York, as we are officially informed at the Comptroller's
office, of $850,0()0.
Now, if 625 miles of telegraph wire costs $850,000, then 175,000 miles would
cost $238,000,000.
625: 850,000:: 175,000: 238,000,000.
If, however, we suppose that the estimate which Mr. Chester has rendered to the
Postmaster-General is a correct one, and that 175,000 miles of telegraph wire costs
but $18,253,625, then 625 miles would cost only $65,187.
175,000: 18,253,625:: 625: 65,187.
In Mir. Chlester's estimate for constructing Government lines, which ho proposes
to erect for $104.30 per mile of wire, he includes 75,000 miles of poles, averaging
33 per mile, and making a total of 2,475,000 poles.  In the line which he  constructed for the City of New York, for which hle charged $1,360 per mile of wire,
he used only 80 miles of poles, averaging 33 per mile, or a total ot 2,650 poles.
For the Government line the estimate embraces an average of 14 poles per mile
of wire, and the average cost of the line per mile of poles is $243.38.
The line constructed for the City of New York, however, averages but a fraction
over two poles per mile of wire, and the bill rendered for it is at the rate of
$10,625 per mile of poles. On this basis the cost of constructing 75,000 miles of
line would be $796,875,000.
We leave the Postmaster-General and Mr. Chester to settle the discrepancy
between the twno estimates. 
40
this whole subject is also shown in the manner in which he refers
to a recent communication made to the Postmaster-General of
Canada, by the President of the Montreal Telegraph Company,
in reference to the recent adoption in the "Dominion of Canada"
of a uniform tariff of "25 cents for ten words, and one cent for
each subsequent word, irrespective of place or distance"-a rate
which at first glance seems to be very low, but which on twentyfive wvord., the proposed standard of the United States Government, wvould be 40 cents.  From this Mr  Creswell, as will be
seen by reference to page 32 of his report, quotes in his argumeit only so much as passes for an endorsement of the views
which he desires may be accepted by Congress and the country,
and omits the following of much greater significance: "It will
be necessary foryou, however, to remind the Postmaster-General
of the United States that though this system has been entirely
successful here, it could scarcely be put in operation in the
United States, except under the control of the general Government, owing to the onerous charges to which the business there
is subject. Telegraph wire and all other material used in telegraphing are admitted into Canada free of duty, but are subject
in the United States to heavy duties, averaging probably 60 to
70 per cent.  The expenses of living being greater in the United
States than in Canada, salaries are necessarily higher. Taxation
is also more burdensome, and every article in use is dearer. It
is true that against this must be placed the more dense tLnd pro.
bably more active population of the United States, and the lirger
amount of business transacted; but the distances aie so great
that I doubt if a uniform 25 cent tariff (' i. e., for 10 words, or 40
cents for 25 words') all over the country would maintain the
business in an efficient manner at present."
In a subsequent parag,raph the writer expresses an opinion
that the Canada rate-i. e., 40 cents for 25 words-may, in the
course of a few years in the United States, through an increase
of business, "become self-supporting;" but if this should be the
case, is it not altogether probable, in view of the very great reductions made by the Western Union since 1866, that such a
result will be attained equally soon, if not sooner, by  this
company than by a Government Department, which could
not see its way to a uniform rate of postage until Great Britain
had for more than twenty years furnished an example, and 
41
which even now expends, in the city of New Orleans, five cents
in the delivery of each single letter, which may be carried from
any point in the United States to that city for the sum of three
cents.
One other matter made much of by the Postmaster-General in
his report may also be appropriately noticed in this connection,
namely-the alleged "enormous and dan,gerous" abuse of the
"free message business." If the Postmaster-General had taken
the trouble to inquire, instead of trusting hearsay and rumor, he
would have found that for the last fiscal year the whole number
of free messages transmitted over the wires of the Western
Union, would, if paid for at regular rates, have returned  the
sum of $750,000. Such a result on its face is unquestionably
somewhat startling; but its importance vanishes in view of the
further statement, demonstrable from the books of the company,
that out of this large aggregate, full 70 per cent. was on account
of messages transmitted for railroad companies, from wvhon the
telegraph was receiving an equivalent service in the way of
maintenance and repair of its lines; and that of the remnainimg thirty per cent. a very large proportion was in the nature of
compensation to hotels, express companies, &c., for the rent of
offices or accommodations afforded the company.
The statement, therefore, made at the commencement of this
review, that the Government was undertaking to deal with a
subject of great financial, political and social imlportance, without
being in possession of either accurate or adequate information,
is abundantly confirmed by the evidence which has been cited.
TELEGRAPH OWNERSHIP BY THE FEDERAL GOVERNM[ENT INCON      SISTENT WITH THIE THEORY AND MAINTENANCE OF Rl'E      PUBLICAN INSTITUTIONS.
But a more important and conclusive argument against the
absorption and control of the telegraph by the Government is
to be found in the fact, that the adoption of such a policy is in
direct antagonism with and destructive of the fundamental principles upon which the Government itself has been established.
We are a nation of forty millions, made up of individuals representing almost every nationality and human variety, and
increasing at such a ratio as wvill give us at the close of the pres 
42
ent century, or within a period of thirty years, a population
approximating a hundred millions. The area of country in habited embraces extremes of over 2,500 miles in direct dis tance; while the diversity of character and interest, among the
people of the different sections, growing out of differences of soil
climate, pursuits and education is even greater comparatively
than the distances by which they are separated.   Language ex cepted, the different States of Europe do not differ so much
among themselves as New York differs to-day from Texas, or
South Carolina from California.   The problem of greatest
moment, therefore, presented to us as a nation, is to harmonize
these varied and conflicting interests, and to unite them all under
one firm and stable Government. The solution of a similar
problem has been essayed before-in Old Rome and in modern
Austria and Russia-under conditions of the most centralized
imperialism; but its attempt under a republic with universal
suffrage and with no standing army is something for which,
apart from our own experience, there has been no precedent for
success. Whether those who framed our Constitution were men
of superior wisdom, and clearly foresaw the conditions under
which their work was to be tested, is a matter which is here unnecessary to discuss; but that they originated or adopted the
only theory under which, through recognition, our past success
has been mainly dependent, seems certain; and that was, that
while it is the essential feature of every imperial and centralized
government to think for, act for, and, as far as possible, direct
the pursuits and even the creeds and amusements of the people,
it is, on the contrary, the essence of a republic, composed of a
union of separate independent States, to concern itself as little as
possible with the internal affairs of the nation, and to do nothing
whatever for the people which the people are wAilling or capable
of doing for themselves. And if this theory be correct, the
conclusion is irresistible, that a measure like the one contemplated, of absorbing and operating the telegraph by the Government, is a step away from republicanism and towards imperialism, to be especially resisted by all those who  believe that
whatever there is of danger threatening the vitality of our institutions is due mainly to the tendency of the Federal Government
to enlarge the sphere of its functions, and to exercise powers that
were originally never intrusted to it. 
43
INCREASE OF FEDERAL PATRONAGE.
The increase of Federal patronage incident to the adoption of
the measure under consideration constitutes a further most strilcking illustration in the same direction. The number of officers
and agents, other than soldiers and sailors, and employe6s in
Government workshops, who are at present in direct receipt
of compensation for services from the National Treasury
is estimated at upwards of sixty thousand-the number engaged in the Post-office Department alone being 44,655; all of
whom, and as many others as by reason of social relations have
a community of interest, together with all such as under our
system of" rotation in office" are expectants of office, may, as
all experience shows, be relied on to support any policy or any
nomination which any administration controlling their official
existence may favor under the plea of public utility or necessity.
Of this the story of the "Plebecite" in France; the subserviency
of all Federal officials prior to the rebellion to the interests of
slavery, and the experience of all our recent presidential elections,
are in themselves sufficient of illustration and evidence.
Under such circumstances it is now proposed to augment the
number of recipients of Federal patronage according to the following approximative estimate.
The number of persons at present in the exclusive service of
the Western Union and other telegraph companies, in the capacity of operators, clerks, messengers, superintendents, contractors
and repairers, is over 10,000-a number much smalier than it
would be, were there not such a cooperation of service and proprietorship between the leading lines of railway and the telegraph as admits of the employment of railroad officials by the
latter, at little or no expense, as operators or repairers. But
under the proposed Federal system all of this economy of copartnership must disappear, for, as a recent report of the Postoffice Committee of the House of Representatives has it, "the
functions of the Government are exclusive, and whenever it
formally undertakes any service, as proper to be exercised by
it, private parties must necessarily be excluded from the performance of the same service."
Again, an essential feature of the Government scheme is, that
the Post-office Department shall, as soon as practicable, estab 
44
lish a telegraph office at every post-office in the United States,
the gross receipts of which are not less than $100 per annum, to
be accompanied by a free delivery by carriers of all messages within a circuit two miles in diameter; which free delivery, in the case
of letters, now pertains to less than one hundred offices in the
whole country. The number of post-offices whose annual receipts
are ofthe amount above specified is at present about 12,000; and
as it is not unreasonable to estimate that if the average number
of Federal telegraphic employcs, at the outset, was not two to
each office-an operator and a messenger-it would not be long
before at least that number would be regarded as the lowest
standard of Governmental necessity.
That, in the course of time, the office of postmaster and telegraph operator would, inl many small towns, come to be fil]ed
by one and the same person, thus reducing the number of additional employ6s in such places to a messenger and occasional
repairer, is not unlikely; but that, in view of the pressure
incident to American politics to create and maintain offices for
political reasons, any such practice is likely to become general,
is something altogether improbable; and, as showing further
how unmistakably the drift of political management is at
present in respect to such matters, the following incident may
be related:  During the past summer an application was made
to one of the bureaus of the Government, having in charge a
branch of manufacturing, to purchase and introduce a new
labor-saving machine, which private enterprise was everywhere
adopting.  The proposition was declined for the very same
reason that it was made-namely, that it would occasion a reduction in the number of those receiving employment, the officer in
charge adding that the policy forced upon him was to employ
as many, anrid not as few men as possible, and that any deviation
from it would occasion him annoyance, and possibly a forfeiture
of his situation.
It will also readily suggest itself that whatever is likely to be
gained from the employment of postmasters in small towns as
telegraph operators, is likely to be far more than compensated
by the very great increase of force necessary to meet the requirements contingent on the expected increase of business under
Government rates and management.  This increase the Postmaster-General thinks would, after one year, be from 13,700,000 
45
messages (the present estimate) to 30,000,000; Air. Washburn
and others say 40,000,000; while the experience of the Western
Union shows that for every alditional 400 messages per day
passing between  any two points there must be an additional
wire, and an entire new set of operators and messengers.*
It is, therefore, altogether reasonable to assume that, if the
Post-office Department takes possession of and directs the telegraph service of the country in the manner proposed, the number of additional offices which will at once, or in a short time,
be addled to the roll of Federal patronage will equal or exceed
2a,000.tf And if the theory of the Government be correct, that
the people need the telegraph, and that it is essential to civilization and the spread of intelligence that they should everywhere
enjoy its use cheaply, there can be no good reason assigned
why it should not be made co-extensive with the Post-office;
* The largest business ever done in one day at the general office of the Western
Union Company in the City of New York was on November 11th, 1872, when
21,132 messages and 95,490 words of press matter  were sent and received.
Estimating the latter at 30 words per message, the aggregate would represent a
total of 24,315 messages.
Sixty-two wires vwere employed in doing this work-six of them being doubled by
the use of Stearns' Duplex Telegraph, making an average of 392 messages per wire.
The wires were all worked to their full capacity until very late at night, and many
of them all night. The weather was fine and the lines in excellent order, so that
the work done may be regarded as practically exhibiting the maximum capacity
of the wires under the most favorable conditions.
f "The supposed economy of uniting the two services will probably be found in
practice in a large measure delusive. A few clerks and leter-carriers in the Postoffice may be able to take upon themselves additional duties, but, as a general rule,
it will be found in this, as in other cases, that any additional work requires additional workmen. A clerk cannot be assorting the mails and receiving( telegrams
at the same time: the two functions will unavoidably interfere with each other.
Neither  can  much economy be effected in the matter of rents."-Report of
Committee on Post-o2ces and Post-roads, rHouse of Representatives,  1869.
Mfr. Palmer, of the Select Committee of the House of Representatives, in a
report made July, 1870, estimated that the number of additional employes which
would be required by the Gov;ernment to manage the telegraph at from 20,000 to
25,000.  Mr. Beck, of the Committee on Ways and Mean-,* in January, 1872, reported to the House, as the result of his investigations, that he was satisfied "it would
require not less than 25,000 additional Government officials to manage and control
the telegraph system of the United States under the bill of General Washburn,
and the number would increase every year."
* Beck was on Washburn's Special Committee. 
46
or why a post-office district whose annual receipts are $100
should have a wire and an operator, and another contiguous
district, whose receipts are only a little less, should be deprived
of similar privileges. The plea that one office would be remunerative and the other would not could not be consistently
offered, for in neither case would the receipts from business be
likely to defray more than a fraction of the expenditures; and
the fundamental idea, moreover, with which the Government
enters upon its scheme is, that necessities, and not expenditures,
are to have the prime consideration. The scheme of telegraphic
ownership once entered upon, the logic of the case, and the
desire of every member of Congress to please his constituents,
would therefore soon lead to the extension of the wires to every
post-office, except the very smallest, andc consequently augment
the number of new officials very far beyond the number already
indicated.
Does it not also occur to the Postmaster-General and others,
who with him are so strenuous for the Government appropriation of the telegraph, that every argument they can bring forward in support of their pleaded necessity, namely, protection
against corporate monopolies, the urgency of cheaper service, the
requirements of the State in time of war, can be made to justify
equally the Government appropriation of the business of the
railroad and express.  NAy, more, do we not find that in Continental Europe, whose experience in respect to the telegraph is
commended to us for imitation, that the railroad and express,
equally with the telegraph, have passed under the control or
ownership of the Government, and that the reasons which have
influenced to such action in the one case have been regarded as
equally applicable to the others.  IL 1869 the Government of
Great Britain to,)k possession of the telegraph, and, as a
sequence of such policy, a Committee of Parliament, within a
very recent period, have reported in favor of a similar ownership
by the Government of all the railways of the United Kingdom.
THE EXTENT OF GOVERNMENT INTERFELRENCE INVOLVED IN
TELEGRAPH OWVNERSHIP.
But there atre other aspects of the case whichl, when subjectel
to examination, would seem to still less commend themselves to
the approbation of the public. 
47
The proposed Governmental system, as has already been
pointed out, makes all other telegraph competition unlawful,
and prescribes punishment by a fine for every offense of trans mitting or receiving messages without official permission.  Now,
when we consider that within the circles of population and busi ness which employ the telegraph, its use is daily becoming more
common and fatnmiliar; that besides the public offices for the
transmission of messages from town to town and from city to
city, the telegraphic instrument has become the indispensable
adjunct of every police station, fire-alarm, stock and produce ex change, arid underwriters' agency for the reporting and relief of
vessels; that in the free hand of railway officials it regulates the
movement of every train, and in those of merchants and manu facturers it communicates between office of sale and places of
production; that it is already sold as a toy for children to play
with it, and that the improvements of every year tend more and
more to simplify and extend its operation and agency, does it
not become obvious that the proposed Government control of
such an instrumentality embraces a great many more interests
than those represented by the Post-office? and further, that to
keep that control exclusive will require a system of law and
espionage so foreign to our people that practically it can never
be executed?  Indeed, it is much the same thing as if the Government, for the reason that it desired to use the power of steam
for the exclusive transmission of the mails, sliould Iake its use
for all other purposes a matter subject to official permission. It
is possible that no injury might actually result therefrom to the
business of the country, but it is certain that such a system would
engender complications and a spirit entirely foreign to the atmosphere of this last halfof the nineteenth century. As a more specific illustration to the same effect, take the so-called "gold and
stock" telegraph of the city of New York.  Here is a system by
which upwards of 1,000 separate offices receive uninterrupted
messages during business hours relative to prices and sales, the
telegraph company furnishing the operators and the instruments,
and the officers of the " Stock Exchange" the information.  The
Government, however, under the new system, would furnish both
the information and the instrumentality, interpose its official representative into the center of the financial market, and make 
48
the character and quality of the information transmitted dependent on other considerations than the business interest imme- 
diately interested. If it be said that in Europe, where the telegraph is a Government monopoly, none of these complications
and embarrassments to business have been experienced, it may
be replied that in London the first effect of the Government
possession of the wires was to break up the use of the
telegraph by the Stock  Exchange;  and  that, furthermore,
nowhere in Europe, and not even in London, is there any such
use made of the telegraph as has come to prevail in the United
States.
A GOVERNMENT SYSTEM OF TELEGI'APH PROVOCATIVE OF ES     PIONAGE AND INTEPFERENCE WITH THE RIGHTS OF
CITIZENS.
The probability if not necessity, of a system of espionage, in
order to make the proposed exclusive control of the telegraph by
the Government effective, has been touched upon; but the subject is too important to be dismissed with an allusion. Necessarily the possession of the telegraph brings those whlo manage and
operate it into very close connection with the finances, the commerce, the press, the politics and the social relations of the
country.  Under the present system the pecuniary interests of
the companies imperatively restrain them from favoring any
party or interest. In addition to this there is always. the impending peril and threat of heavy money penalties, recoverable
at law, for any breach of trust or neglect of duty; and holy
often judgment is rendered for errors acknowledged by the
complainants to be unintentional the records of the courts abundantly testify. Hiow honorably, furthermore, the existing companies have discharged their trust to the public is proved by
the circumstance that, among all the reasons advanced for a
change of system, "breach of faith" has not been specifically
cited in a single instance. A Governmental system, on the
contrary, which, as in the Post-office, will assume no responsibility for the dishonesty, incompetence and mistakes of its
agents, and one, moreover, in whichl its agents know that their
station and salary, if not their permanance in office, is more
dependant on the favor of superiors than on good behavior, can 
49
but be provocative of carelessness and indifference.   Differing
fi'om communications by mail, there can be no secrets, except
through the use of ciphers, to those who operate the telegr;),IlJ,
and when responsibility is lessened the temptation to violate
privacy will most assuredly be increased. Are the American
people ready to accept the idea that all that passes over the
wvires, both at the time of transmission and ever thereafter, is
liable to be inspected and used by the changing officials who
may fill the departments at Washlington-for a paragrar)h in the
Government bill reads: " that the originals of all messages sliall
be transitlled to T'Vashinqton, to be preserved for reference?"  Are
the public willing to place further facilities in the way of the
exercise of the prerogative alreadv claimed to be possessed by
committees of Congress, of taking possession and using such records-a claim noways different in principle from the opening
and reading of letters intrusted to the Post-office-and for the
resistance to which the manliness and integrity of the officers of
the existing telegraphls have as yet proved the only effectual obstacle? On the Continent of Europe there is not a government
vwhich does not regard the telegraph as an adjunct of the police,
and which does not claim and, probably, exercise the power of
interfering with the transmission of any message which it may
regard as prejudicial to its own interests; and even in England,
liberal as her government is in comparison with those upon the
Continent, the right to delay or withhold telegrams for the
press has been claimed and exercised by her officials within a
very recent period. It should not be forgotten, furthermore,
that in the period of anti-slavery agitation the action of United
States officials was precisely similari, in respect to the transmission and delivery of the so-called "Abolition Documents" by
the mail, and that this action was justified and defended by
those who were then in control of the Post-office Department;
and also that within the last month we have had the curious
spectacle of the Postmaster-General-an American lawyeraskilng the Attorney-General of the United States-another
lawyer-lwhether it be permissible for postmasters to open
sealed letters, and detain them on suspicion that their contents
were mace up of something morally objectionable. One is
almost tempted to ask whether the official making the inquiry
4 
50
referred to, knows that we are living in the nineteenth century,
and that the form of government he helps to administer is a
Republic and not a despotism?
In an exciting political contest, like that which the country has
just passed through, can it be doubted that the telegraph, if in
possession of the Government, would be used  for political purposes-for the perpetuation of its own power, or for the assistance of its friends. And even if this should not be the case,
and the Government should keep itself immaculate, the very fact
that very great facilities for the use of the telegraph for partizan
purposes existed, and that detection was almost impossible,
would of itself be provocative of such a distrust as would limit
the use of the wires for political correspondence almost exclusively to those in sympathy with the then existing administration.
There is still another point in this connection well worthy
of public consideration.   Suppose,  in the heat and excitement of a national political contest, in which the result was
acknowledged to be close and doubtful, a general suspicion
should be excited —groundless or otherwise-that the telegraph
had been or was likely to be used by an administration
for its own political advantage,  would not, from  that very
moment, the utility, nay, even the continuance of the system
as a whole, be impaired or totally interrupted? A fine copper
wire, carried from the line down  a crack of the. telegraph
pole to the ground, effectually interrupts the current; trees can
fall conveniently in the woods in many different localities; and
although there are instruments vwhich will enable a boy sitting
in a central oficm  to determine within a half a mile the location of a break in a line of telegraphic wire stretching over
a distance of from two to three hundred miles and upwards,
there can be little inbformation got out of such instruments when
nothing remains of a circuit but numerous detached fragments.
At the outbreak of the war in 1861 it will be remembered that
the telegraph and express continued to operate in the hostile districts of the South long after the Post-office had ceased to discharge its functions; and simply because it was understood that
the agency in one case was Federal and official and in the other
private and inferentially neutral. 
51
FEDERAL TELEGRAPH OWNEPRSHIP AND CIVIL SERVICE
REFORM.
"Civil service reform" and the restraint of great "monied
monopolies" are things much talked of late, as among the neces  sities of our national situation; but what civil service reform or
any other beneficial reform is to be expected in national affairs,
if the Government is to be invested with the reach of power over
the business, wealth, politics and press of the country, as this
scheme contemplates? Or what the restraining influence on
monopolies, when the Government itself has become the mono polist, and has added to the patronage which it now possesses
all that pertains to the corporations which it proposes to digest
and assimilate? Is it too much to affirm that an administration
once in power, with such influences at its control and disposi tion, could make its tenure of existence commensurate only with
its inclination?
The true idea of civil service reform-the only one which will
ever prove truly effective-is to be found in carrying out the ori ginal theory, that the Federal Government should be restricted to
the most limited sphere of action consistent with its own safety
and existence, and in reducing the patronage at its disposal to the
minimum; and not in first increasing the amount of patronage
and then making rules to prevent abuse in its distribution-a
process very like praying to be led into temptation and to be
delivered at the same time from its influence. And yet, as
showing to how small an extent this idea finds popular acceptance, we have the Postmaster-General of the United States urging, as one principal reason why the Post-office should absorb the
telegraph, that, if it is not done, the telegraph, under private
management,  will absorb  the  Post-office.   The  assumption
of  the  Postmaster-General  is  in  the  first  place  wholly
unwarranted, for all the evidence, both in this country and in
England, is to the effect that correspondence by mail increases
nothwithstandcling the increase of telegraphic facilities, and
from the nature of the case necessarily must do so; the Western
Union Company, for example, notwithstanding its unsurpassed
facilities for using the wires, being the greatest single customer
for postage stamps in the United States; and secondly, if the
contrary were true, it does not seem to have occurred to the 
52
Postmaster-General, that to most people who have studied the
theory of our Government, and the dlangers to which it is exposed, any cause occurring naturally which would relieve the
Government from the Post-office, with its six million annual
deficit and forty-four thousand officials, would( be a thing to be
rejoiced over and not one to be deprecated.
THE WESTERN UNION  COMPANY AND THE SIGNAL SERVICE
BUREAU.
How strong is the tendency on the part of Government officials, disconnected with the business of the country, and not dependent on subserving the interests of the public for their continuance in office, to exercise power in an arbitrary and unwarranted manner, is strikingly exemplified in the course recently
pursued by what is known as the'- Signal Service Bureau" of
the Government.   This  service,  as first projected, was  in
the nature of a scientific experiment, to which the Western
UTtion Telegraph Company freely lent its resources in the absence of any stipulated compensation, at a time when Congress
had not sufficient faith to make an appropriation for the Bureau
adequate to its necessities.  As a scientific experiment, moreover, notwithstanding its results of interest and value, it mainly
still is; and yet one of the chief arguments advanced in support
of the Federal ownership of the telegraph (we quote the exact
words of an official  report) is, that "the interests of the Government demand the entire control of the wires for the proper transm-ission of the weather reports and other public business;'; thus
conclusively showing that in the  thoughts of Federal officers
the old monarchical principle has attained full recognition,
namely-that the interests of the rulers are to be considered
first, and those of the people last; and also that, in the judgment
of these same persons, it is of great deal more importance to send
over the country by the telegraph, in extended prolixity, the
latest statements of whatL the weathler was yesterday and what
the wind is likely to be to-day, taking possession, with inflexible
routine, if need be, of the only wire which conflagration, flood
or tempest have left serviceable, than that the great movements
of commerce, of business and of society, which control prices,
determine production and regulate the daily life of the nation, 
53
should be allowed to pulsate throughout thle whlole extent of a
continent with the minimum of delay and interruption.*   (For
further detais of the relations of the Sgyrat Service Bureau to
the telegraph, referevice is made to the appendix to this  7eport
marlted C.)
THiE RIGHTS OF STATES UNDER A FEDERAL MIONOPOLY OF THE
TELEGRAPIH.
Another question of interest sure to crowN out of the absorption
of the telegraph by the GovernmenLt would bo that of the tenure
and conditions under which real property, taken from the several
existing  telegraph  companies,  would  be  held  by  Federal
authority within the territorial limits and sovereignty of the
different States in which such property may  bo located.  The
17thll clause of the 8thl section of the 1st article of the Coristitution of the United States provides thatt Congress  shlall have
power to " exercise exclusive lgcy'lat'o?t " over the seat of Govern
* As the relations past and present of the Signal Service Bureau with the Western Union Telegraph Company are being used to excite prejudice against the
management of the telegraph system of the country by private agencies, attention
is here asked to the following succinct statement of the exact faces copied from the
Jourral of the Telegraph:
The Signal Service business was new and peculiar.  It required the exclusive
occupation of from twenty to thirty of tlhe, principal circuits, varying in length from
250 to 2, 50  mniles, three times in each twenlty-four hours, land the dropping of tlhe
mnessages transmitted thereon at each signal station.  In addition to tlhe occupation of these important circuits, extending throughout thle United States, for the
transmission of the wn-eathler reports, the Chief Signal Ollicer represented that it
was necessary that hlie should have at his disposal special circuits between  Wa.shington and New  York, WAashington  and  Cliicago, and Washington and  New
Orleans.  These circuits were required to be connected  with the Signal Office at
7.45 A. Mf., 4.4o P. AIM., and 11.45 P. MA, daily, and  at suchl other times as the
Signal Officer si.ould call for them.  The Sigrnal Service had been in operation but
a short tirnme, hlowever, when it -was ascertained that thllese special circuits iwere
being put to other uses than tlhe correction of errors in reports and other matters
connected with their transmission.  It was found tlhat they were being ta.ken for
purposes of display, as well as for the obtaining of trivial information, such as the
houes for the departure of trains, the hiring of operators, the procurement of vaccine matter for the prevenltion of small-pox, &c., &c., during the most crowded
hours of the day, iwhen they were most useful to the public, and, therefore, most
valuable to the company.
The authority of tlhe Postmaster-General to fix the telegraphic charges for Government messages, under the Act of 1866, was not denied; but the company did not
admit the right of that otfficer to contiol its wires, to direct vlwhen and how circuits
should be madle up, and to d(lictate the rottes by which messages should be sent to
their destination.  Nor did it admit the rilght of any officer of the Government to
order its operators to open their offices at unusual and inconvenient hours in the
morning, and to keep  them open at night until the permission of some other
Government  official to close them  had  been  obtained.   The position of  the 
54
ment, and a "like authority over all places purchased by the
consent of the Legislature of the State in which the same shall be,
"for the erection of forts, magazines, arsenals, dockyards and
other n,eedful buildings;" and in accordance with this provision
the Federal Government has never, heretofore, except in the
exercise of" war powers," assumed ownership or exclusive control over any property within any State, except by a consent
of the Legislature of such State, formally sought and( given.
It is also important  to note that the  words  "by the consent of the Legiscature of the Slate iez which the same shall be," were
unanimously inserted by the Fedcleral Constitutional Convention
on motion of Rufus King, of Massachusetts, and Gouverneur Morris, of Pennisylvania, to obviate an objection raised by Elbridge
Gerry, of Massachusetts, that without them the clause wsould
confer a power upon the central Government which milght prove
perilous to the rightful sovereignty, within their sphere, of the
States; an(i  that Mr. Madison, in one of the numbers of the
"F-ederalist," subsequently called attention to the great value of
this clause, as a check on the possible encroachment of the
Federal Government on the powers of the States.
ANow, in all the reports and bills advocating or providing for
the absorption of the telegraph by the Government, it seems to
be taken for granted that the Federal authorities are to be ern
company upon this point was clearly and unmistakably set forthi by the president
of the company in the proceedings of the Committee on Appropriations at Washington, larclh 29, 1 812, in the following words, which we quote frorm the report of
that committee:
" I have conceded the right of the United States to require anythilug to be sent
by telegraph to any body, any where within the reach of our wires, and at any time
that our offices are a-ccessible for that purpose.   I distitictly disclaimed the position
that there is any thling about the messages of the Signal Service thatexcludes them
from the provisions of the Act of 1866.  The Chief Signal Officer may file in the
Western Union Telegraph Office any number  of messages directing themrn to be
sent to as many stations as, in his judgment, it is necessary for the public service
that they should reach; and it is competent for the Postimaster-General to fix a rate
to every station in the United States to be applied to that business  but then and
there his authority in the premises ceases. [ take those messages and-exercising
the utmnost diligence, and being tle best judge as to which wires I shall employ to
do the work, and what is the most expeditious route between the initial and the
terminal stations, or as to how many of several routes shall together be emnployed
for that purpose-1 mutst deliver those messages at their destinations  But that
we shall keep ali office open all night at some places and open half the night at
other places, and shall open one at five o'clock in the morning, and another at six,
and another at seven, in order that they may all be in telegraphic communication
at the same instant, and that we shall connect the War Department or the Signal
Office with our main office, and permit its officers to control our wires, is a right
which, with great respect to the Postmaster-General, I deny to have been conferred under this Act." 
55
powered by Congress, not only to abrogate at once all State
charters under which all telegraph companies are now organized,
but also, and irrespective of State permission, to exercise absolute
control and ownership, with a concurrent exemption from all
taxation, over all real property at present belonging to existing
telegraph companies, and wherever situated. And, if this assumption be correct, it follows that either the Federal Government is, at this time, proposing to itself the alienation and
transfer from State jurisdiction of extensive properties in a
manner not authorized by the Constitution, contrary to all precedent, and wholly subversive of State sovereignty as heretofore
recognized; or, if the contrary be true, and no such procedure
is contemplated, that no system of Government telegraph can
practically go into operation without the consent of the several
States; and that the opposition of even one State would be
sufficient to prevent the scheme from becoming uniform. And,
as appertaining to this matter, attention is here asked to the
circumstance that, since the commencement of the present
session of Congress, a bill has been introduced into the Senate
which proposes to transfer the power of condemning private
property for public (" Fcdernl ") uses from the Legislatures of the
separate States to the Federal courts, and so relieve the general
Government from the humiliating necessity they are now under
of asking State authority for leave to appropriate State property.
THE REAL ISSUE INVOLVED IN THE PROPOSITION OF FEDERtAL
INTERFERENCE WITH THE TELEGRAPH.
Whether, therefore, under the scheme of Federal interference,
direct or indirect, the people are likely to obtain more efficient
and  cheaper  telegraphlic facilities; whether it is a necessity
for the Signal Service to control exclusively  the wires for its
own purposes, or whether the interests of any particular
company are likely to be injuriously affected, are all alike questions of minor importance; inasmuch as the real question involved, the one before which all others shrink into comparative
insignificance, is-Will the people consent to the inauguration of
a policy, on the part of the Federal Government, vwhich revives
the old Medimeval doctrine of the necessity of State interference
with the pursuits and business of the people, and every step in 
56
the carrying out of which is a departure from Republicanism
and anl approach towards despotism and monarchy?
THE TELEGRAPH AND THE ASSOCIATED PRESS.
One point more in connection with this review needs to be
noticed, and that is the assertion that the Western Union Telegraph Company, through its alliance with the "Associated
Press," constitutes a monopoly obstructive of newspaper enterprise and the free dissemination of news, and as such ought
to be abated.  How entirely unfounded, however, this is will
at once appear from the following statement:
The "Associated Press," in its inception, was an organization
having its headquarters in the City of New York, and composed
of representatives of the then principal newspapers of that city,
for the purpose of combining  their respective energies and
diverse facilities for the collection of news.  This was many
years ago, and in the days of the infancy of the telegraph. Subsequently, as railroad and telegraph facilities extended, and as
the benefit of cooperation became clearly apparent, a series of
similar organizations were formed-East, South, West, and on
the Pacific *-each one independent, but cc6perating in the collecting, exchanging and selling of liews.  In each case, furthermore, it was a matter of no difficulty in the outset, for any
journal, willing to incur its proportion of expense, to become a
member of one of these organizations; but afterwards, as the
privilege of membership became valuable, the several organizations, of their own volition, and with a view to their own interests, imposed restrictions on membership.
But with all this the telegraph has no concern, and it is difficult to see how the Government could interfere with the existing order of thiings in respect to this matter, even if it had as
full control of tile wires as the Postmaster-General claims that
it should exercise.  The existing telegraph companies, having
in view tihe amount and regularity of the work to be performed,
and also the interests of the public, contract with the several
* At present, beside the "New York Associated Press," there are in existence
the " New England Associated Press;" the "New York State;" the "Western;"
the "Northwestern;"  the "Kansas  & Missouri;" the "Soutlernl," and the
"California." 
57
organizations of the "Associated  Press"  to forward  their
despatches at what may be termed exceedingly low' wholesale prices;" but if any other association or company, being
free to organize, should apply for like privileges, there can be
no question but that they would be granted.   The grievance
complained of, therefore, if it really exists, rests upon the
"Associated Press," which, naturally enough, are unwilling
to share advantages, derived from long establishment in business, with every new comer and rival, and not with the telegraph which conveys their messages, any more than with the
railroad, the steamboat or the stage coach, which, in certain
cases, takes the place of the telegraph in performing similar
service.
As illustrating, furthermore, what the telegraph is, respectively, under a free and a Government system, attention is asked
to the fact that if, at the present time, we  were to compute all
the news matter delivered by the telegraph to the "press," as
separately transmitted to each paper, it would comprise an
aggregate equal to all the despatches of every kind sent over all the
telegraphs of the world, within a given period selected for comparison. When a calculation in respect to this matter was made
some years ago, it was shown that for the year 1866 the whole
number of messages transmitted in Continental Europe was
12,902,538, for which the gross receipts were $11,597,632.71;
but that, (luring the sarne year, the total number oqf messages
furnished to the newspapers of the United States (dividing the
total of words by twenty, and com)puting separately for each
paper), was 14,725,181, and the gross receipts for the same
$521,509.  And since this time the amount of "press" matter
transmitted by the American telegraphs has greatly increased;
the " Western Associated Press" alone taking aa average of 10,000
worsls for each of the 365 nights of the year.  As another illustratiori of the peculiarly American character of the "Associated
Press," and of the remarkable results that have flowved from the
facilities afforded to it by the telegraph under private management, reference may be made to the statement made before a
committee of Congress, in April, 1870, by the President of the
Western Union, "that he would undertake to produce an
American journal, printed a thousand miles from the Atlantic 
58
coast, that should contain more news from all parts of the
world in a single issue than could be gleaned from the London
Times in a week."   In a report from the II. R. Committee on
Appropriations to accompany Mr. Palmer's bill in favor of the
"Hubbard telegraph," December, 1872, the increase of "press"
messages in Great Britain since the absorption of the telegraph
by the Government is brought forward as an argument ill favor
of a change in the telegraphic service of the United States; and
yet in the same connection it is stated that the whole number of
"news" words sent by the Government telegraph, a year after
its establishment (or in 1870-'71), for the whole United Kingdom, was not quite 20,000 daily during the session of Par'liament, and nearly 15,000 daily during the remainder of the
year-a result, in comparison with what the "press" of the
United States have for years required of the telegraph, almost
too insignificant to be used as an illustration.
If the "Associatedcl Press," therefore, is a monopoly, it is a
monopoly in which nearly every reader of newspapers is an in.
direct participant and shareholder; and for whatever of benefit
has resulted from the system, which finds no parallel in Europe,
thle people of the United States "are indebted to the Government for the one negative quality of letting the'press' and the
telegraph alone."
THE IHUBBARD PROPOSITION.
The case of the Government having been thus considered, it
remains but to examine the proposition of the so-called "Postal
Telegraph," advocated by Mr. Hubbard. But in doing this a
singular difficulty is experienced of finding out exactly what the
"H ubbard proposition" really is; for its authors, although professing as far back as 1869 to understand most clearly the
nature of their recommendations to Congress, have caused
at least five separate and different bills, or bills in the nature of
amendments, to be reported-two in the course of a single
month (December, 1872), and four in the course of a single
year. In general, however, it may be said of them that, in
common  with  the  proposition  of  the  Postmaster-General,
the interference of the Government in a sphere of business
that does not pertain in any degree to the functions or
wvell-ordering of a Republican State, is the thing primarily 
59
sought for. But apart from this circumstance, which alone
ought to furnish a sufficient reason for uncompromising opposi tion on the part of all those who believe in holding the Federal
Government strictly to its original basis, the simpl)le, impartial
statement of the proposal of Mr. Hubbard would seem of itself
to constitute the most  unanswerable  argument  against  its
endorsement and acceptance that could possibly be presented.
Mr. Hubbard says, in the outset, to the Government, if you
will assume all the expenses of the service, other than what
depend on the mere operating and maintaining of the wires namely, offices and their equipments suitable and sufficient for
operators, instruments and batteries at all the stations; all clerk,
bookkeeper and messenger service; all fuel, lights, stamps,
paper* and envelopes; allow us to use the various Post-office
facilities we may require; relieve us from all State and local
taxes; guarantee ten per cent. per annum on all the stock of the
company, provided the receipts be sufficient, and give in addition a bonus of one million ten per cent. stock for what are
pleasantly termed the expenses of "organizing and connecting
wires," then the new company will, in turn, contract with the
Government to transmit messages for the public at rates somewhat cheaper-" priority dispatches" excepted-than are charged
at present. That relieved from such burdens, and endowed
with such privileges, Mr. Hubbard and his associates could
afford to make good his averment in respect to charges seems
not improbable; but that the Western Union and other existing telegraph companies, if endowed with equal privileges,
would be willing to guarantee equal or greater reductions in
rates may also he taken for granted. Mr. Hubbard, therefore, would seem to be debarred in the outset from claiming
that his proposed organization can offer to the Government any
more favorable basis for negotiating for the establishment of
cheaper rates than would be offered by the organizations already
performing service.  He, therefore, in reality, asks the Government to take a position which no free government ought ever
to allow itself to be placed in-namely, that of deciding between
* At the present time the Western Union Company alone requires 500 reams
of paper per month of a single description, to meet the consumption of' tie
forms upon which the messages transmitted over its wires are written. 
60
two private parties, representing equally private interests, whlich
one it will favor and which it will crush. Nay, more, he calls
upon the Government to go further, and place itself in opposition to those companies and organizations who, when the telegraph business was an experiment, undertook the risk, and
extend its favor and bounty to other parties, who, lOwV that
success has been won, are willing to enter into the possession
and enjoyment of other men's labor. If this be justice, it is of a
quality more honored in the breach than in the observance.
It is intimated that the facilities asked of the Government,
under Msir. Hubbard's proposition, are of a kind which will not
entail much additional expenditure, and that the offices and
clerks already required by the Post-office may, to a great extent,
be made available for telegraphic purposes; but this plea is
almost too specious to require serious  consideration.   The
Government of the United States performs no service except at
a much greater expense than would be incurred under similar
circumstances by individuals, and all the instincts, precedents
and predispositions of those who serve it are in a direction contrary to the practice of eeonomy I If there is, therefore, as
is constantly maintained, any real and true intent to put an end
to the constantly increasing buirden of national expenditures,
there must be an inflexible determination on the part of those
who control the Government to avoid every new occasion or
pretext for expenditure.
Again, the bill of Mr. Ilubbard contains a provision which,
as has been already shown in discussing the Government propositionI, firees the company chartered by it from just that
responsibility to the public which it is indispensable should
exist to ensure against indifference, breach of trust and neglect;
inasmuch as, in making the company an agent of the United
States, it gives them the same immunity from the payment of
damages which is now possessed by the Post-officee in the case of
the non-delivery of letters intrusted to the mails. It also frees
the company from all risk of defalcation and embezzlement,
and transfers the same to the Government through a provision
that the Post-office Department is to be the agent to whom, in
the first instance, all payments for the transmission of messages
are to be made by means of stamps. 
61
It is also interesting to note that this proposed charter of the
so-calledcl Postal Telegraph Company, while professing to be in
the interests of the great general public, and in opposition
to everything like monopoly, in reality, but as it were covertly,
provides for the creation of a monopoly of the most offensive
and objectionable  character; inasmuch  as it authorizes  the
putting aside of the ordinary messages of the public-whatever
may be the pressure of their necessity —and the giving of
priority of transmission to such other messages (s may be
registered and pay double.  It seems clear that the effect of this
woull be to place the wires at all times at the exclusive disposition of those to whom  immediate  dispatch  was an item of
greater consideration than expense; and if, as not unlikely, this
should prove to be the case in respect to the majority of business and social messages, then the general result of this provision
would be to raise the general average cost of telegraphic communication, and so completely neutralize and defeat the alleged
object of the Hubbard proposition. It has, therefore, been not
unaptly suggested that the title of the "Postal Telegrapli " bill
sl]ould( be so amended as to read, "an actfor tle increasiig of the
2-ates ofcorrespondeace by the telegraph."
But a more objectionable feature of the proposed "Postal Telegraph" bill, and one which, whether its authors so intend it or not,
gives tothe whole scheme the aspect of a device for the direct
pecuniary enrichment of those concerned, is the provision for
the issue of stock, to the extent of one million of dollars, to defray the expenses of organization and the connection of the lines
of the new company with the various postal stations   Now, as
there are no provisions in the bill which require the contribution
of any money as the basis of the issue of this stock, or which regulate its apportionment; and as the legitimate expenses for organization must be but trifling; and as the creation of additional
stock is expressly authorized to defray the expenses of all lines
and wires purchased or constructed, the inference is unavoidable that the million of dollars in question is to be divided
among  the incorporators or other persons whose services in
behalf of the charter may be considered as desirable. And as
this special stock is to be entitled to receive dividends out of the
receipts by the Government for the transmission of messages, at 
62
the rate of tenl per cent. per annum, it followvs that its authorization by Congress would be equivalent to imposing a tax, in perpetuity, of $100,000 per annum on the American people using the
telegraph, and all for the exclusive purpose of giving a bonus to
the incorporators named in the bill, as an inducement for them
to engage in a business in which they have now no investment,
and in the conduct of which no experience.
PREPAYMENT BY STAMPS.
It is to be observed that the bill of MAr. Hubbard, and also
that advocated by the Government, provide, as a new and essential feature, for the prepayment of all telegraphic messages; and
that, too, as in the case of letters, through the agency of stamps.
At first thought these provisions strike one as likely to prove
most effective and desirable; but a little consideration will reveal
the fallacy contained in them.  Thus, a very large proportion of
the messages transmitted by telegraph are in the nature of questions, in respect to which the interest vests exclusively with the
inquirer. A, for example, living ill New York, asks B, in Chicago, if he knows whether ( is in his city; if D is good for a
loan, or if E wNill grant an interview, or speak at a political meeting.  If B should be required to pay for his answer, in whichi he
has little or no interest beyond that growing out of social relations, it is very probable that the question would not be put in
the first instance, and almost certain that the answer would not
be returned in the second. If A agrees to pay for B's answer when
received at the office in Chicago, the New York office must either
give him credit in Chicago or require a deposit in advance for the
unknown cost of B's message when received, and afterwards, by
some complicated system of accounts, establish a clearing between
the office in New York and the office in Chicago. The result
would probably be that a not inconsiderable part of the business
now intrusted to the wires would be done away with, or would
be found to involve an element of cost and trouble which has
not been taken into consideration.  And so again in respect to
the use of stamps. In a country of limited extent, as England
or Belgiutim, where there is one rate per word for all d(listainces,
stamps may be made available; but in the United States, where,
in adcliti)un to tlc endless variation in the number of words, 
63
messages of the same number of words are to pay differently for
different circuits, and differently by day and by night, the number of stamps that would be required and the calculation and
adjustment made necessary, would be a matter of no little expense to the Government and perplexity to the citizen. And
as some indication of what this item of stamp expenditure is
likely to amount to, it may be stated, in the far more limited
sphere of the Internal Revenue, the whole number ordered for
that office for the year 1868 was 367,536,332.
RELATION OF THE VOLUM3E OF TELEGRAPHIC BUSINESS TO THE
AGGREGATE OF TELEGRAPHIC EXPENDITURES.
There is another fallacy involved in the idea of reduced tele graphic tariffs, which the advocates of the "Government" and
" Hubbard" propositions have alike endeavored to make popu lar, and that is, that the business of the telegraph follows in gen eral the same law as the business of the Post-office; and that
a reduction of the tariff on telegraph messages to one half, one
third, or, as Mr. Gratz Brown claimed in 1865, to one twentieth
of the present average rates, would be attended with such an
increase of business as to afford the maximum of profits in proportion to the investment. If this be true, it further follows that
the Government or Mr. Hubbard, in proposing much lower rates
than are now charged, are not only perfectly sure of the basis
on which they propose to operate it, but also that the management of the existing companies is so short sighted and penurious
that it prefers to adopt the one policy which brings with it the
smallest ratio of profit with the minimum of satisfaction to the
public.  Now, that a reduction of rates in telegraphing tends to
stimulate business, and that, under very low tariffs, the increase
in the number of messages offered for transmission is sometl)ing
enormous, cannot be disputed; but a careful examination of the
telegraphic statistics of different countries, which within a recent
period only have been collected and tabulated, brings to light
this fact, also, that in any large system of lines, after a certain
volume of business has been attained, an increase in the number
of messages is always followed by an increase of expenditures,
which, though not fully proportioned to the increase of business,
still approximiates it clos.ly.  That this, furthermore, must be 
64
so, will appear evident, when it is remembered that the business
of telegraphing is closely akin to the business of writing letters,
and that "?f written letters were paid for by the word, increase of
ccrresponcleice wotll clot materially r?educe their cost."  Thus, for
example, in operating the telegraph, each message must be first
bookled and accounted for; tlhen, in transmitting, it must  be
spelt out letter by letter, and so, to all intents and purposes, be
rewritten, and then rewritten a third time by the operator who
receives it.  During the time of its transmission it monopolizes
the use of one wire and the labor of the operators who work it,
and afterwards of the clerkl who records the despatch and the
messenger who delivers it.  On  the other hand, in ordinary
business, it need require no more time to sell a large bill of goods
than a small one, or to record the sale and collect the payment in the one case than in the other; and, in like manner, a
locomotive or a ship wliich can transport one hundred passengers, or one ton of mail bags, can generally, without any material
increase of expense, perform double the work if found necessary.
If there were, therefore, no statistical information whatever
available concerningi the peculiar work of the telegraph, it would
be only a common sense inference that the benefit resulting
from a great quantity of operations must be less in telegraphy
than inll almost any other industry.
But exact statistics on this subject are, as already stated, not
wvanting; and an examination of those of almost every country
in Europe shows that the recent great increase in the business of
the telegraph there experienced,  lwhichl  the advocates of the
"Government" and " Hubbard" propositions like to dwell upon
as the result to be especially sought for in the United States, has
only been attained through the adoption of rates so utterly
destructive of profit that only Governments vlwhich can readily
resort to taxation to make up a deficit can afford, under such
circumstances, to own  and manage  a telegraph.   Thus, for
example, a comparison of the telegraphic statistics of North
Germany, Bavaria, Belgium, Holland and Denmark, for the years
1865 andl 1870, affords the following striking and instructive
results:
NORTHII GER}aANY.-Increase in the number of messages, 259
per cent.; increase of receipts, 76 per cent.; increase of expenditures, 83 per cent. 
65
BAVARIA.-Increase of messages, 63 per cent.; increase of
receipts, 17 per cent.; increase of expenditures, 149 per cent.
BELGIUMf.-Increase of messages, 252 per cent.; increase of
receipts, 79 per cent.; increase of expenditures, 61 per cent.
HOLLAND.-Increase of messages, 142 per cent.; increase of
receipts, 17 per cent.; increase of expenditures, 62 per cent.
DENMARK.-Increase of messages, 149 per cent.; increase of
receipts, 19 per cent.; increase of expenditures, 38 per cent.
In like manner an examination of the statistics of the business
of the Western Union Company also shows that, although 137, 191 miles of wire were operated and 12,444,000 messages sent
in 1872, as compared with 85,291 miles and 5,879,000 messages
in 1867, the net receipts of the Company from all sources for
1872 were only $165,303 in excess of those of 1867.
The public, therefore, can readily understand how it is that a
majority of all the telegraph systems of the States of Europe,
notwithstanding great economy and efficiency in management,
continue to show an annual deficit. Neither ought it to be a
matter of surprise that the most eminent of telegraph authorities
in Europe have, as the result of their most recent investigations,
entirely reversed the opinions which they originally regarded as
unassailable.  Thus, in his recent work, "Statistics of the Telegrapb," first presented to the Statistical Society of London in
June, 1872, Sir James Anderson says: "Like every one else, I
entertained the belief at one time that a reduced tariff was the hey to
success in private telegraph enterprise," and "that this success was
not realized in practice was disappointing in the extremne." Referring, also, to what are called in Europe "international telegrams,"
which correspond with the telegrams transmitted in this country
between the States, he says: " However much every one engaged
in the control of telegraphic enterprise may desire to reduce the tariff
and increase the correspondence, they should not forget that this
'ncrease, although certain, will decrease the revenue," and again,
"that a reduction of tariff leads to a diminution of the net product,
evenr under the most favorable conditions."
And again, M. Jamar, Minister of Public Works in Belgium,
in a recent report, reviewing the experience of the telegraph in
that country under twenty years of Government control,* announces the conclusions arrived at as follows:
* Annals of the Public Works of Belgium, vol. xxviii.
5 
66
"That in Belgium, notwithstanding the existence of the most
favorable circumstances, all reduction2 of tariff has resulted in a
diminuttion of 2tet product."  Sir James Anderson  and M. Jamar
also agree that the results of the telegraphic experience of
Europe establishes this further fact, that telegrams relating to
commercial and business matters (which constitute the bulk of
the telegraphic correspondence of the United States) follow in
their movement "the variations of political or financial conditions," and are "only influenced in a secondary degree by the
alterations of the tariff."
Now, if these conclusions be correct, and Sir James Anderson, of England, anl M. Jamar, of Belgium, unite in saying that
no data can be found to refute them, it therefore follows that
the establishment, through the direct or indirect agency of the
Federal Government, of a greatly reduced system of telegraphic
tariffs, is something which is sure to have an adjunct in some
form  of additional Federal taxation-a  taxation, moreover,
which is not to be limited to and paid by the comparatively
small number of people who use the telegraph, but is to be distributed over a population of which not one thirtieth part have
any direct interest in the subject.
Finally, while there are very many precedents for a governmnent extending its sphere of business and influence so fr as
to include the ownership of railroads, telegraphs and express
agencies; and many also for the ordaining of how men shall
live, what they shall wear, what church attend, and where they
shall trade, there are few or none to be found where a government has entered into a partnership with private individuals
for the carrying on of business, in which all the loss and responsibility is to accrue to the party of the first part, and all the
pecuniary profit to the party of the second part; and in which a
divided responsibility in the management is almost certain to
result in unsatisfactory conclusions.
If we accept, also, the statement of its special advocates,
the " Hubbard proposition" is, after all, but  the "Government proposition" in disguise; for the report made by the Select
Committee of the House in 1870, in favor of the "Postal Telegraph," after demonstrating by a great array of fact and
argument the impolicy and anti-Republican character of the 
67
"Government scheme" for absorbing and working the telegraph,
goes on to speak of the Hiubbard proposition as follows: "The
system is a step toward the governmental; it will introduce the
telegraph into the post-offices, and if, after trial, the public good
requires it, the lines can be purchased by the Government at an
appraised value."
Furthermore, as it is represented alike by the advocates of the
Government plan for absorbing the telegraph, and by the friends
of the partnership or postal telegraph, that the Federal Government cannot have the facilities which it needs under the existing
system, and that its demands for service have been treated most
arrogantly, attention is asked to the following extract of a letter
addressed by the President of the Western Union Telegraph Company to the Chairman of the House Committee on Appropriations-the particular subject matter being a difference of opinion
between the Signal Service Bureau and the Western Union
Company, in reference to the compensation to be awarded to the
former for the performance of services:
"NEW YORK, April 12thi, 1872.
"I beg to offer the following suggestion: That authority be
given to the President of the United States, in the event of the
failure of the Signal Office to secure, by negotiation, terms
and conditions deemed reasonable for the transmission of the
weather reports and the other services connected therewith, to
appoint an arbitrator on behalf of the United States, to meet
one appointed by the telegraph company; the two thus
appointed to have authority to choose an umpire, in case of disagreement. The decision of the arbitrators to be binding for
the fiscal year 1872-'73, and for that portion of the current year
beyond the expiration of the present arrangement.
"I would be pleased to have this letter made a part of the
record.
"I am, very respectfully, etc.,
"WILLIAM ORTON, President.
" Hon. JAMES A. GARFIELD,
"Chairman, etc., IVas7hington, D. C."
NOTE.-Since the above was written, the advocates of the
"tHubbard Proposition," apparently foreseeing that the public 
Cs
would not be likely to look with favor on the creation and distri bution of the one million ten per cent. stock for the purpose
of "organizing" and " connecting wires;" nor upon the system
of "double paid priority messages," have caused (Dec. 19th,
1872) two new bills to be reported-one in the Senate and one
in the HIouse-in both of which the above provisions are omitted and the followving new ones substituted:
Fib8st.-The capital of the "Postal Telegraph" Company is
fixed at $20,000,000, to be paid up in cash as required; but as
a report from the Committee on Appropriations (Hi. R.) accompanying this bill states that the expenditures required to carry
out the scheme of a "Government Telegraph," occupying substantially the same field as the " Postal Telegraph," would involve the necessity for appropriations or a bonded indebtedness
estimated at least at " $75,000,000," it is difficult to resist the
inference that the advocates of the "Postal Telegraph" have some
other object primarily in view than the accommodation of the
public.
,Second.-The charge for the transmission of telegrams is to
be one cent a word for each circuit through which it shall be
transmitted; two hundred and fifty miles to constitute a circuit
for all distances not exceeding five hundred miles; and five
hundred miles for all greater distances.  From the receipts from
the sale of telegraph stamps the Postmaster-General is required
to deduct five cents for each telegram transmitted-irrespective
of the amount paid for it-to defray the Government expenditures for doing everything except operating and maintaining
the lines, and then pay over the remainder to the postal company as full compensation for their share of the work.  Again,
in all previous bills establishing the "Postal Telegraphl," it is
assunmed that the stock of the company is to receive an annual
interest of ten per cent., and it is fair to suppose, although no
rate of interest is mentioned in the new bills, that the expectant
investors of capital under them still hold to such anticipation.
But if this be so, it is difficult, looking at the scheme from a
merely financial standpoint, to see why the Federal Government,
which can obtain money in abundance at 6 per cent., and expects to borrow at no distant day at 4 or 41 per cent., should, 
69
with the ostensible object of giving the public cheap telegraphic
facilities, contract with a private company for the investment of
capital, on conditions which are manifestly expected to afford,
out of the tariff imposed on messages, and through the aid of
Government facilities, a rate of interest of from four to six per
cent. greater.
Third.-A telegraphic stamp of five cents ix required to be affixed to every telegram not transmitted by the lines of the
Postal Telegraph Company-Government messages, and messages transmitted on lines maintained solely for private use, excepted; and that herein is to be found the "meat and marrow"
of the new proposition will appear evident from the following
considerations: Thus, in the bill representing the scheme of
the Government, it is expressly provided (and in accordance
with the Constitution) that all private or corporate telegraphic
property taken by the Federal authorities shall be paid for on appraisement; and in all the former bills establishing the "Postal
Telegraph" it has been apparently assumed that all other conmpanies might continue to operate their lines, provided they were
able to do so, in competition with such rates as the Postal Telegraph Company, with a large share of its expenses assumed by
the Government, might see fit to establish. But in the newv
bills the arbitrary tax of five cents imposed on each message
transmitted by all other companies, and from which the messages of the Postal Company are to be exempt, creates an instrumentality which will effectually enable the Postal Company to
crush out all other companies without making compensation,
and virtually enables them to say to its rivals, "Unite with us,
and put in your property on our terms, or wind up your affairs
as speedily as possible, and leave it to us to administer upon
your effects." If, however, there is yet anything of legal force
in the old maxim, "Quod facit per alum facit per se," the Federal Government, in authorizing such indirect confiscation of
private property, could not escape being involved (in a moral
liability, at least) for heavy damages; but the proposition for
destroying by Federal taxation private property under one
ownership for the benefit of similar property under similar
ownership is not thereby rendered any less extraordinary and
despotic. 
70
CONCLUSION.
In thus submitting the results of my investigations, I would
take occasion to remark that the whole case has been so often
and so fully argued and reviewed by committees of Congress,
the press, and the special advocates of the several involved
interests, that little of originality can attach to any new presentation. I have, therefore, aimed at nothing more than to present
the main facts of the case in such a way as will facilitate their
clear and easy comprehension. And when that comprehension
is attained to by the people, there can be little doubt on which
side the friends of a truly free Government and the opponents
of official centralization and interference will make haste to
array themselves.
I am, yours most respectfully,
DAVID A. WELLS. 
APPENDIX 
The following important correspondence between the Post-office
Department and the President of the Western Union Telegraph Company, detailing the statistics of the business of the latter for the year
1872, was not included in the report of the Postmaster-General:
Executive Office,
WESTERN UNION TELEGRAPH COIPANY,
NEW YORK, October 19, 1872.
HON. J. A. J. CRESWELL,
Postmaster-General, Washington, 1). C.
SIR-Referring to your communication of date August 26, 1872,
I now have to submit the following information, in reply to your
inquiries.
On the first dclay of July, 1872, this Company controlled and
operated 62,032 miles of line, and 137,190 miles of wire. Of this
amount 1,212 miles of line and 2,742 miles of wire are in New
Brunswick and Nova Scotia, and 512 miles of line, bearing one
wire, in British Columbia; leaving 60,308 miles of line and 133,936
miles of wire in the United States. The number of offices operated
on that day was 5,237.
During the year ending June 30, 1872, there were sent
10,271,935 paid messages.
660,203 partially paid and free messages, and
1,512,361 press messages.
The number of press messages is an estimate made by dividing
the number of words sent for the press by thirty, which is taken
as about the average number of words in ordinary commercial and
social messages.
The number of messages stated does not include messages sent
by and for railroad companies between stations on the line of the
roads, nor service messages of the Telegraph Company. Of these
two classes no record is kept. The use of one wire on many important railroad routes is almost wholly devoted to the transmission of railroad messages.
The gross receipts of the Company for the year ending June 30,
1872, were $8,457,095.77, and the gross expenses, exclusive of
construction, were $5,666,863.16.
I have the honor to be, with great respect,
Your obedient servant,
WILLIAM ORTON,
President.
A.
(Signed,) 
72
Executive Office,
WESTERN UNION TELEGRAPH COMPANY,
NEW YORK, October 28, 1872.
HON. J. W. MAARSHALL,
Acti?ig Postmaster-General,
Washington, D. C.
SIR-I have had the honor to receive your communication of
date October 25thl, inquiring as to what portion of the gross
receipts of the company, during the last fiscal year, was on account
of press dispatches, and what proportion of the gross expenses are
charged to salaries and maintenance, respectively, and whether
any part of said sum is on account of payments made for leases of
lines of other companies.
In reply thereto, I have to say that the gross revenue was
derived as fcllows:
For transmission of messages................................. $7,040,803.53
I" " press reports.............................. 979,083.71
1"       "  Imarket reports...........................  107,579.72
"        " 1     weather reports............................ 137,522.88
From all other sources....................................... 192,105.93
Total receipts.................................... $8,457,095.77
The disbursements were as follows:
Paid other lines.............................................
Refunded and uncollectible....................................
Salaries....................................................
Messengers.................................................
Printing and Stationery.....................................
Rent, light and fuel..........................................
Office furniture, fixtures and repairing..........................
Instruments and battery......................................
Claims for damages and law expenses.........................
Taxes........................................................
Repair and maintenance of lines...............................
Rent of lines leased..........................................
Miscellaneous.................................................5
$5,666,863.16
It is probable that the receipts for press reports were slightly in
excess of the amount stated, as the separation is made during the
month by reinspection of the messages, and some press messages
may be overlooked.
$160,514.74
. 59,881.01
3,058,363.22
293,908.30
166,196.24
328,999.48
116,345.62
240,991.02
41,530.68
45,445.21
930,005.17
150,082.42
,4,600.05
I 
73
The receipts for market reports are not paid by the press.
Those "from other sources" include premium on gold received
from the tolls accruing to the company on cable business, subsidies, commissions on money transfers, and dividends on stock held
by the company.
Tile disbursement for messenger service is almost entirely for
salaries, and the amount paid for repair and maintenance of lines
includes the salaries of the repairers.
I am, very respectfully, etc.,
WILLIAMI ORTON,
President.
(Signed), 
APPE-NDIX
STATISTICS OF TIIE OPERATION OF GOVERWNME
The following Table, copied from the Journal of the Telegraph, gives the results of the operation
The receipts and expenses of Great Britain and Ireland are for fourteen months.  These figures show th.
of transmitting the messages averaged 63 cents.
Total Numbe
of Messages
Sent.
5,272,321
492.188
1,592,079
313,245
744,070
2,264,558
1,289,155
1,813,320
364.009
1,356,812
165,391
42.3,341
2,301,679
494,1 1 1
1,329,0G1
457,993
10,084,020
41,000
512,648
Number of
O.ices of
le riva te
Companies.
1,327
326
228
75
29
363
241
463
47
115
9
213
187
63
45
1,780
537
North Germany.........                           
Bavaria................ 
]3elgium................
Delmark...............
Spain...................
Austria................
Hungary...............
Italy...................                         
Norway................
Holland................
Portugal................                         
Roumania..............
Russia..................
Sweden................
Switzerland.............
Turkey.................
Great Britain and Ireland.
Indlo-European..........
British India............
Totals..................167,055       439,468        7,248     6,048   31,311,001
I
Number of
Government
Oflces.
1,078
317
217
75
170
536
246
600
95
119
109
58
491
99
483
348
2,000
10
197
Miles (f Line. Miles of W~ire.
15,049
4,040
2,696
1,217
7,204
14,021
5,908
10,514
3,831
1,856
1,793
2,061
2G,987
4.048
3,203
15,827
29, 746
2,115
14.939
50,291
12,832
8,788
3,181
16,489
26,643
17,426
30,906
5,606
6,297
3,347
2,713
53,649
10,089
6,866
26,381
130,008
3,418
24,538 
APPENDIX C.
EXECUTIVE OFFICE,
NEW YORK, October 15, 1872.
BRIG. GENERAL ALBERT J. MYER,
Chief Signal Officer, &c., &c., War Department,
Washington, I). C.
SIR-I have the honor to acknowledge the receipt of your communication of September 12, 1872. Absence from the city, and
the unusual pressure of business preceding and incident to the
annual meetings of the Stockholders and Directors of the Company,
including the preparation of my Annual Report, have prevented an
earlier reply.
My letter of August 28, 1872, presented the views of the Company concerning the arrangement made with the United States in
May, 1871, and which expired June 30, 1872; it also sought to
establish the justice of the claim of the Company for compensation for services rendered the Signal Office under that arrangement
during the last nine months of the term.
A careful examination of the reply has failed to discover therein
any indication that the claim is considered  unjust or inconsistent
with the original and supplementary agreements made with the
representatives of the United  States.   It is inferred, therefore,
that the accounts have been approved,  and that the  statement,
"the office is authorized to direct the settlement of them,"' is
intended to be understood that the office has directed them to be paid.
Much gratification has been derived from the perusal of the
somewhat elaborate history of the first arrangement made between
the Signal Office and the Company, which you have taken the
trouble to give; and although the relation of events anterior to
MSIay, 1871, with the matters of account and claims for payment for
services. rendered by the Company from October 1, 1871, to July
1, 1S72, is scarcely apparent, yet it is agreeable to the Managers
of the Company to learn that the views of the Signal Office, heretofore expressed, concerning their action in tendering the free
use of the Company's lines, and all other facilities at their disposal
required to inaugurate the Weather Reports, at a time when there
was no appropriation from which compensation could be made,
are unchanged.
There is, however, a liability to draw an erroneous inference from
the statement referring to this arrangement, which seems to attribute the action of the Company to its inability to fix in ad
... 
76
vance a proper  rate  of compensation for  this service.   It was
represented to the Company that, before the Signal Office could
make use of the Telegraph, instruments must be procured and
other facilities provided, and expenses incurred which might exhaust the appropriation; it was, therefore, impossible to say what
sum, or if any sum at all would be available for the payment
of telegraphic service.   It was the suggestion of the President of
the Company that a preliminary service of four months be'undertaken-not merely for the purpose of ascertaining the cost of
such service, but because: first, the Chief Signal Officer expected
to require all the funds at his disposal for the purchase of apparatus, and for other necessary expenses preliminary to the
transmission of telegraphic reports; and, secondly,  the period of
four months would expire with the Congress which would be in
session during three months of the term, and which it was expected
would be influenced by the results of the experiment to appropriate such a sum  as "future negotiation" should show was necessary. It subsequently appeared that the Chief Signal Officer
was correct in assuming that no part of the appropriation under
his control, when the experimental term commenced, was available
for the payment of telegraphic charges.
But the expectation of the Company that, during the period of
four months for which it had stipulated to make no charge, some
effort would be made by the Chief Signal Officer to negotiate an
arrangement for the future was not realized.   The  Signal Office
made no application to the Company for "future negotiation" on
any basis during that term.   "The  public spirit which prompted
the perfectly fair and liberal proposition made at that time on
the part of the Company" was disappointed at its reception by
the Signal Office, and the gratification which its more generous
recognition has subsequently afforded is not quite complete, because of the fact that it comes in reply to the repeated applications of the Company for payment of claims for service rendered,
the justice of which has not been denied, although the claims
still remain unpaid.
It seems necessary at this point to state that, in order to relieve the President of the Company as far as possible from the
merely clerical labor of preparing the papers necessary for the
inauguration of the Weather Reports, the Chief Signal Officer
kindly took that labor upon  himself.   As compensation  for the
service to be rendered during  "he experimental term was  not expected, and the material stipulation was that made by the Company agreeing to make no claim for service, except for any
balance of the appropriation which might remain after all other
charges had been paid, the President did not hesitate to sign the
memorandum prepared by the Chief Signal Officer, notwithstanding it contained what were deemed immaterial stipulations, which
it was well known to all connected with the Telegraph could
not be literally performed. If it was "the essential part of the
understanding"  of the Chief Signal Officer, in the preparation of
the memorandum which he submitted to the President of the 
77
Company for execution, after the use of the Company's wires had
been  tendered, that the experiment  was  merely to procure data
"as  a basis for future negotiation," it is  to  be  regretted that
the President of the Company did not then-as he does not now
-so understand it. The Company did not intend to stipulate to
inaucrgulrate a new system of accounts; nor was it expected that
the evidence whicll its records afford, and the opinions of its most
experienced managers in  addition thereto, would  be wholly  disregarded in any subsequent consideration of the value of the service rendered the Signal  Office.
The experience of the first two months demonstrated to the managers of the Company that the service they had undertaken for
the Signal Office was so burdensome and expensive, and so damaging in its effect upon other business, that no ordinary rate of
compensation would enable them to continue it without serious
loss.  It occurred to them to  suggest that possibly the compensation might be increased without cost to the United States  by  an
arrangement  which should give  the Company  all the telegraphic
business of the  several departments.  Such an  arringement  did
not then,, nor  does it now, seem  to  be  an  improper  one  to
suggest or to make.  The  ordinary business of the Government,
at  the  rates  then paid, afforded a profit to  the Company.  The
Signal PReports would  not afford a profit at  the same  rates, because of the more difficult and expensive character of the service. Besid(les, there was a manifest injustice in putting an onerous and profitless service upon this Company  by one  department
of the Government  while another was  giving  profitable business
to our competitors.  The justice and propriety of this view of the case
was subsequently recognized fully, not only  by  the Chief Signal
Officer, in respect to the business of his office, but by his professional adviser, the Honorable William. Whiting.  It was understood, as a  part of the arrangement made  iln Iay, ISZI, in the
negotiation of which the Chief Signal Officer had the a)le assistance of iMr. Whiting, that the Signal Reports were  to  be given
exclusively to this ('ompany; and, also, that the telegraph business
of all the departments was to be diverted to our lines, so far as this
could be done, by representing to the officials of those departments
the character and value of the services which the Company had then
undertaken to render for the United States.  This was all that was
asked to be or that could be done in that direction in the absence
of special authority.
The assumption that the action, or rather the non.-action, of the
Signal Office, upon  the suggestion of the Company  that a portion
of the compensation for future service should be  made  by  giving
to it the ordinary business of the other departmnents, contributed
to "the difficulties which made necessary the conferences terminating in the Spring of 1871" is entirely erroneous.  Those  difficutlties resulted from other causes altogether, and those over which
the Company  h.-d  no  control.  The  fact that no  attempt  was
made to negotiate with the Company, during the experimental term,
for a continuation of the service beyond that term, occasioned 
78
surprise;  but  an  explanation  was  soon  found  in  information
which reached the Company that the influence of the Signal
Office was being exerted upon Congress to procure the enactment of
a proviso to the bill making appropriations for the Weather  RPeports, which  indicated an expectation on the part of the Signal
Office that the Company could be compelled to continue the
service without negotiation, and to accept such compensation as
the Signal Office should advise the Postmaster-General was sufficient.   The  fact  that  this  proviso  became  a  law  seemed  to
establish the correctness of the informatidh which had been
received concerning it.
It thus appears that the first return received for "the public
spirit  which prompted  the perfectly  fair and liberal  proposition
made by the Company" to enable the Weather Reports to be
inaugurated, was-not an inquiry to ascertain the views of the
Company as to the cost of the service, as the basis of negotiation for its continuation, but the enactment of a law, upon ex
parte representations, without notice to the Company, and without opportunity to be heard before Congress, which seemed to
be designed to enable the Signal Office to compel the performance of the service in future upon such terms as it might see
fit to impose.
The repeated efforts of the Company to ascertain the views
of the Signal Office, as to service beyond the experimental term,
were  unsuccessful.    The  arrangement  expired  by  limitation  on
the first of  March.   It was  continued  at the  request of  the
Signal  Office  until  the end of the  session  of Congress, March
3d, when it ceased-simply because no agreement had been
made with the Company for continuing it.
The  authority  of  the   Postmnaster-General  to  fix  the  telegraphic charges for Government messages, under the Act of
Congress approved July 24, 1866, was not denied. The Company
did not, however, admit the right of that officer  to save  control
of our wires, to direct when and how circuits should be made up,
and by what routes messages should be sent towvards their destination; nor did it admit the right of any officer of the Government
to say, in effect, that private citizens, holding no office under the
Government, could be required to open their offices at unusual and
inconvenient hours  in the  morning,  and  to  keep them  open at
night until the permission of a Government official to close themt
had been given; yet the course of the Signal Office towards the
Company seemed to imply that such authority over its wires, and
office3, and employ6s, was conferred by the law of Congress,
which  was  understood  to have  been enacted with the knowledge
and approval, if not at the solicitation of the Chief Signal Officer.
The Company had performed, during four months, a new and
difficult service without compensation.    It had been ready during
that time,  as it lhas been at all times since, to negotiate wilh the
representatives  of the United  States  for any  service desired by
any Department of the Government, and for this particular service
to accept a less average rate of compensation  than is paid for
other telegraphic business. But justice to the stockholders, and 
79
the self-respect of the managers of the Company, alike required
that an apparent attempt to place the control of the Company's
property and business in the hands of officials of the Government  should  be  resisted  promptly  and firmly.   It was  under
such circumstances, and for such reasons alone, that the managers of the Company were reluctantly constrained to discontinue the transmission of the Weather Reports.
Subsequently, negotiations were opened with the Company by
the Chief Signal Officer, assisted by the I-Ionorable William
Whiting,.  These negotiations resulted  in  an  agreement  between
the United States and the Company for the transmission of the
Weather Reports for one year from MIay 24, 1871.
The Company was represented in this negotiation by its President, and  MIr. George  B. Prescott, its Electrician.  It was  their
understanding that the service of the Company was to be performed according to a certain schedule of circuits, and in the
words of a numerical cipher, both of which were then submitted
and made  the basis of the agreement.
The  right of the  United States to require the performance  by
the Company of the peculiar service desired by the Signal Office,
at rates of compensation to be fixed by the Postmaster-General,
was not admitted.   The  compensation was fixed  by  agreement;
and, although it was deemed inadequate by the representatives of
the Company,  it was accepted-partly because of their desire to
contribute to the success of a scheme which it was believed would
prove of benefit to the public, and  partly because  of  represerntations that  the appropriation  would  not justify larger compensation. The compensation agreed upon was for the transmission
of the words of a certain cipher over particular circuits, both
of which were submitted. It was not, however, expected by the
representatives of the Company that both the cipher and the
circuits  were  to be adhered  to inflexibly.  On  the oeher  hand,
it was  not expected that changes would  be made which  would
increase the cost of the service to the Company.
In December, 1871, the Company was notified that an entirely
new cipher would be put in operation on the first day of the
new  year.   A  very  slight examination  of the proposed cipher
satisfied the MIanagers of the Company that its use would
greatly increase the difficulties, and consequently the cost of
the service, and therefore they objected to its introduction as
a violation of the agreement. But, notwithstanding the objections
of the Company, the new cipher went into operation on January
1, 1872.  The working  of the new cipher was  carefily watched,
and the result justified fully the apprehensions which the MAlanagers
of the Company  had  previously expressed concerning  it.  The
time of  the occupation  of the Company's wires  was materially
increased, while, at the same time, at the rate agreed upon per
word, the compensation  was materially  diminished.
An examination of the reports transmitted upon the New York and
Lake City, the New York and Milwaukee,,t,(l New York alid Portland circuits, from the sixth to the fourteenth of January, inclusive,
develeped the following facts: The average dailv occupation of 
80
these three circuits with Weather Reports was thirteen hours and
fifty-four minutes.   Before  the  new  cipher was  introduced  the
average  time  was  ten hours  and  thirty-ei,ght minutes,  and the
average number of words transmitted in that time was 7,876,
or at the rate of  12.3 words per minute.   But  with the new
cipher  there were  transmitted  in  thirteen  hours  and  fifty-four
minutes but 5,370  words, being  at the rate of 6.4 words  per
minute.  Thus, for the increased occupation of our wires, owing
to the difficulties of transmitting this ingaeniously constructed
cipher, we would receive at the contract rate per word more
than thirty per cent. less compensation.
Subsequently, the position of the Company in this regard was
sustained by the opinion of the Honorable William Whiting,
who recommended that the rate per circuit for Signal Service
messages  be increased from  two  to three cents  per word.   In
his communication on this subject he says:
"This conclusion  is  founded  upon  the test of  the  practical
"use of the cipher now adopted, which shows that it is more ex pensive than the one originally adopted-and as the new cipher was
"introduced on the first of January last, I shall also recommend
"that the increased rate shall be applied from and after that date."
Although this opinion bears date May 9, 1872, neither the
compensation at the rate named therein, nor any compensation
whatever, has been received by the Company for the period during which the new cipher has been in operation, nor for the
three months next preceding.*
The change from two to three cents per word is spoken of
as an increase of fifty per cent., and without explanation the
impression may be conveyed that such an increase was asked and
allowed.  As a matter of fact, however, there was no  increase of
compensation by the change from two cents to three cents per
word, for the reason that it required a longer time to transmit
the less number of words of the new cipher. The minimum number of words in the original cipher transmitted daily over any
of the circuits was 44.   At  two  cents per word  the Company
would  receive 88 cents.   The minimum  of the new cipher was
31  words.   At  three cents  per word  the daily  product  would
be 93  cents.  This shows  an apparent increase of only  5_(  per
cent.; yet the wires were occupied an average of from five to eight
per cent. longer each  day in transmitting  31 words  of the new
cipher than 44 of the old. The use of the new cipher increased
considerably the number of service messages required to correct
errors resulting from its inartistic construction, and these were
sent without compensation, as stipulated in the agreement.   The
Managers of the Company do not desire to enter again upon a
discussion of the subject of the rates. The illustration submitted,
showing the time a particular circuit was occupied, and the compensation pa)yable therefor, loses whatever force it may appear
to have in the presence of the following statement of facts:
The signal service business for the month of January, 1872, at
* See Note, page 93. 
81
the rate  of two  cents per word  for each circuit, would pay  the
Company $S86.,926 in a year. If the same service were charged at
the rates estahlished  by the Postmaster-Gcnei'al for other Government messages-that is to  say, one cent  per word  for each circuit of 2o0 miles, it would amount to $195,2o75; while, at the
average rates chirged the public, the same service would amount
to $44o.321.
A  majority  of the gross  receipts  of the Company  is  from
general busine's  at average  rates.
It has been repeatedly demonstrated  that it costs the Comipany
seventy pe, cent. of its gross receipts to carry on the buinhess.  If
Signal Office business costs only the average of all other l)bsilless
it would yield the average profits.  But Si.,,nal Otffice Reports have
paid less thlan  half the average  rate, and  cotst more than  the
average  to transmnit;  precisely  how  much more  has  not been
stat,.d, for the reason that it is not possible to ascertaiin.  These
reports monopolized  not merely  wires and circuits, ]lt  at times
the whole  s-stern  of circuits over  large portions  of  territorv.
In the question of the cost there is involved  not only the actual
expense for specific service, but the dam.-ige resulting from other
business being delayed.   For every operator employed iii sendcling
and  receiving Signal Reports  it sometimes  happened  thit two
would be idle, because their wires were taken to  n.makle the special
circuits.    \\hen the President  of  one  of the most  important
Railroad  Comtpanies  ia the country  will state the cost each of
carrying  a limited  lumber of passengers  by special train, three
times  a  clday, such  trains to have priority  over all others, the
service to hegin at the same hour each d(lay and to continue
daily  for  a  year,  then  the  managers  of  this  Company  will
undertake to show that the cost of a precisely similar service by
the Telegraph  is certainly greater than sending ordinary messages
in the  usual way.
On page 135 of the Annual  Report of the Chief Signail Officer
to the Secretary of War for the fiscal year ended June 30, 1871,
is a  table which  exhibits  the rates  then  charged  l)y  all the
Telegraphl  Companies from  Washington  to 6.5 of the most  important  telegt,aph  stations  in  the  United States,  and  also  a
comparison  between  the  rates  charged  the  public  and  those
fixed  by  the  Postmaster-General  on  Government  Tbusiness for
single messages and for messages of 100 words.   The comparison
is as follows:
Average  rate paid by  the public per message,  $2.29.   The
same  message, at Government rate, $1.25.   For 100  words, rate
paid by the pul)lic, 813.98.   By the Government, 84.14.
Concerning this exhibit the Chief Signal Officer remarks: "Cal
culations made from  the above table show  an average saving to
the United States, beyond awhat had been paid previously in the
case of the shorter messages classified as above, of 45 pIer cent.,
and in the longer messages, of 70 per cent., which rate incereases in
fiavor of the United States when the number of words exceeds 100."
That this conclusion  is justified by  the exhibit is  not  (lis                                6 
tioned.    But  something  more  appears  to  be  proven  than  is
contained  in  the  statement  quoted.   If  the cost  of ordinary
Telegraphic liiiiness is 70 per cecnt. of the gross receipts at  the
atverage  rates paid by  private  citizens, it follows that  a part at
least of the'saving to the United States," which resulted fromr
the reduction of 45) per  cenat. in the rates for Gover nmenot  messages madle by  the Postmaster-General, was  at  the  expense  of
the  Telegraph  Collmpanies,  who  performed  the  service  for  the
United St-:tes at rates below  the  averagec cost.
It seec,i  proper to remarlc, in this connection, that  although
the thle  referred to in the report  of the Chief  Signal  Officer
fairly exhibits the advantages which  the Governmtient  derives over
individuals in the use of the Telegraph, it conveys  an erroneous
impression  of the  average rates actually paid.   If  Washingiton
sends the same  number of messages to each of the 65)  stations
named   in  the  tal)le,  then  the  averlge  chiarge   per  message
would be ascertained by  adlding  together the  -) separatc  rates
.nd dclivi(i:l,  the  sunm  lby the  numinber  of  stati(n)ns.   For exiple' The chaire froiomn Washington to New  Yorkis given as 49
cents. t  From  NVashiigton to  San Diego, California, %88.51.   The
averagoe of these charges is, therefore,  $4.50;  but it is  prohbtllc
that of e\e-ry 100 messages from Washiigton therie  will be ninetynine de:tinc  to Ncw York to one for San Diego.   On this basis the
average, instead of $4.50, would be but 5'7 celts.
But the siubstitution of the new  cipher was  not  the only  embahrrnssioeiit froni wvhich the Company  suffered in connectionl with
Sign al Oifice business.
Whiiue the negotiations were in  progress  between  the representat ve  o(-f the Signa(l Office and of the Companqy, il thc  Spring
of S1 I, it was  represented  by the Chief Signal Officer that, in
addition to all the other  facilities required, it was  necessary that
lie shotuld have at his disposal sp)eci.l circuits betweein  V,Visliincrton
iand  New  York,  WAashington  and  Chicago, and  \Va.shing,tou  tilld
New  Orleanis.  The wires for these circiits  were to  be connected
w-ith the Signal Office at 7.45 A. I., 4.4,5 P.  \., aid 11.45 P. II.,
daily, and at  such other times as the Signail  Office should call
for them.'I'hese circuits were iii addition to the sel-cheduled circuits
upon  which. the  reg, la  tri-dtily \Weather  P'cp- rts were to be
trainsmittedl.  It was rcpresented that it wvas necessary for the Chlief
Sigtnal Oieer to lbe able to communiiicate directly  a,id prvomptly
withi the Ohserver S eigeauts at the three cities naed, duritig the
timeC the  regular r-:piorts were behiig received( at the Signal Office,
and  w ithout intelrluptng them or otherwise interfering with their
tr nsmissicn.   Desiring, to provide every ficility required for the
efficient  transaction  of this l)usiness, the Compiany  consented  to
supply tli::,sc special circuits.
The  new  arrangement  had beeii in  force  but  a short  time,
however,  when it wasi aseeirtainecd  that these special circuits were
being put to other uses than the correction of' errors  in rcliorts
and  other miatters  of  implortance  directly  connected  with  their
transmission.  It was found  that they were being  taken for puI
82 
83
poses of dclisplay, during the most cr)wded hours of the day, when
they were most useful to the public, and, therefore, most valuatble
to the Company.   Nor were the improper uses of the Company's
wires  confined  to  those  colnposing  the  three  special  circullits.
Other and equally important  circuits, including those connecting
the Atlantic  and  Pacific coasts,  were  sometimnes  taken l)v  the
Signal Office, without notice  to or permission of the Compailly,
to give exhibitions  to  invited gLuests,  and  to promote  the conveniencc or gratify the whlims of its attach6s.
The  following are copies of some  of the messages-reams  of
which are nowv in the Company's  possessionesent from  and exchanged  with  the Signal  Office over  circuits  provided  by  the
Company withl the understanding that they were to be used only
in emergencies, and for the transmission of business of special
importance.  The cost of this service, computed at ordinary rates,
would amount to thousands of dollars:
CONVERSATION BETWEEN THE SIGNAL OFFICE AT WASH      INGTON, NEWV YORK, BOSTON AND CHICAGO, August
7th, 1871.
Signal Olfce to Beston.-The Secretary of War asks, "WhIat is the weather and
"thermometer?  Is Observer about there?  Tell him yourself, if not."
Boston to Sigizal Office. —" Weather  hlazy-pleasant-East.  Doln't know about
"thermometer."
Signal Ofice to Boston.-" Thanks of the Secretary of War.  O. IK."
(SIGNAL OFFICE CALLS NEW YORK.)
Signal Ofice to Yoezo York. —" What wires are you working to Chicago?"
New York to Signal OWfe. —" We are working three wires to Chicago."
Signal Office to Sewz York.-"' Can you stay on hlero for a feow minuts?"'
New  York to Signal Ofice. —"Very busy, but will do it.  Jump in at end of
"messare."
(SIGN-AL OFFICE  CAtLLS CHICAGO.)
Signal Office to Chicago. —" Is S. or G. there?"
Chicago to Signzal Office. —;' Who do you want?"
Signal Office to Chicacgo.-"- Is G. or S. there?"
Chicago to Sigial Office.-" Yes, wait a minute.  I'll get them."
Signal Oice to Chicago.-" Good morning.  The Secretary of War is here again.
Are you working through to San Francisco?  Can you put West on  for a
minute?"
Chicago to Signal Ofce.-'"West 0. K., can put it on here, but it will be slow
"work.  I can repeat it quicker than you ca,n work thlrough, and make it.eppear ias
"though you were working direct.  WVon't that do?"
Sigyn 1l qOce to Chicago.-" He lhas nothling important to say.  Only wanted to
see if wires wvoul(d wov)rk.  Ite has beea trying the Franklin lines, bat there is not
much show for them."
Chficago to Sigynal OfIce.-" I'll put it on if you think l)est; but this is the very
"worst time of (lav for our business."
Signal Office to Chicago.-" Let it go till some other day." 
84
Chicago to Signal Office.-" Suppose yoi arrange for to-morrow morning, say
"10.30, WAVashlington  time, then I will have every thing ready.  I am short of
"wi es and crowded with business now."
Signial Office to Chicago.-" O. K.  Will let you know.   12.30."
SIGNAL OFFICE, WASHINGTON, WITH SAN FRANCISCO AND
INTERMEDIATE STATIONS, 10 A. M., August 9th, 1871.
Signal Office to Chicago.-" Is Air. Swain in the office?"
Chicago to Signal Office.-" Yes."
Siglal O,ic to Chicago.-" The Secretary of War wants to see how soon we
"can get Sani Francisco.  Please connect the wires through."''
Cict jao to Sigial Office.-" I will put you in communication with San Francisco
"non. WAait a moment."
(The wires were connected through, and San Francisco answered the call at
10.12.)
S;inal Offi,ce to San Francisco.-" Good morning.  The Secretary of War is here.
"Please give him the state of the weather and thermometer at San Francisco. Is
"Carusi about?"'
Sa)i Franczeco to Signal Office.-" Good morning, Mr. Secretary.  It is cloudy.
"No wind.  Thermometer 54.  MIr. Carusi is not in the office, but we can have
'himr here in five minutes."
Sig~nl Ofice to San il-ancisco.-" Please call Observer."  (The Signal Office here
mude some unintelligible signals.)
Ci icago to Signol Office.-" Who are you calling?"
Signal QOyce to Chicago.-" Is Cheyenne and Corinne here?"
Chicago to Signal Office.-" Yes."
Corizne to Chicago.-" Do you want us?"
Chicago to Corinne.-"Yes.   Washington is here, and wants you.  Answer
"him."
Sg;2al Qijice to Corinnze.  "Please give the Secretary of War the state of the
weather.',
Co-itgne to Signal Office.-" Little hazy.  Thermometer 75."
Signal Office to Corinne.-" O. K."
(SIGNAL OFFICE CALLS CIIEYENNE, AND IS IMMEDIATELY ANSWERED.)
Signal Office to Cheyenne.-" What is state of the weather?"
Cheyenne to Signal Office.-" Very cloudy and windy. Looks like rain."
(SIGNAL OFFICE CALLS SAN FRANCISCO.)
Signal Office to San Francisco.-" Has Carusi come?"
San Francisco to Signal Office.-" He will be here in a minute. Boy gone after
"him.  Lillis sends compliments to the Secretary."
Signal Office to San Francisco.-"The  Secretary of War sends compliments.
"Weather broiling hot here."
San Francisco to Signal Office.-" Here is Carusi."
Signal Office to Observer, San Francisco.-" How far is your office from the Tele"graph Office?,                                  "(Signed),        GEm. MY.ER." 
85
San Fra/zcisco to Signal Office. —" It is one square from the office."
Signal Office to Observer, San Francisco.-" Have you a barometer reading  ready,
"or would you hlave to make one?"
Signal Office to fMaizagers and Operators at Stations between Washington and San
Francisco.-'" The Secretary of Wart tenders his thanks and coiegratulatioins to all
"managers and operators for their success in working this morning.  10.50 A. M.
"The wires worked nicely. Two minutes only were occupied in obtainlling direct
"communication between Washington and San Francisco."
CONVERSATION BETWEEN SIGNAL OFFICE AND CINCINNATI,
at 3.20 P. M., September 6, 1871.
Signal Office to Cincinnati.-" Good  afternoon.   Do  you  know  an  operator
"named  B. F. H, now at Council  Bluffs, said to have  worked  in your
"office?"
Cincinnati to Signal Office.-" Wait a minute.  Good afternoon.  I had a man
"here named II-. He wals not much as an operator. Very steady man.
"Don't remember initials.  Don't find his name now on my books.  Hle afterwards
"wevnt to Omaha.  Our manager there can tell more about his ability than I can."
Signal Office to Cincinnati.-" Can you conveniently find out for me his quali"fications,  habits, character, pedigree,  &c.?  iMaybe  Mir. Bliss would  know,
"Would like to know where he came from."
Cincincati  to Signal  Office.-" His initials are IH. H. HI.  I will inquire
"and notify you." 
CONVERSATION BETWEEN SIGNAL OFFICE AND CHICAGO,
September 16th, 1871, 3.40 P. M.
(SIGNAL OFFICE CALLS CHICAGO.)
Signal Office to Chicago.-" Is it S. or G., or is Maynard there?" I
Chicago to Signal Office.-" It is G. What can I do for the Government to-day?"
Signal Office to Chicago.-" Good morning.  Valuable service, as usual.  In
"explanation of loss of 49 and 50 we have had report:' Can't raise; generally at
"night.'  WAanted to know whether that meant:'Can't raise somne office,' or
"something else.  Do you know about it?  Is there a chance to tighten screws
"on North-Western?"
Chicago to Signal Office.-" 0. K.  I believe that has reference to office through
"which the midnight reports from the North are expected to be passed.  The
"record book very frequently, and I think generally, reads at nigh,t.  Can't raise
"Fort Howard.   We were told by Green Bay, I think it was, that he would not
sit up for signals with'out an order firom his superintendent, Alr. Robertson.   I
"inferred, from the style of his language, that they were a kind of self-governing
' people in Green Bay, and concluded that the service was not organized in that
direction."
Signal Office to Chicago.-" They report Fort Howard has a wire run into his
"house and rets extra salary for doing the signal business.  Wislh you would
"keep watch of them, and if there is any reason whly the wire is not in order, and
"signals don't come. post me.  Meanwhile I'll pay my respects to them through
" the Superintendent.   Has  the Observer supplied  you  with  carbon paper
" enough?"
Chicago to Signal Office.-" Yes, he has, thank you.  We will do as you desire." 
86
Sijna6 Office to Cihicago. —' Please take this message:
" Fe0711 SIGNAL OFFICE, WASIINGTON, 16, to SEPGEANT A. PRUNER, M]LWAUEE.
" Is Lieutenant Adams inspecting your Stltionl?  Answer.
"(Signed),      II. W. IIOWGATE."
CONVERSATION BETWEEN SIGNAL OFFICE AND INDIAN     APOLIS, 10 A. M., October 9th, 1871.
Sij7al Ofce to lndiaczapolis.-" Have you got any more signals?"
Llc:cidaa(tlis to Signc,l Office.-" I have tried every possible way to get Keokuk,
"D.,vellolrt or Milwaukee signals, but so far no sho10w."
Siyjial Offce to Indiana)olis. —  Miuchi obliged.   Will you be in office this P. M."?
Iiaml/zzo)lis to Sigzal Off,ce.-'-" Yes, all day."
,Q'10 Office to I,di(1a:)olis.-g' Will you please  let me know,  say about  two
"o'cl(,ck. wl0at is the sitiaationI at Cllica,o-whetler prosl)ect of getting afternoon
"si2l1.:ls tlhrougil regularily?  If not, wallt to try to get other route.   Can you get,
"prlotlxbjL, a wirel to Omahla, if Chlicago wires are not all riglht?"
Ildilclicplolis lto Si,ll(l Office.-" P,oba)lbly may get one round Ko.  Will try to get
"an ol,enitilg somewlhere  uOilce altelcrnoon ll     a    The s  ituation at Chicago at
"present is rather gloomy.   Thlirty squarcs are destr,)e(yod"
Si:,el Office to Idiaieap)olis.-' All righlt, all righlt.  Can you give me the situa"tioi tt Chicago now?  The Secretary of War wants to klnow."
I2~dir,ia2Iclis to Sijyeal Ofice.-" Tlhe latest from Chicago is a message from Mr"W-ilsonl-, 5ul)erintendenlt at Clhicago, to iMr. Orton, New York, in which  he says
"tll}rty sqilres, thle entire business portion of Chiicago, has been destroyed.  Thie
"firie is Still raging.  This message came from Galena direct from Chicago."
Sijeezl O!ce to Ialiacnal)olis.-" Muclh obliged.   Let  me know if there is any
"clmauge tilere, please."
ILdianalolis to S,.igzal Office.-" Will post you of any further information."
CONVERSATION BETWVVEEN SIGNAL OFFICE AND CINCINNATI,
10 A. M., October 17th, 1871.
Sigyzal Oice to Cilcinnati.-' Say, Ham, get two signals, 47 and 70."
Ciecinnali to Siglial Ofice. — Wait a minute."
Siglal Ofice to Cillcieilati. —" Find them."
Cincinzatli to Sigezal Office.-" Ilere are 47 and 70.
Sigral Office to Cinci?nnati.-" Please repeat them."
Ciacinnati to Sigeial Office.-"0 3 2 7 0
0 8       8
0 6 1 7 1
2 0 0 0 0
O 0 9 4 7
O 9 68 4 6
1 0 1 7 2
O6171
20000
00947
09646
101712
5 3 0 0 0."
S;al OfOice to Cincinnati.-':ThIankl you.   It is awful cold; eight degrees below
"zero.  Please rush these Government."
S;e'n(tl Ofice, IVashia gleon, D.  C., October 171h.-"Observer, Keokuk.  Repeat
"temi-)erature, this morning's report, quick.
"   H. W. IIOWGATE,
"A. S. 0. & Asst." 
87
Signal Office,  Wash7ington, D. C., October 17th.-" Observer, Corinne. Repeat
"temperature, this morning's report, quick.
"IH. W. HIOWGATE,
"A. S. O. & Asst."
CONVERSATION BETWEEN SIGNAL OFFICE AND AUGUSTA,
Ga., 10 A. M., Oct. 31st, 1871.
Signal Oice to Augusta.-" Can I see G. a minute?"
Augusta to Sigjial Ofice.-" Go ahead."
Signal Offi.ce to A_d(jsta.-"Good  morning.  Ilow do you  recaive  reports 27,
"28 and 55 from N  w Orleans?  Are they generally in before yoa send yours on
coast circuit?
Augusta to Sigizal Ofice.-"- No.  They comne about the same  time, when we
st,art, anId that is a little ahead of schedule time.  We always try to get ours and
"coast South first, so they can send them West.  72 is generally late; the rest
pretty lroml)t."
Sigzal Office to A~tgutsta.-" Think of clhahoging schedules so as to have you send
thiose four reports on coast circuit, to save time here and at C.  Ciii you do it
"as well as not?  Probably it will put your sending time backl about five miniutes."
Augusta to Signcal Ofice. —' Do you mean that it will make it earlier or later?"
Sigictl Oice to Augusta.-" Later."
Azigustl tao Sti$ettl QO8ce. —' Yes. WAVe can do it easy enough then. See no reason
"why it couldn't be dole.   We get half an hour before you do on coast."
S/i'oci Qfice t) Ati esia. —" All right.  Is there anything new that way about
signals-anytlhing want tighltenlig?"
Augusta to Sijnal Office. —'"No. The new Observer sticks to his office very
"closely, and seems to attend to his business."
CONVERSATION BETWVEEN SIGNAL O)FFICE AND CHICAGO,
at " o'clock P. M., November 1, 1871. 
Signial Ofice to Chicago.-" Is Sholes there?"
Chicago to Sigtal Ofice.-" Here is York or Swain."
Signal Ofice to Cliicago. —' Wantted to speak with Sholes a minute, if hlie is in."
Clicago to Sigonal Office.-'-" No. Here is York, though."
Signal Office to Chliicago.-" When will S. be in?"
Ch'icago to Signalt Once.-  He ought to be here now.  Time for his return."
Sigoal Office to Chicayo. —'Tell hIim want to see him.  Who is Superintendent of
"Portland (Oregon)?"
Chicago to Signal Office.-' Half minute.   Asking San Francisco now.   San
"Fraincisco says it is C. Plummer.  Here Sholes comes."
Sigenal Oyice to Cticago.-"-'; Slioles, do you remember the matter we were
"spetking of eve I left S. D.?"
Chicago to Stqial Office.-'- G(ood( afternoon.  Yes; presume you mean regarding
"situation in WAashington?"
Signal Ofice to Chicago.-" How does the man feel about it now?   IIow much
will lie take?"
Chicago to Signal Offce.-" Where would hlie be located?" 
88
Si'gnal Oce to Chicago.-" Here. Some telegraphing —sonme clerking-with me.
"You know about what situation is worth here, and you also know what Chicago is
"now.  We offer any (lost about ten words here).  Don't know how much can offer.
Want find out what will cost, then get authority.  Doni't remlemiber what hle got
there."
Chicago to Signal OQice.-" How soon would you want him?  Can you wait few
"days for a letter?"
Sigeol O,jg; to Ch/cago.-" Want him soon  as possible.  If case hopeful, will
'you write particulars how much he got there?"
Chicago to Sigial Oice.-" He can't decide  to-day.   ie gets  115.  lie will
write you if you can wait few days for a letter."
Signal Ofce to Chicago.-"-' Tell him to do so. I will also write. Good after"noon.  Thank you."
CONVERSATION BETWEEN SIGNAL OFFICE AND PHILA     DELPHIA, 1.07 P. M., Nov. 9th, 1871.
Signal Offce to Philadelphia.-" Is Robinson there?"
Philade'phia to Signal Office. —" Robinson is out of town.  G. is here."
Signal O/ice to Philadelphia.-" I wish to see him a minute."
Philadelph?ia to Signal Office.-" In half a minute.  lie is very busy with Pitts"burgh.  Will be here in a minute."
Signal Ofce to) Philadelphia.-" Do you know anythling about the small-pox:
"business-any way to get vaccine matter reliably good?"
Philcadlphia to Signal Office. —" Disease don't seem to decrease much.  Think
"you could get it from any reliable physician here."
Signal Ojice to Philadelphia. —" I supposed so.  Wish you would ask G. or R.
"if they know suchi a man, and can get me some conveniently.  I don't know any
"one to send to for it."
Philadelphia to Signal Office. —" G. says,' Don't know of any one just now.  Will
"let you know soon.  Will inquire.'"
Signal Ofice to Philadelphia.-" -'fuch obliged."
Philadelphia to Signal Office.-" Not at all."
CONVERSATION BETWEEN SIGNAL OFFICE AND CHICAGO,
November 6th, 1871, 10.11 A. M.
Signal Office to Chicago. —" Is Sholes there?"
Chicago to Signal Office. —" Yes."
Signal EOlice to Cticago.-" At key?"
Chicago to Sigial Office.-" No."
Signal 0(ice to Chicago. —" Please ask him here."
Chicago to S,ignal Ofj,e. —" Good morning.  Your letter was received yesterday.
"He expressed himself as much  obliged for first choice, but under the circnm"'stances, enliztmerit, &c., there is hardly inducement  enoiugh.   With very little
"extra ho,urs' wolit every night can  make it 130 here.   Hlope  it has not incon'veniencecl you or your plans."
S;qgozl Ort2cc It Chicago.-" Good morning. Received no inconveniicnce. Sorry
:c:li'1 do better.  Have to come to it gradually, you see.  Glad, however. he is
d~'ding so wvell." 
89
Chicago to Signal Office.-" Tell him I am all right for the present.  Are you
"coming out this way again soon?"
Signal Office to Chicago.-" Can't tell when.  Hlope to be able to do so before
"long."
Chicago to Signal OQfice.-All right.  Will see you whenl you come.  It's likely
"that I shall be in WAVashington this winter on a visit.  WVill see you then."
Signal Oice to Chicago.-" Hope so.  Good morning."
CONVERSATION BETWEEN SIGNAL OFFICE AND CHICAGO,
November 18, 1871, 11.19 A. M.
Signal Office to Chicago. —" Please ask Chief if lhe can tell me  the nature and
"extent of the storm near Omaha."
Chicagoto Signal Ofice.-" Good morning.  Mr. M. will do so in a minute.   Had
"a very severe wind and snow storm west of here last  night.  Our masts at the
"Missouri River blown down.  All lines down betweent Council Bluffs and Omaha.
"Don't know how far west the storm extended.  WVo are sending messengers from
"Council Bluffs to Omaha.   May have some signal reports after awhlile."
Signal Oice to Chicago.-" Has the storm passed away, or is it moving east?"
Chicago to Signal Office. —" It is moving east. Cautionary signals are up here.
' It is raining at Bluffs now."
Signal Office to Chicago.-" Thanks.   Martin It-  applies for a place.  Want
a first class man to enlist at 120 dollars.  Can you send such a man to me?"
Chicago to Signal Office.-"R-  not first class; would probably do, however.
"If he wishes to go I'll arrange to relieve him.  Know of no one inow that can be
"spared. Are you in a hurry?"
Signal Ofice to Chicago.-" No.   Want none but reliable men."
Chicago to Signal Ofice.-"He is all right, but I don't consider him first class
operator."
Signal Office to Chicago.-" All right."
CONVERSATION BETWEEN SIGNAL OFFICE AND BALTIMORE,
November 21st, 1871, 2.30 P. M.
Signal Ofce to Baltimore.-"Is W. there?"
Baltimore to Signal Office.-" No, sir.  A. W. is here."
Signal Office to Baltimore.-" Can I see him a minute?"
Baltimore to Signal Ofice.-I" Yes; go ahead."
Signal Ofice to A. TV., Baltinmore.-" Good morning. Can you tell me who is the
"best oculist in Baltimore?  Friend wants to find one there."
Baltimore to Signal Oice. —" Yes.  Dr. Reuling has the reputation of being the
"best here.  His office is on North Charles street, between Mulberry and Saratoga
'streets.   Ie has performed some wonderful cures."
Signal Office to Baltimore.-" Much obliged.  All right."
SIGNAL OFFICE, WASHINGTON, WITH CINCINNATI, 1.35 P. M.,
February 14th, 1872.
Signal Office to Ciecinnati. —" Give us Chicago a minute."
(CIIICAGO WIRE CONNECTED.) 
90
Signal Office to Chicago.-" Can I see one of your chiefs a minute?"
Chicago to Signal Office.-"Yes."
Signal Office to Chicago.-" Good afternoon.  You  know  MeC,at the
"Slpply Department.  His daulihter here would like to know if he is at home.
"Understands lie was going to Wisconsin."
Chicago to Signal Ogce. —' Will see.  Can't get the office now.  Can find out
"and send you a message soon.  Operator there has gone to dinner."
Signal Office to Chicago. —" Please do.  If away, do they know  when he will
"return?  How do you get miy signals?"
Chicago to Signal Office.-" Very well now.  Bad day to-day, or was this morn ing.  Heavy wind boke wires.  I'll let you know as soon as I can get that off."
Signal Oice to Chicago.-" Mrs. MAlack arranging to go home when she finds that
"he is there. O. K."
SIGNAL OFFICE WITH CINCINNATI, 11.39 A. M., February l1th,
1872.
Signal Ogce to Cincinnati.-" Can you  send a message to  Chicago and get
"answer right away?"
Cincirbnati to Signal Office.-" Yes."
Signal Oice to Cincinnati.-" Take this."
"Froni SIGNAL OFFICE, WVASIIINGTON, 15th,
"To J. K. MAICCONAUGIIEY, SUPPLY DEPARTMENT, CIIICAGO.
"Your wife leaves at 7.45 this evening via Wheeling and Columbus.  Can you
meet her on the road?  I am waiting answer.
"(Signed),          GEO. C. MAYNARD."
"Chicago should be able to get answer at once, if he is at office.  If you work
"direct to the Supply Department, send there."
Cincinnati to Signal Office, at 12.20 P. M.f-"I requested Chicago to get quick
"answer to yvou.  Said lie would.  I'll ask him again."
Signal Ofice to Cincinnati.-"Please do."
Feb. 19th, 1872, at 6.15 P. M.
(SIGNAL OFFICE TOOK THIE CIRCUIT WITII CINCINNATI.)
Signal Ofice to Cincinnati.-" Is Horton iu?"
Cincinnati to Signal Oice. —" Yes."
Signal Offce to Cincinati. —:' Good evening.  Received your letter this evening.
"Talked the matter up with Chief.  It will probably be 0. K. now.  You need not
"say so, but likely one of the trio will come; but your man."
Cincinnati to Signal Office.-" Was afraid they had been trying to oust him.  Ile
"is really very cipable, and was'propery' division labor here.  There would be no
"trouble, but fact is," &c.
CONVERSATION BETWEEN SIGNAL OFFICE AND BALTIMORE,
February 28th, 1872, 12 P. M.
Signal Office to Baltimore.-" Can I see Wolf a minute?"  To Wolf.-" Do you
"know at what time in afternoon and evening trains leave BaltimLnore for WAVash"ington?"
Baltimore to Signal Office.-" To G. C. M. There is one leaves at 2 P. M., one
at 3.50 P. MAl., one at 4.40 P. M., one at 8.30 P. M.; and one about 9.30 P. M." 
91
Signal Oce to B,.tiinore.-" Thanks.  That's trains enough.  May  drop in on
"you to-morrovw."a
Baltimore to Signal Offic.-' Do.   Will be glad to see you."
It will be noted that the occupation of the wires which these
conversations  illustrate  was  at  other  timies  than   thle  regular
hours named  in the schedules for making up  the special circuits;
and  it can hardly  fail to excite  surprise that the Sig,nal  Offico
should interrupt and  suspend the business  of the public on the
great  commercial  lines of  the  country  during  the most',tetive
hours of  the day  with such  trifling matters.   The propriety of
cxhil)itilgc the working of the wires to the Ilonorable Secretary
of NVar is not questioned; yet it would have pleased the Company  better  to have  received  an intiimatioa  that  it wvould  be
agreeable  to him  to accept  a courtesy  from  it  than to  learn
afterwards that it had been extended without the knowvledge of its
officers.  But the prol)priety of taking the wires for the put'pose of
inquiLing, the  times of  departu!e  of  trains, for  negotititng,  the
enlistment t  of Observer  Sergeants, for  the  )purchase  of vaccine
matter, er any of the various other purposes not directly connected
with Coi-imerce and Agriculture, is not apparent,  even if the Company  was  to bhe  compensated  for  their use.   But  when  it is
understood  that  the Company \was not deemed  entitled  to con'peinsation for such occupation  of its wires, and  that  no complete
record was klept wvhereby  it would  be possible  to ascertain the
extent  to which  it was  carried  on, it will  not  excite surprise
that the  Company became anxious to be relieved of so grievous
a burden.
Another  serious  difficulty arose  from  the  issuing,  of orders
firom  the Si,gnal Office to the Company's employes. WVhen the
arrangemtent  with the Signal Office was imade, it was  understood
that all changes or modifications of the service should be proiuulg,atel to the employ6s of thle Company  through its oneers, but
in several instances this course was  not adopted, the Signal Office
making  such  changes  without  notice  to  or  the consent of the
ComIpany.  Thus, in August, 1871, reports from  Portland, Boston,
New York and Baltimore were sent to New Orleans from Augusta
without the  knowledge  of the Company's  officers,  and  in September  other changes were  made  in the transmission of reports
over the southern circuit.
In  October  arrangements  were  ii,a(le  witli the Company  for
holding, offices open for the reception of  Storm  Sitgnal I'Reports.
On the 20th of December  orders were sent by the Signal Office
to several of these offices, notifying them of the discontinuance of
the reports for the winter, blut no notice of suchl action was sent
to the Executive Office of the Company, and the fact waIs only incidentally learned through the offices which  had been instructed.  In
order to prevent the confusion and  deraingement of business, resulting fronm  the issuing of instrluctions by the Sigcnil Office over
the wires to the ciiploy6s of the Comnpany, it became  necessar y
to give  notice  that  all orders  relating  to the wotrkinug  of t11e 
92
Company's lines which did not come from the proper officeers of
the Company would  be disregarded.
Notwithstandingl the frequent  complaints and urgent protests of
the Company these abuses were not remedied. It became neces sary, therefore, for the protection of the Company's  interests, that
some decided action should  be taken;  and accordingl]y, after full
consider'tion of the subject by the Executive Coi-imittee, notice was
given to the Ilonorallc Secretary of War, by letter, dated March
4. 1872, of a desire to terminate the arratngement at the expiration
of the  year  for  which  it  had  been   made;  but, at  the  re quest of  the Signal Office,  the service was  continued until the
end of the fiscal year, June 30, 1S72.   During  the interval the
Company  was invited to send  representatives  to meet  those of
the Siognal  Office  at Washing,ton,  on  the seco(nd  day of  May,
1S79, for conference upon the matters pending between the United
States and the Telegraph Comnpanies.  Pursuant to this invitation,
the representatives of the Company attended  at  the Signal Office
on  that  day,  and  being(  invited  to  submit  a proposition  for
continuing the transmission of Weather  Reports, they submitted the
follownin,:
'To transmit the Weather Reports for the year succeeding  May
24thl, 1S72, substantially on the basis fixed by tihe Postmaster-Gen eral for the transmission of telegraphic communications other than
Signal Service Messages and Reports-that is to say, one cent per
word for each circuit, or unit of distance of 250 miles, or fractional
f)airt thereof, through which it shall be transmitted-tihe distance to be
computed by adlding the distances from one station to anotheri, where
messac,es are dropped or received on the route between the initial and
terminal stations of each working circuit, and in addition thereto one
fourth of one cent per word for each drop at such intermediate  stations; all words to be counted, and no communication to be at a rate
less than twenty-five cents on each circuit."
It will be seen that  this was  an offer to transmit the Weather
Reports over special circuits at fixed  times,  for the compensation
established by the Postmaster-General for other Government business, except for the  extra service  required  to take copies of the
reports aIt intermediate stations  on the circuits over  which they
were transmitted.
In  the  ordinary  transmission  of  messages  two operators  are
required-one  to send, the other to receive.   The time of two
operators  engag(,ed at  intermediate  stations, in  taking  what  are
technically called " drop" copies, is worth to the Company  precisely the same as if they  were  engaged  in  sending  and  receivili-g mressagres in the ordinary  way.   But,  as in the  case of
the WVeather Reports, the operators connected therewith were all
)ii the same  wnire in any circuit, it was deemed equita-le to treat
four drops, requiring four operators, as  equivalent to the cost of
oidinayV tranismission  on a circuit of 250 etiles, and it was therefore proposed  to  charge, in addition to the one  cent per  word
for each 250  miles,  one foutrth of  one  cent  per word  foir each
drop at the intermediate  stations. 
93
This proposition was declined by the representatives of the
Si,nal Office, and no offer  was made then or subsequently to the
Comanyv foir the continuance of the service.  But the Congress
then  in  session  enacted  a  provision  to  the appropriation  for
continuiinig the Weather  Reports  during  the next  fiscal year,  for
sul)jeeting  to  severe  penalties  any  Telegraph  Company  which
shoiil(l neglect or refuse  to perform  any  telegraphic service  for
the iUnited States required by  any officer  thereof, at a rate of
compensation  fixed  by  the Postmaster-General.    The  Company
was informed that this provision  was  drafted and submitted to
the Committee  on  Appropriations  by  the representatives of the
Signal  Office, iand its enactment  urged  by  thlem.
At  an  interview  between  the  representatives  of the  S,igcnal
Office aiid of the Company,  after the adjournment of Congress,
and before the expiration of the fiscal year,  the fi)rmer distinctly
declined to  negotiate  for  continuing  the  service, alleging ais a
reason that they had the right to require its performance.  This
righit  was  not  admitted  by  the  Company,  and  the  service
terninmated.
The foregoing statements, together with those made in previous
communications, contain all that is material  concerning  the relations of the Signal Office and of this Company in connection with
the transmission of the Weather Reports,  except the discussion of
the subject before the Committee on Appropriaitions of the Itouse
of Representatives..As the  official record  of the proceedings before the Committee has been published, it is not deemed necessary to make further reference thereto in this connection.
It is gratifyingi to the Company  to know  that  the Sign(tl Office was able to make  satisfactory arrangements for the transmission of the  Weather  Reports  by  the  lines of other Telegraph
Companies-whereby  this Company  has been relieved  fi-om  burdens which  it was unable to bear-without inconvenience  to the
Signal Office, and without  deprivingr the public of the  valuable
results of its operations.
I have the honor to be, very respectfully,
Your obedient servant,
WILLIAM ORTON,
P RESIDE NT.
NOTE.-The bills of the Company for transmitting the Weather Reports for the
ten months ending July 31, 1872, amounting to $102,391.51, were paid October
28th, 1872, by order of the Honorable Secretary of War.
(Signeci), 
APPENDIX D.
RE.MONSTRAN.CE OF TtE WVESTERN UNION TELEGRAPII COMIP'Y
AGAINST THE POSTAL TELEGRAPH BILL.
(Senate Bill, No. 341.)
EXECUTIVE OFFICE,
l!cstetra lllito  0~llrqapIt (g.,
NEW YorK, February 13, 1872.
To the ITonorable,
The Senzate of the Uaited States.
TIEn WESTERN UxIox TEIEGR,API COMIPANY hereby respectfully remonstrates aglainst the passage of Senate Bill No. 341, entitled, " A
Bill to Connect the Telegraph with the Postal Se(rvice, and to Reduce the RPates of Correspondence by Telegraphl," reported by  the
Senate Colmmittee on Post-offices and Post-roads (Report No. 20),
January 22d, 1872.
The following are some of the objections which we urge to the
bill
First. —Althouglh the RPeport truly states that  "the Western
Union Telegraplil Coimpany performs nine tenthls of the telegraph
business, and fairly represents the telegraph system of the couintry,"
this Compaiiy lhas not been applied to 1by your Committee for any
information  either concerning its,owvn business or1- in r(latiolI to
teleg,raphy geneially; nor has it been offered an opportunity to
be hlearLd upon the subject before the Committee.   On  a single
occasion, twvo years ago, tlhe President of this Company  was,
on his own application, accorded a hearing before tlhe Committee,
limited to fifteen minutes.
Under these circumistances the MIanagers of this Company have
been mielh  surprised at the publication, in a Senate document, of
statemenlts concerning this Company, whichl are erroneous in fact,
or in the inferences to be established, and wlichl are used to jlustify
the very extraordinary measures embraced in this bill.
This Company is not prepared to admiit that the Senate of the
United States is the proper tribunal b)efore wvlilih to try the corporations created by the States, eithler for alleged undue expansion of
capital, unreasonable chares, or inadequate facilities; but we
claim  that, whether the mcasure reported by tlhe Committee on
Post-offices and Post-roads is based upon clharges against this Company, or npon alleged considerations of public policy, the dictates
of justice and( the p)ractice of the Senate alike re(quire an inquiry
into the facts, and a care(ful investigation or' tile interests to 1)0
effected, lbefore adopting  legislation so important in its consequences.  Representing, as this Company does in a larCge dere,( 
95
the telegraphl property, the telegraphl experience, and the telegraph
progress of the country, we claim that, in,any proposed legislation
affecting telegraphl property and business so vitally as the pro visions of this bill, we are entitledcl to a hlearin, both as to the ne cessity alleged to exist for Congressional  aiction, and the effect
of such action upon the private property involved.
We protest against the assumiption by  tlhe Committee of the
Senate,  withlout proof and withoult l)avini  been  lheard in our
defence, that the business of the Western Union Telegraphl Com pany is conducted in dclisregaid of the iilhts of the public to such
an cextent as to render it necessary for Concres.s to intervene.  We
are not advised that any person has applied  to tllhe Senate for the
redress of any grievance alle ed agaiiist tlhis Company.   Its Man acgers are believed to possess tlhe confid(l(inc of tlhe piilulie, and are
eairnestlv strivin7i to meet their wants T)v extendingi tlheir lines into
new territory and by)  enlarging tele(grapl)lic facilities as rapidly as
the growthl of business demands.  The telerralplic facilities of the
United States have bCeen increased witlhin lss than six yvears past
bv the construction of thlirtv thousand miles of line and seventv
thousand miles of wire, and the opening- of more tlan tl)re  tholu sand new stations  Of this development tl]e \FSTERN- UxION CoAr PA-NY has prosvide(d moe than half, and has expended tlherefor about
five million dollars, iin  addition to the contributions of PRailway
Companies included in its systemn, which amount to two and a half
!million dollars more.  Probably, the gross expenditure for new
teleoiraphic property Il)vy all the companies in tlhe country, inieluding
railways, has amiountedc to nearly or quite twelve millions of dollars
withlin these six years.  During this period tlhe avera'e chlarge for
messages has been reduced 0 on  half, and work llas been in progress for some  time  by this Company  preparatory  to  furtlher
reductions, which will )be made at an early dlay.
There have been paid in dividends to stockholders initele,graph
companies, durin, the period of this development, about five
millions of dollars, or an average of less than oneC nmillion a year.
This would lbe ten per cent.-the rate contemplated bly this billon a capital of ten millions, whichl is less than tlhe sumI  iinvested
during( the same time in extenditng and improving tle telel,'graph
system, wahich previously represented more lines and(h larger rc c,nues than tlhose for which Great Piritain recently paid more than
thirtv million dollars in,old.  Tlat tlie capital invested in toleg,ilapl)s in tlhe United States is not now, and lhas not of late been receiving  adequate  compensation, is Avwell knovwn  to all who  are
acquainted wvithl thle tfaetc.  The investment has been made, however, in the confident expectation of a suitable return as the country
progressed in popuIlation and wealth.  This Company  Tias considlered the ordinary risks incident to competing enterprises, where
success depends on the patronage of thle publlic, but they Iha
wholly overlooked the possibility of danelr firom the Govelnmlent,
or of an attempt l)y Congress eitlher to t.lake their pro)perty or interfere with their business without just comipensatioli, or to create a
competin, Company-, and then to coufer upon tllat conl)any tlhe 
rilght of exclusive use of the vast facilities provided for the postal
service at the public expense.
Private enterprise has already established the telegraphl throughout every State in the Union, and in all the Territories but one
(Arizona).  The value of the services it has rendered, without
charge, in the interest pf science, and to sufferers by fire, and flood,
and pestilence, is far beyond that of all the pecuniary contributions
it has received.   Millions of acres of the public domain have been
g'ranted to railway corporations, while the telegraphl has received
no grants of land except whlereon to plant its poles.
While the deficiency —nearly $25,000,000-in the revenues of the
Post-office Department within the last five years lhas been defrayed
by taxation upon the people, the extensions of the telegraphl within
the samie period have been made by mecans of private capital, furnishled by private citizens.  This bill attacks the results of this
enterprise, and, if it becomes a law, will be fatal to them.
Second.-Thlis )ill creates a corporation and confers upon the
corporators special privileges and extraordinary powvers.  l)o~iwhat
riciii~i)le and for zhliat recaron the particular piersons mlamcd ii this
bill are p?ropose(d to b)e,imade the reci])icits of afiaichtise?ever gr)anted
by Conlre.ss before, coit(l o.f iai)iiease pectuniariy valte, iii t(A cteu(t that
they shall be'cable(l, tiic(tei cover of its provi,iotis, to graslp the telegiapl)h propelrty of the corporations created b)y t(le State,s, auid now e)gagecd il thie bztsiies, i e c e ic not iifoi-iiicd.  They are authorized to
issue one million dollars of its stock "for expenses of organization,"
and as there is nothino in the bill to prevent the distribution of this
stock among, the coiporators, we assume that to be their expectationl.  The bill contains no provision requiring the contribution of
any money as the basis for the issue of such stock.  This stock is
entitled to receive dividends at the rate of ten per cent. per annum,
so that Congiress is, in effect, imposing a tax of one hundred thousand dollars a year, to be levied either upon the Post-orices or the
senders of imess.ages, to give a bolnus to the beneficiaries under this
bill, as an inducement to engage in a business in which they have
now no investment, and in the conduct of which they have had no
experience.  If it be the policy of the Government to give so large a
bonus to encourage investments in telegraphic enterprises, we submit that justice requires that companies now engagred in the business, and whose property is at hazard, slhall at least be permitted
to compete for the gift.
Third.-The bill provides that certain expenses, heretofore borne
bv telegraphl companies, such as rent, lights, fuel, messenger and
clerical services, and also for stamps, shall hereafter be borne by
the Post-office Department-tlthe inference being that the necessary
labor can lbe performed without increasing either the number of
officials or the expenses of the Department, and that it is on account
of the saving, thus effected that the telegraphic service can be performed by the corporation created by the bill at rates which all
past experience in this country has found to be unprofitable.  The
fact that this illusive feature has escaped the scrutiny of tlhe Committee on Post-offices and Post-roads is another evidence of the in
96 
97
justice of acting on the bill without subjecting its provisions to the
criticisms of interested and competent experts. The bill provides
for a class of messages (section 2) termed "registered telegrams,"
"which shall have priority of transmission," and on which double
rates may be charge*   On examining the R(,port of the Committee,
to ascertain the reason for conferring a privilege of such immense
value, we find no reference made on the subject.
This Company remonstrate against a scheme which gives a million
dollars to create a new monopoly, under the pretence of checking
an existing one, and vwhich, under the plea of effecting "a greater
reduction of rates than was obtained in Great Britain," covertly
authorizes putting aside the ordinary messages of the public, whatever the pressure of their necessities, and giving up the wires to
priority messages at double rates-the effect of which must inevitably be to establish the priority rates for messages requiring immediate despatch. The priority rates under this bill are higher than
the present average rate.
We remonstrate against the passage of a bill which proposes to
hire out the Government Post-offices, furnished, and warmed, and
lighted, and the services of Government emnployes to private parties, unless to the highest and most responsible bidder. Especially
do we protest against being excluded from such competition, and
being put on the defensive by those whose investments in the business will be made, if made at all, after they have realized from the
gratuities which the bill proposes to confer.
Fourth.-The bill, in effect, exempts the property and business
of the Company which it creates from State and municipal taxation. It also makes the Company the agent of the United States
so that the public would be as completely without redress, in case
of neglect to forward and deliver messages, as they now are for the
loss of registered letters and other valuables entrusted to the mails;
at the same time all the risks of defalcations by postmnasters and
clerks, of theft or counterfeiting of stamps, are thrown upon the
Post-office Department.
The Western Union Telegraph Company does not desire that the
Government shall purchase their property. It has confidence in
the future growth of the country in population, commerce and
wealth. In the benefits of that growth the telegraph must largely
participate. It relies upon the future for a just return for the great
expenditure it has already made, and is still making, to enlarge and
improve its service.  If, however, this Company fails to meet the
just expectations of the public, it is suggested that the true remedy
is to require the surrender of its property, under the conditions of
the law of 1866.  But, until a state of things exists which makes
interference by the Government necessary for the protection of
public interests, this Company asks to be permitted to control and
conduct its own business without Congressional intervention.
We remonstrate against the passage of this bill, because it would
depreciate the value of the Company's property for the benefit of
private parties. It cannot be that Congress would enact a law,
the necessary and direct effect of which would be to depreciate the
7 
98
value of private property
with a view to diminish t]
When this Company ac
it was upon the assumpt
into between the Governe
not to be interfered with
years; and (2) that the
dispossessed of our prope
tors in whose appointmen
Company submits to the
law as that reported by tl
the compact into which w
Congress.  Under that c
sages for every departmei
ority over all other busi
General, which do not p
unreasonable in us to as]
be performed on the part
be released from its obliga
Common justice requir
peting enterprise, in whic
only responsible partner, i
by tl-hec restraints of a comr                   n
disregards.
The owners of telegrap
ing Congress for relief fr
bear; but this Company
gation of the subject, at 
any charges affecting thei
ed also an equitable par
fered by Congress with
possible.
The Western Union Tel
protect their property fr
promise desirable reforms,
to secure them, makes no
owners for private prope
to the public any benefits
gard it otherwise than as
pense of the public treas
seeks to supplant.
WILLIAMI ORTON,
HORACE F. CLARK,
E. D. MORGAN,
MOSES TAYLOR,
ALONZO B. CORNELL,
AUGUSTUS SCIELL, 
Committee of the Board of Directors of the
Western Union Telegraph Company. 
PROCEEDINGS
OF
THE COMMITTEE ON APPROPRIATIONS
IN THE MATTER OF
THE POSTAL TELEGRAPHi.  
POSTAL TELEGRAP.
WASHINGTON, D. C., 17thi Dec., 1872.
The Committee on Appropriations held an evening session in
order to give a hearing to the representatives of the various
Telegraph Companies of the country, on the proposed postal telegraph system. The following proceedings took place:
REMARKS OF MR. TIIURSTON.
Mr. THlURSTON, President of the Pacific and Atlantic Telegraph
Company, stated that under the Act of 1866 his Company recognized its obligation to sell its line to the Government at whatever price might be fixed by the arbitrators provided for in that
law.  Hie was prepared to show the cost of the line to the Company-its real actual cost, with unwatered stock. But he had
not come before the Committee to make any statement himself,
but rather to hear what other gentlemen bad to say. He was
prepared, however, to answer any questions of the Committee.
As to the Hubbard bill, his Company had great objection to it,
and looked upon it as a decided wrong for the Government to
create a monopoly for the purpose of wiping out private enterprise.  If the Government itself should assume the telegraph
business, as he supposed it had a constitutional and legal right
to do under the Act of 1866, his Company had nothing to
oppose to it. But the Hubbard bill he regarded as unjust and
unfair. Hiis Company was perfectly willing for the Government
to use its lines on the terms of the Hubbard bill, and would be
very well satisfied to be guaranteed six per cent. on its capital
instead of ten per cent.   The proposition in the Hubbard bill
that the Government should furnish office room, stationery, receiving and delivering clerks, messengers, &c., would save half
the current expenses of Telegraph Companies. The rates in the
Hubbard bill were presumed to be less than those now charged,
and under which his Company was making no profits.  He was
sure that all the Telegraph Companies would be willing to assent
to the terms of the Hubbard bill, and let the Postmaster General
fix the rates for messages if the Government would guarantee
them 10 per cent. on their capital. Hiis own Company would
be well satisfied with six per cent.
Mr. HALE.-You would adopt the same rates as those proposed in the Hubbard bill, and ask no higher guarantee than
6 per cent.?
Mr. THURSTO.-.-We would. 
102
The CHiAIRuMAN.-What do you mean when you speak of
6 per cent. on your capital?
Mr. THURSTON-.-I mean six per cent on the whole cost of
our line, with no watered stock.
The CHAIRMAN.-Please state to the Committee the extent
of your lines, and what was their cost.
Mr. TIHURSTON.-Our lines run northwest to St. Paul; south
to New Orleans; east to New York, Philadelphlia and Baltimore; and west to St. Louis. They run up and down the Mississippi river from St. Louis to St. Paul, branching at Dubuque
to Chicago, and extending from Chicago to Pittsburgh, whence
they branch to the three principal eastern cities that I have
named.  They also extend from Pittsburg to Cincinnati, an(l
run down to New Orleans by way of Louisville, Nashville and
Memphis.   In round numbers we have 5,000 miles of line
and about 10,000 miles of wire.  It has cost us $1,982,000, and
that amount of stock has been issued. That amount, as near as
I can figure it, is as small a sum  as such an extent of line can
be built for. Our stock has been all sold for cash, at par; and
it has netted us that sum, less commissions and expenses in placimg it.  Our materials were all bought at the lowest market
price for cash.  The labor has been done in the same manner,
and the line has cost us $1,982,000. It is possible that, under
other circumstances, a line might be built for less.
The CIAIRMAN.-W'hen was your line built?
Mr. THURSTON.-Our line has been built from 1866 up to the
present time.
The CHIIAIRMAN.-Is it costing less now thanl at first?
Mr. THURSTON.-No, sir; about the same. Wire is much
higher now.
Tfhe CHAIRfA,N.-What rate per mile does it costyout?
Mr. TUrPSTON.-The whole 5,000 miles of line have cost us
an average of $400 a mile, or $20() a wire. That includes all
the expenses.  It includes the purchase of rights of way.  We
paid in one case $165,000 for one right of way. It includes all
travelling expenses incident to procuring rights of way, and all
the expenses of a Company in existence for six years, during
which time we have been steadily constructing lines. We have
not been building any for the last year.
The CHAIRMAN.H-Iow was it that you had to buy rights of
way?  Do vou not go upon lines that are declared post routes
by Congress?
Mr. T''IIURSTON.-Generally  we do; but in all cases we had
to fight our way, and we found it cheaper to purchase certain
privileges from railroad companies than to go through lawsuits.
I came to Washlington a few days ago for the purpose of con.
suiting the Attorney General on the rates to be fixed by the 
103
Government for the transmission of its messages. lHe claimed
the right to fix those prices under the lawv of 1866.   I asked
Mr. Whiting, who represented the Attorney General at the time,
if the Government considered that law  a contract.  IlIe said,
"Yes, most certainly, it wa,s accepted on the part of your Company."  I said, "I want to ask you one question: Does the Government propose to carry out its part of the contract?"  iHe
said, " Certai],ly."  I saiad;" Well, at the present time, our hands
being tied, we are at great expense in constructing our lines from
Memphlis to New Orleans, our righlt of way being contested by
the New Orleans and Jackson l,-iilroad Compary on their road.
They have sued us, cut down our poles, and refused to carry
our materials, and have charged us with being common trespassers.  I wisl the Government of the United States then to carry
out its part of the contract and compel that Company to give us
right of way and proper transportation unider that Act."  Ie declined to d) it, or to express any opinion on thle subject.  I mention this to slhowv that that is all tihe benefit we have derived
under the Act of 1866, whereas, oi the other lhaid, we have
been doing the signal service business for a long time at rates
that are absolutely a loss to us of one half.  We found it cheaper
to buy rights of way.
Mr. IIALE.-You say that you have not been extending your
lines fo)r the last year.  NV hy is that?
Mr. T'I'HUPSTON.-On a very simple principle of good business.  We have no money, and we never run in debt.
Mr. IIALE.-You extended your line to the point  that you
found it profitable to do so?
Mr. THURSTO_N.-No, sir.  We  could extend our line further
and make it profitable. The fact is, a telegraph line mnust reach
out continually into new territory if it is to continue to do business. You cannot run a telegraph line with any profit upon
isolated roads. You must have it so as to accommodate all
customers.   The business of a telegraph line is somewhat like
the business of a large grocery or dry goods house; it has its
regular customers. A very small amount of its business is
derived from transient customers. Its principal business is
from regular customers-men with  whom we have to keep an
account, and to whom we render bills at the end of the month.
The transient business, the mere messacge of the man  who may
co)me in to-day to send a message, and whom we may not see
again for a month, amounts to nothing. Therefore, it is necessairy for us to have as large a connection as possible with the
business centres of the country.   This line of ours was construetedcl on that principle.  WAe reach all the direct centres of
trade with as little expense as possible.  It was got up at the
close of 1865 with a view of making a competing line with the 
104
Western Union Telegraph Company, which was at that time a
monopoly. The stock of our line was taken principally by
merchants, not so much for profit as for the purpose of getting
up cheap telegraphing. The stock has not been on the market.
Mr. HALE.-You do not propose now to extend your lines
further, but have arrived at about the extent you desire?
Mr. THlURSsToiN.-If this question of Governmental telegraphing was not pending we should probably extend our lines much
further-that is, we should fill in the territory better.
Mr. PALMI,:R.-You spoke of the signal service business.  Are
you doing any portion of it now?
Mr. THURSTON.-Yes, a large portion of it.
Mr. PALMEI{.-At what rates?
Mr. THURSTON.-We  are getting a rate of three cents per
word on a given circuit, as designated by the signal officers,
which circuit is in contradistinction to the circuit as designated
by the Postmaster General.
Mr. PALMER.-Can you tell what the average length of a circuit is?
Mr. THUulSTON.-No, sir; it varies very much.
Mr. PALIEP,. —It is the same, substantially, as it has been for
a year or two?
Mr. THURSTON-.-No, sir; one circuit is from Cincinnati to
New Orleans, for which we get thirty cents a message from the
signal service, and for which we charge the public $1.50 per
message, and do not make money at that.
The CHAII",fAN.-Please state to the Committee the amount
of real estate, offices and the like, held by your Company. You
have stated the cost of the line, and I suppose that includes
real estate?
Mr. T'I'HURSTON.-I meant the cost of the line and equipment.
We own no real estate.
The CHAIRMAN.-Did you include the offices in your statement?
Mr. THURSTON.-I include the equipment of the offices.  We
rent the offices.
The CHAAIRMAN.-Your statement of about $2,000,000 in
round numbers is the total cost of all that you own as a Company?
Mr. THURSTO..-Yes.
The CHAIRMiAN.-What is the average number of wires along
your lines?
Mr. T[IURSTON.-From  New York to Philadelphia we have
five wires; from Philadelphia to Pittsburg we have three wires;
from Baltimore to Pittsburg, two; from Pittsburg to Cincinnati, three; from Cincinnati to Chicago, two; from Cincinnati
to New Orleans, two; from-St. Louis to St. Paul, two; from St. 
105
Louis, by way of Terre Haute to a point on the Chicago line,
two. It is a two wire line with the exception of about 150
miles.
Mr. HALE. —How do your rates compare with the rates of the
Western Union Telegraplh Company between the same places?
Mr. THURSTON.-'They are the same at present.
Mr. HALE. —How long, has that been the case?
Mr.']'HU RSTON.-Since the first of May.
Mr. IIALE.-HIow were they before?
Mr. THURSTON.-They  were the same between  the same
places.
Mr. HALE.- -Why did you say since the first of May?
Mr. THURSTON.-Because up to that time they were not precisely the same.  T'here was a little variation in the rates up to
the first of May. At that time there was an advance of rates.
Previously to that the rates varied now and then.
Mr. HALE.-Since the first of May your Company and the
Western Union Company have had the same rates?
Mr. TnuRsTON.-Yes, sir.  The rates that we have now are
the rates which the Company which I represent established when
we first commencedcl business; they are about half the rates
which the Western Union Company charged before then. After
our tile was of sufficient length that they found it able to inter
fere with their business, they reduced the rates which we had
established fully one half.   That competition went on for three
years, and, of course, no money was made by the Companies. It,
was a losing business.  By an agreement between the two Companies the rates were advanced on the first of May last; but we
only agreed to put them back to the point at whichl we first
started.
The CHlAIRMAN.-Are your rates the same now?
Mr. T'HURSTON.-Yes.
The CHAIRMAN.-Is there any other relation between the two
Companies besides the one you have mentioned-such as ownership?
Mr. THURSTON.-No, sir.
The CHAIRMAN.-NO combination in work?
Mr. THURSTON.-No, sir.
The CHAIRMAN.-Are you in combination with any other
telegraph line?
Mr. THURSTON.-No further than  the mere interchange of
messages.   Messages are interchanged between  us and the
Franklin Company, the Atlantic and Pacific Company, and the
Great Western Company. WVe simply exchange mressages one
with the other, when we take them for points in one another's
line. There is no combination existing, in the full sense of the
word. 
106
Mr. NIBLACK. -What is the proper name of your Company?
Mr. THITUPSTON. —The Pacific and Atlantie Telegraphl Cornpanrv.
The CIAIP,MAN. —Ias the question ever been raised in your
Company as to tLhe right of the United States under tlhe Act of
1866?  Have you ever contested it with the Government or
deified it in anly way?
Mr. TiIUl.STON.-NO, sir. We do not pretend to contest it or
deny it under our acceptance of that Act.
The CI-AII,MAN.-I-Iave you ever refused to send any message
for the Government?
Mr. THIUrSTON.-No,  sir.  We  have protested against the
compensation, and my protest is now on file in the signal offices,
showing distincetly that we are doing the workl at one hlalf its
cost to the Company. I propose at the proper time to make application to the proper authorities for recompense for the money
that vwe have lost in doing the service for thLle Government. I
stated the matter very fully in my protest on file in the signal
office.
The CHAIRMAAN.-When?
Mr. THuPnsToN.-Some time last summer.
The CIJAI.RMAN.-Does the mode adopted by the signal offices
of sendiing its messages interfere with your business any more
than aliy other ordinary form of messages?
AMr. TIIUPSTON.-Yes.
The CIAIPrrAN.-In what way?
Mrr. TTURSTON.-IWe have certain hours at which signal messages are supposed to be handed us, at which time we are
expected to transmit them without delay, giving them preference
over all other business.  Until those messages are lhandedl in we
cannot fully handle our wires, nor underakle to send long mes
sages, because we would  have to interrupt them  wlhen the
signal messages cotime in.   The result is that the wAires lie comparatively idle, waiting for the signal messages. Of course there
are a few messages sent in the meantime in regard to handling
the wires, or such office business as is neede(d; but effectually
and practically the wires are at the service of the United Slates
for one houi's time.  When that hour expires the orders arc to
go on with the regular business of-the office; but during that
hour's time the wires are kept virtually at the service of the
signal office.
The CHAIPRIAN.-Is the peculiar arrangement of circuits and
dropping messages a matter of disadvantage to you?
Mr. THIUPRSTON.-Yes, sir.
The CHtAIRMAA.-In what way?
Mr. THiU]STON.-The circuits are purely arbitrary and are not
circuits of the Company.  the signal service makes our circuit
I 
107
for us from New Orleans to Cincinnati whether our Superin tendent makes it so or not, and we must send its messages over
all the circuit; then the messages have to be dropped, and for
these drops we get no compensation.   For instance, we send a
regular commercial message firom Cincinnati to New Orleans,
and we receive for it $1.50; the signal service sends its mes sages between the same points, and we receive for it only 30
cents-but that message is also dropped at Louisville, Nash ville and Memphis.  There  ire one, twvo, three, four niessa(gs
delivered for 30 cents.  But the signal service says: " No, this
goes the whole leingth of the wire; it is heard at eachl office as
"it passes through; it goes through those offices anyway, and
the dropping of it is no extra expense to the Compan,y."  If
that message, which goes from Cincinnati to New Orleans wvts
sent primarily from Cincinnati to Louisville, it would be a mes
sage, and would be paid for at the rate of 30 cents; the manipulation in sending it from Cincinnati would be the same, and
the labor of receiving it at Louisville would be precisely the
same. But the signal service s Lys that it is no trouble to have
the message dropped at Louisville, and yet the operator hals to
be on hand there, and has to go through the same manipulations
in receiving that dropped message as if it had been sent primarily, and only from Cincinnati to Louisville. The result is
that a signal service message sent from Cincinnati  to New
Orleans employs four offices, and requires the same services to be
performed as four commrercial  messages would require, and
vet the signal service pays for only one message, and pays for
that only 20 per cent. of that which a commercial message would
pay.
The CHAIRMAN.-Thle operators would be at the intermediate
offices anyhow, would they not?
Mr. THURSTON.-They mi,ght not be.  It is not likely that
some of them would be at their offices at 12 o'clock at night
It would not be necessary.
The CIHAIRMAN.-What do you estimate the present value of
your lines at?
Mr. THURSTO'.-We estimate their present value commercially. We have gone through six years' hard work, toil and
struggle, getting up our line, disposing of our stock, acquiring
facilities, and sustaining the establishment of our line agt,inst the
Western Union Telegraph Company, which attempted to crush
us out.  Our stockholders have been without any income all
this time; they have established a business at a loss, or at the loss
of interest on capital, and they look to it, the same is any other
business man would, to repay them in the future. When a business has been established-a rolling mill, a foundry, or a manui:tvtory-the value of it is not precisely what its owner has paid 
108
for it in dollars or cents, but what it is worth to him as a future
means of subsistence and profit. Therefore, when we estimate
what our lines are worth, we do not estimate them at what
they may have cost us, but as to what they are worth
in the future as a means of earning money for the stockholders-what they would be worth to sell to anybody else tomorrow. A man who had spent some time in establishing a
large manufactory might say, "This only cost me $100,000, but
really it is worth $200,000, and I do not want to sell it for less."
That is the view we take.  While we only spent $2,000,000 on
our line, and spent it very niggardly and very economically, we
do not feel disposed to dispose of our property at an undervaluation. We consider our line worth $3,000,000.
Mr. HALE.-Is your stock in the market?
Mir. THURSTON. -No, sir; it is not in the general market.
The CHAIRMAN.-What would you say is the cost to your
Company per wordl for doing associated press work?
Mr. THIURSTON.-I am not prepared to answer that question
at present.
The CHAIRMAN.-IS it your opinion that you are doing that
work for less than cost?
Mr. THURSTON.-I do not presume we are.
The CHAIRMAN.-You have stated that you are doing the
work of the signal service at less than cost.
Mr. THUIRSTON.-Yes, and I am prepared to show it very
clearly from my letters on file at the signal office.
The CHAIRMAN. -How does the rate which the signal service
pays you compare with the rate which the associated press pays
you?
MAr. TiaURSTON.-I cannot compare the rates, because we send
the associated press reports in a different manner  and in a
different form.  We  send a great deal of specials.  Our associated press business is not like the associated press business
of the Western Union Company.
The CHIAIRMaAN.-What are those rates?  I suppose your
rates were on the same basis as the Western Union Company.
Ar. THURSTON.-Very nearly on the same basis.  The understanding between the Western Union Telegraph Company
and ourselves is, that neither Company shall make a change of
rates without the concurrence of the other Company-that is, in
regard to our regular business; but in regard to these press
rates we may change them as we see proper.
The CHAIRMAN.-Can you remember readily what those rates
are?
Mr. THURSTON.-Not readily.  A short time ago-a week or
so since-a proposition was before me for sending despatches
from Washington City to Cincinnati, and, I think, Chlicago, and 
109
4i and 5 cents a word was the price to be paid. That was for
specials.
The CHAIRMAN.-How many drops were included in that?
Mr. THURSTON.-One at Pittsburg and one at Cincinnati.
The CHAIRMAXN.-If you can furnish us a statement on those
points as to the rates charge4 the associated press by your
Company-the rate per word, the distance sent, and the number
of duplicates or drops-we should be very glad you would do so,
the object being to ascertain an]i make a fair comparison between
press work and signal service work.
Mr. TIjURSrON.-I am going back to Pittsburg to-morrow
and will transm,it the information in a letter.
Mr. PALMER.-What press associations do you work for?
Mr. THURSTON. —We  transmit  for  the  American  Press
Association.
Mr. PALMER.-WVhere does it collect its news?
Mr. THURSTOIN.-In  New  York  City, and Cincinnati  and
Chicago.  
Mrl. PALMER. -Where does it make its headquarters?
Mr. TrauRSTO-N.-The president of it resides in Phliladelphia.
REMARKS OF MR. BROWN.
Mr. JAMES W. BROWN, President of the Franklin Telegraphl
Company, stated that the managers and stockholders of that
Company regarded the HIubbard bill with great disfavor. They
thought that some of its provisions were striking at the very
life of the Franklin Telegraph Company. That Company was
organized about six years ago. During that six years it had
been running in sharp competition with the Western Union
Telegraph Company, over what he believed was well known as
"the worst burned district" in the United States.  In other
words, the tariff had been lower in proportion to the length of
wires than in any other part of the country. For six or seven
years they had been losing, or at least, not making any money,
and had accumulated quite a debt. Last year was the first
year that the Franklin Telegraph Company had managed to
make any profit. Last year the Company had saved from its
earnings about $2,000, and this year it expected to save a much
larger sum. Now that it appeared that there was the slightest
probability of Congress passing the Hubbard bill, the Company
felt very much concerned about it. The Company felt that the
profitable business which it had been doing last year and this
year was not so much owing to its present management as it
was owing to its increase of business through its extension of
wires and opening of new lines, which had become feeders to
the Franklin line. The Frahnklin Company had gradually 
110
built up its business, and it now felt a great deal of concern in
seeing that any steps were being taken to destroy its business
It felt that it had been gradually educating the public up to the
telegraph business, and that, if the Hlubbard bill should pass,
the Company was going to lose its reward. IHe, therefore, came
here in the name of the Franklin Telegraph Company's stock holders, to protest, if he could use the word, against any corpo ration being organized to enter into competition with existing
Telegraph Companies under the very favorable terms proposed
in the Hubbard bill.  Oii looking over that bill he discovered
that the tariff rates would not be materin ally reduced from those
which the Franklin Telegraph Company was now charging.
For instance, the rate between Newv York and Boston would be
twenty-five cents under the Hubbard bill, and the Franklin
Telegraph Company was now charging only thirty cents. That
was a circuit of 2.,0 miles.  For two circuits of 500 miles the
rate under the Hubbard  bill would  be forty cents, and the
Franklin Telegraph Company w~is doing that service-from
Boston to Washington-for fifty cents; theierfoi-e, there was
not much difference between the rates, while, on the other hand,
the Company to be organized under the Hubbard bill was to be
furnished by the Government with office room, stationery,
clerks andl messengers, and was to import its material free of
duty —and for all those advantages it would only pay to the
Utited States the sum of five cents on every telegram transmitted.  It cost the Franklin Telegraphl Company over six cents
a message for delivering its messages in Boston and New York,
where, owing to the large amount of business done, the work
was done cheaper thlan at smaller stations; so that, if the Government should only receive five cents on each message delivered, it would be giving a bonus to the Company.
Mr. PALMER..-What do you mean when you speak of delivering and receiving clerks?
Mr. BPOoWN.-When a message comes in to the counter there
is a man there to receive it, who is called the receiving clerk.
That message has to be taken and numbered, and, after it is
numbered, it goes to the operator. That is what we call receiving messages. Whenr a message is to be delivered it is sent
from the operator to a clerk, and passes through two or three
hands before it reaches the message boy, whodreceives two cents
for delivering it. The delivery only costs us six cents in the
average; while, for the five cents which the Government is to
receive under the Hubbard bill on each message, the Government is not only to deliver but to receive the message, to furnish the office with fuel and stationery, and to make the
telegraph property free of tax. These bills must be paid by
sonme one, and must, of course, fall on the Government. Our 
111
people feel that if such advantages are to be given to any cor poration, those corporations which have educated the public up
to the present point, and wvhichl have labored as they have done,
should have tlhemrn in preference to a Company which has not yet
got a mile of wire or a telegraph office. Our Company is of
opinion that if its property is to pass out of its hands it shall not
pass into the hands of any new Company on the basis of an appraisement by four or five men, but that if the Government is
going to interest itself in telegraphing, it should go into it as a
business on its own account. If the business is to be done by
the people at all, it should be done by the people thoroughly,
and for the people, and by the agents of the people.
The CHAIPtxAAN.-What would your Company say if it was
offered( the privileges of this bill?
Mr. BROWS.-I think our people would accept it and be glad
to d(o so.
Tiic CHAIR3MAN. —You think you would make as much money
under it as yo()u do now?
Mr. BROWN.-That is a subject to which I have not given
much thought, but I think we could. My idea is that if a man
has a telegraph message to send, and can send it for five cents
cheaper from the Post-office than he can send it from an office
next door, he will send it to the Post-office rather than send it
next door and pay five cents mnore. But if our line alone had this
positio,n, of course the competing companies would immediately
place their tariff on the same basis, and then the difficulty would
come up again.
The CHAIMrAN.-Hlas your Company done any work for the
Government?
Mr. Bl'OWN. -Yes, sir; we do a good deal of department work
and a part of the signal service business.
The CHAIRMAN.-What is your experience as to the signal
service business?
Air. BROWN.-W\Ve have tried to do our best. WVe believe
that the business has been done satisfactorily to the signal office,
and it has been entirely satisfactory to us.
The CIIAIIr.AN.-You receive what you think is a reasonable
compensation for the work?
Mir. BIowN.-Yes, sir; we are satisfied.  We are in "the
burned district," where we are accustomed to low rates.
The CHAIIRIAN.-]Has any question ever been raised by your
Company as to its obligation to perform work for the Government?
Mr. BROWN.-I think the matter may have been spoken of.
When we accepted the Act of 1866 we did it with a full understanding of what we were about, and we were entirely satisfied
to take upon ourselves such burdens as the United States might
impose. 
112
The  CHAIRTIAN.-You regarded  the franchises which  the
Government gave you under that Act as pretty valuable to your
Company?
Mr. BROWN.-SO far we have not had occasion to find them
of much value.
The CHAIRMAN.-Would you be glad to be relieved from the
obligations of that Act?
Mr. BROW\. -No, sir; we do not care anything about them.
The CHAIRMAN.-You prefer to hold to its benefits and bear
its burdens?
Mr. BROWNx.-We (do not complain of any burdens.
The CIIAIRMAN.-What does your Company say to the plan
of the Postmaster General for the postal telegraph?
Mr. BROWN.-The idea of some of our leading men is, that
if the Government chooses to go into this business we have no
objection. We hold our telegraph property the same as we
might hold ten bales of cotton; if we get what we think a fair
equivalent for it the Government can have it.
The CHIAIR.IAN.-What do you think would be a fair price
for your property?
Mr. BROWN. —I think about $500,000.
The CHAIRMAN.-What is the basis of your estimate?
Mr. BROWN.-The cost of our property.
Mr. PALMER.-IHow many miles of line have you?
Mr. BROWN.-We have two routes from Boston to New Yorktwo distinct routes-and we have one route from New York to
Washington. That, of course, you see, doubles the distances
from New York to Boston. We have six wires between Boston
and New York, seven between New York and Philadelphia,
and four between Philadelphia and WVashington. 
Mr. PALMER.-IIow many miles of wire in all?
Mr. BROWN.-3,000.
Mr. PALME1l.-What is the length of the signal service circuits on your line?
Mr. BROWN.-That I cannot answer. I am not sufficiently
familiar with the subject. I do not know the length of circuits
on other lines.
Mr. HALE.-When you say you have 3,000 miles of wire
you count your duplicates and triplicates, you do not mean 3,000
miles of route?
Mr. BROWN.-Oh,- no; of wire.
Mr. HALE. —How many miles of route have you?
Mr. BROWN.-750 miles, in round numbers; from Boston to
New York two routes, and from Washington to New York one
route.
Mr. HALE.-IIow do your rates comnpare with the Western
Union Company's rates for private despatches? 
113
Mr. BPowTN.-They are always the same.  I believe that is
the rule all over the country. Wherever the Western Union
lines run our rates are always thie same.
Mr. HALE.-You are not extending your lines?
Mr. BROWN.-WVe are not extending our route.  We  are occasionally putting on new wires. We put on two wires between
New York and Philadelphia last spring to accommodate our
business.
Mr. HALE (to Mr. Thurston).-Did you mean 5,000 miles of
route or 5,000 miles of wire as the extension of your line?
Mr. THUIISTON.-.5,000 miles of route and 10,000 miles of
wire.
Mr. BRow-'.-In the matter of rates it is perhaps well understood that no sooner does one Company drop its rates than the
other Company immediately conforms to them, otherwise it
would soon lose its business. Therefore, whenever the Western
Union Company lowers its rates it is immediately followed by
the opposition Company.
REMARKS OF MR. SWEET.
Mr. E. D. L. SWEET, executive manager of the Atlantic and
Pacific Telegraph Company, stated that the executive officers of
the Atlantic and Pacific Telegraph Company and its stockhold ers were, so far as expression had been given, of the opinion
that the telecgraph business of the country can be satisfactorily
done by companies operating under private corporations, and
that while the Atlantic and Pacific Telegraph Company might
be glad to avail itself of such legislation as would enarble Telegraph Companies to do business at less than present rates, it is
opposed to the plans now under consideration by that Committee,
and desires permission to state its objections more at length in
writing.
The CHAIRMAN. —Are the signal service circuits long on your
line?
Mr. SWEET.-Yes, sir; we have no signal service circuit that
is less than 1,200 miles long. The shortest we have is between
New York and Milwaukee, which is (the way  the line runs)
over 1,200 miles.
Mr. HALE.-H Vow many miles of route has your Company?
Mr. SWEET.-Our line runs from  New York to San Francisco. That is substantially the route, but it is done in some
parts by connections.  We  own 7,000 miles of wire and, I
think, about 2,600 miles of route, extending from New York
to Saratoga, and Albany and Syracuse, and there dividing into
two routes, one by  way of Osvego,  and one by  way  of
Auburn to Clyde. That is one route. From Buffalo there are 
114
two routes to Chicago by way of Detroit and Sandusky, extending down to Cincinnati, then across the State of Iowa and to
Ogden.  Tihit is the extent of the line that we own.   At Ogden
we connect, by contract, with the Central Pacific T'elegraphl
Company, and their lines are known is the Central Pacrfic Division of our Company, but they are not included in the statement made to the Postmaster General as to the extent of our
wires.
The CIIAIRMAN.-lHave you given the Postmaster General
the estimated cost of your lines?
Mr. SWEET.-No, sir; nor am I prepared to give it to-night.
The CflUR.MANA.-Please to put it in your written statement.
AIr. SWEET.-I will submit the matter to our Executive Committee.
The CHAIRXMA.-You will also please to state your rates for
messages.
Mr. SWEET.-Our rates are the same as those of the Westeirn
Union Telegraph Company, and always have been so.
The CIAIRMAAN.-Please say to your Company that the committee would be glad to know the cost of your line, and such
other facts as you have heard given here to-night by the representatives of other telegraph companies.
Mr. SWEET.-I shall do so.  Aly reason for coming here tonight was, that I might make a memorandum of all the points
n..~~~~~~~z
of inquiry.
The CHAIRMAN.-I would like to say to all the gentlemen
who have been heard to night, that the committee may finid it
necessary to propound some inquiries not yet made. If so, we
will notify them by letter.
Mr. ORTON, President of the Western Union Telegraph Company, said:
As I wsas unable to be present when the hearing commenced
this evening, I am only informed, by what I have heard during
the last ten minutes, as to the course of the proceedings to night,
and I therefore rise to inquire whether the committee desire to
examine the representatives of the Western Union Company on
the subject now under consideration.
The CIHAIRMAN.-The simple facts of the case are: that, by
resolution of the House, of December 4th, so much of the President's Message and of the Report of the Postmaster General as
relates to the subject of the postal telegraph was referred to this
committee. By a similar resolution last year the same subject
wvas also referred to this committee; and under that resolution
at last session some progress was made in a general inquiry, first
about the relations of the Telegraph Companies to the signal ser vice, and second, upon the general question of a bill known as 
115
the Hubbard bill.  That bill is still in the hands of this com mittee, as it has been presented and modified; and additional
facts and suggestions and recommendations of the President
and of the Postmaster General have also come to the commit
tee; and on the whole subject the committee has desired to
know whether any of those Telegraph Companies have anything
new to offer.
Mr. NIBLACK.-Permit me to state my view of the question.
By the message of the President, calling attention to the Report
of the Postmaster General, we are asked to take measures to wards establishing a postal telegraph operated by the Govern ment. From another source the Hubbard bill is urged upon
us. Others again have appeared before us at different times
and urged that Congress should not interfere with the subject
at all.'I'hese three views of the case are now before us for our
consideration.
The CHAIRMAN.-Precisely.
Mr. NIBLACK.-Tihese, I suppose, are the points to which we
desire gentlemen to direct their attention.
The CHAIRMAN.-In addition to what has been so well stated
by Mr. iNiblacl, this committee desires to represent the aspirations of the American people on this subject, as far as it knows
what they are, and also to secure to the Government whatever
is just and right. The telegraph public is now represented in
this room.  The question is, shall the Government do nothing?
shall it take the lines and carry on the business itself? or shall it
allow a third party, as suggested in the Hubbard bill, to do the
business? These are the questions we have to pass upon.
Mr. NIBLACK.-We have heard more on the subject of the
Hiubbard plan than on any other.
Mr. PAL.IER.-As I understand it the several presidents of
the telegraph lines have sent requests to be heard; and, so fir as
I am concerned, I am perfectly willing that they shall speak in
their own way on the subject.
The CHAIRMAN.-Certainly.  The meeting is called for the
sake of hearing what the Telegraph Companies have to say on
this whole subject, and we have this evening heard from all but
the Western Union Telegraph Company. The field is your
own, Mr. Orton.
REMARKS OF MR. ORTON.
Mr. ORTON.-I regret, Mr. Chairman, that, owing to the
fatigues of the journey here, and to a day and night of extraordinary work before leaving New York, I am in no condition at
this time to do justice to the subject; but with the permission of
the committee I will submit a few suggestions which occur to nme 
116
on readcing the report of the Postmaster General, which I hold in
my hand.
I believe that the Western Union Telegraphl Company is the
only Company mentioned  by the Postmaster General in his
report, although reference is made incidentally to other companies; and, as I conceive that the allusions to the Western
Union Company are not entirely just, andl do not represent the facts, either so far as they concern  that Company or
so fair as they relate to the telegraph business generally in this
country or in Europe, I desire to occupy a little time in the consideration of this report.
The first point to which I will invite the attention of the cornmittee is the reference of the Postmaster General to the rates
establislhed in 1871 for signal service messages; and I will say
at the outset that I have no desire to enter on a re-discussion of
the question.  But, in order that this brief review of the report
may touch all the topics, I will merely sav in this connection
that the Postmaster General has misunderstood the position of
the Western Union Telegraph Company concerning the signal
service business.  He  says; "The Western Union Company
contended, first, that the signal service messages, which, to be
"effective, require simultaneous transmission through special
circuits at certain times, were not covered by the second sec tion of the Act approved July 24th, 1866."
When I had the honor to appear before the committee at the
last session of Congress I endeavored to explain that the Company with which I am connected claimed no right to scrutinize
the messages of any person representing himself to be an agent
or officer of the United States, and that the objection which we
mrade to the claim of the Postmaster General in that regard was,
that, after having exercised the authority which the law expressly confers upon him to fix the rates on Government messages, we understood that he claimed something more-namely:
to direct by what route a message should be transmitted from
the initial to the terminal station, and what intermediate stations
on that route should be included in it; and also at what hours
of the day the offices of the Company should be open for the reception of such messages, irn order that a continuous circuit
might be made up to be worked synchronously across the continent, including the intermediate stations, and the messages
transmitted over that circuit, and dropped at the intermediate
stations and delivered at the terminal stations simultaneously.
We claimed that the Act of 1866 did not confer such authority
on the Posmaster General.  We claimed, furthermore, that the
rates to be fixed by that officer under the law of 1866 are uniform rates; that, having fixed a rate on Government business of
one cent per word on each circuit of 250 miles (under which, 
117
for illustration, the tariff on a Government message from Waslh  ington to Chicago, being four circuits, would be four cents
a word), it was not competent for him to say that another class
of Government business between Wanshington and Chicago, sent
by a more circuitous route, and involving more labor on the
part of the Company, should be sent for tihree cents a word  and
yet this difference was involved in the claim of the Postmnaster
General.  For example: under the general order, a message
from the Secretary of War to General Sheridan, whose head  quarters are at Chicago, delivered to us here, entitled to priority,
but transmitted within the discretion of the Company by whlat ever routes and wires would best performrl the service, paysfour
cents a word.  We are entitled to receive four cents a word for
that; but under the order concerning the signal service business
it became necessary to send the message by way of New York,
including in the circuit a large number of stations which are not
in it as ordinarily worked  with Chicago; and for that ser vice the rate fixed was three cents a word.  Now, we submit
very respectfully, Mr. Chairman, that the law which authorizes
the Postmaster General to fix rates, necessarily and inevitably re quires the fixing of a uniform rate for the like service, and that
a message from Washington to Chicago must have a uniform
price for it; that if the Government requires a message to be
transmitted between Washington and Chicago in an unusual
manner, in order that other service than that which is usual in
connection with the message may be performed in coinnection
therewith, for such extraordinary service we claim  that ex traordinary compensation is due. This is briefly the view of
The Western Union Telegraph Company on that point..
The report of the Postmaster General speaks of the liberality
of Congress towards the telegraph as follows
"When through the liberality of Congress the first telegraph
"line had been constructed, and the partial success of the inven tion demonstrated.   "
I do not desire to detract in the smallest degree from whatever
merit is due to Congress on account of its liberality toward the
telegraph; but it seems proper to call the attention of the
committee to the fact, that $30,000 was contributed to enable
Professor Morse to make an experiment with the telegraph, and
that,,the line which was built with that appropriation, after having been operated for a time by the Government, was found to
be an expense-that it was not self-sustaining, and the Government  gave it  away  simply  to stop that expense.   That
appropriation is the only one that I remember to have been
made by Congress for the benefit of the telegraphs of the United
States, with the single exception of that made in 1861, when
Congress authorizedl a contract to be made with any party who 
118
would give adequate- security to construct and maintain a telegraph line between the Missouri River aind the Pacific Ocean,
the free use of which should be given to the United States for
10 years, in consideration of $40,000 a year. Such a contract
was made, the line was constructed, and has been in operation
ever since.  The contract price promised by the United States
has been fully paid and the contract has expired; but I claim
that the Government simply paid for service which was richly
worth the cost.  But, if it was not, there is one other fact in that
connection which is entitled to mention.  Since 1862 the  telegraph has paid into the Federal Treasury over a million and a
half of doll,rs for taxes.
AMr. NIBLACK. —Do  you mean  all the Companies, or your
Company only?
Mr. ORTON.-I mean all the Companiec, since the internal
revenue laws went into operation, which was in 1862.  Therefore, if we consider that the $40,000 a year was a contribution
bv the United States for whichl it received no equivalent, still,
while it was paying that out with one hand with the other it
was taking in three times as much.
The telegraphi, therefore, it is but fair to say, stands before tlhe
people of the LUnited States as the product of private enterprise,
and is not the debtor of the Government for a single dollar.
Congress has given hundreds of millions for other enterpriseshundre(is of millions in bonds and lands to railways, and, so far
as I Inow, not a single Telegraph Company in the United States
is to-dclay the recipient, directly or indirectly, of one single dollar
of benefit conferred by the Federal Government. We make
no  complaint of that.  It  has been  a favorite  investment
withl but few people.  It has paid less during the list six years,
while I have been actively connected with it, to the owners of
the property, ol whatever basis the estimate is made, than any
other active public investment in the United States. Whether
the estimate be made on the basis of the cost of the lines, onl the
market value of the stock, or on any other basis-the telegraph
business in the United States during the last six years has paid
less on the average than investments in other corporations.
Reference is made, in the Postmaster General's report, to a
possible rivalry between the business of the post-office and the
telegraph in this country.  Without reading from the report of
the Postmaster General, and certainly witliout desiring to do him
any injustice, I think I am justified in saying that his report
contemplates a state of things under which the telegraph might
become the competitor of the mails, and the revenues of the
)ost-office might suffer from such competition.  That is the infirence which I draw from certain general statements in the
report.  Now, I cau only express an opinion on that point, and 
119
I shall not undertake to refer to statistics in support of it; but
it is my opinion that the telegraph contributes far more to the
development of the postal service than it draws from it as a result of its competition.  That is to say, between any two cities
of the Tlnit:d States the increase in the correspondence by mail
will be in a larger ratio than the increase in the correspondence
by telegraph, whatever that increase may be.   WVhile I shall
not undertake to support the opinion by data, I will state, as the
result of my investigation of the subject, that the telegraphl, instead of being the rival of the postal service-a something which
is goingo to interfere with it or detract from its revenues-is a
constant stimulant to increase the correspondence by mail, and
therefore to increase the postal revenues.  Let me remark, in this
connection, that notwithstanding the fact that the wires of the
Western Union'I'elegraph Comipany are absolutely idle for at
least six hours in the twenty-four, we probably pay a very much
larger sum for postage every year than any other private corporation in the United States.  With our offices, and wires, and
men, and all the necessary appliances for conducting the business, without apparently any increase of cost, we still pay large
sums annually for postage, simply because there is a department
of correspondence which it is impossible for the telegraph to
do.  For example: It cannot audit its own accounts.   I do not
mean to say that it is physically impossible to do so by telegraph, but that the expense of doing it with accuracy would be
vastly greater than it is to do it by mail.
Mr. NIBLAcK.-You mean in the transaction of official business between the offices?
Mir. OITON.-Yes, sir.  It is very difficult for the telegraph
to be accurate in the transmission of figures.  I read again from
the report:
"The natural policy of private Companies is to extend facili"ties slowly, and only to profitable points; to let their business
"augment gradually, and to reap larger profits from a small
"number of messages, while a Government system, managed in
"the interests of the people, pursues exactly the opposite
" course."
I suppose that it is entirely correct to say that it is the natural
policy of men engaged in every department of business so to
conduct it as to make the largest legitimate profit. The telegraph, however, has not been behind the development of the
country in population, in scarcely any section. It has kept
pace with the railways all over the country, and there are hundreds, if not thousands of miles of telegraph in operation to-day
where there are no railways, and where, I think, the mails only
run two or three times a week.  The telegraph is being rapidly
developed in Northern Texas, the Indian Territory, Kansas, 
120
Colorado, Montana, California, Northern Michigan, and other
sections of the country, where I think the mnails are not run
every day.   It is not too much  to say that the telegraph
has fairly kept pace with the growth of the country; but,
if it has not, I still am of opinion that it would be unjust
to charge it withl any special selfishness.   Investments are made
in telegraph property for the sole purpose of making profit.
We make no pretense to being a philanthropic or benevolent
institution.  We only claim that, having received no benefits
from Congress other than that general protection of the laws
to which all citizens are entitled, we are not liable to any special
charges, even if we do not keep up with the general expectation
in the provision of facilities. I quote again:
"Meanwhile, the immediate defects and abuses of the tele"graph call loudly for reform."
If there is anybody, Mr. Chairman, who alleges before
this committee, or before Congress, or before any departmentof
the Government, abuses concerning the conduct of its business
by the Company with which I am connected, I shall esteem it a
favor to be informed of the fact.  But I submit,  unless allegations are made, which, not being denied, do call for reform,
whether it is just for the head of an executive department of
the Government to charge citizens engaged in a lawful enterprise, by the investment of their own capital, with "defects and
abuses," without supporting that charge by something which,
undenied, would be acccepted as evidence of the fact.
I do not admit that the question of the value of telegraph
property is, under present circumstances, an entirely proper subject for consideration by this committee, and for this reason:
Under the law of 1866 the Federal Government has the
right to purchase all the lines and property of the Companies
which have accepted the provisions of that Act, at an apre)(tised
value, to be ascertained by five competent disinterested persons,
two of whom shall be selected by the Postmaster General of the
United States, two by the Company intereste1, and one by the
four so previously selected. Now, while the general question of
what it might cost the United States to acquire all the telegraph
lines may be a proper subject for consideration, I conceive
that ainytlhing which looks like anticipating the award of that
jury, in the selection of which the Companies have an equal
voice, is unfair; and I therefore except to that portion of the report of the Postmaster General which discusses this question of
the value of the telegraph lines of the United States.
I desire to have the attention of the committee especially to
what I am about to read. The report states as follows:
"The majority of lines in this country have been built very
"cheaply, their entire cost, including patents, being probably 
121
"much less than $10,000,000.   In fact, the poles have been
"erected in many cases entirely without cost to the Telegraph
"Companies by the railroads along whose tracks they are built."
* * * (I fail to see how that affects the question of their value.)
"The cost of a new system, equal in extent to the present,
"would, at the above rates, be $11,880,000."
Nowv, I submit whether these general charges of defects of
administration, this prejudicing of the condition of the property,
and this fixing of its value, is a fair proceeding on the part of
an executive officer of the United States towards Companies
whose obligation to part with their property is coupled with
their right to be represented on the jury that is to settle the
question of its value. No reason for the opinions here expressed,
and to which I have just referred, is given in the report —no
satisfactory reason-but I find in the appendix a detailed estimate by Mr. Charles T. Chester, of New York; and I would be
glad to know whether the statement which I have just quoted
from the report as to the probable cost of duplicatitng the present telegraph system of the United States, is based upon this
estimate, on page 169 of the Postmaster General's report. IIas
the committee any information on that subject?
THE CHAIRMIAN.-I presume the committee has no information on that subject. The Chairman has not. Perhaps the
Postmaster General may.
The POSTMASTER GENERAL.-That result is gathered in part
from that report of Chester's, in part from other information, and
also in part from the reports of Mr. Orton himself.  It is not
confined to MAr. Chester's statement or to any other statement.
Mr. ORTON.-If my reports have been as widely misapprehended as the report of Mr. Chester has been, I can begin to comprehend how such a statement as that came to be made.   The committee will pardon me for calling attention again to the fact that
there are two statements made in the report: first, that all the
telegraph property in the United States probably cost "much
less" than $10,000,000; and secondly, that it can be reproduced
for $11,880,000. The only witness whom the Postmaster
General brings forward to support this statement is Mr. Charles
T. Chester, of New York, whose estimate is found on page 169
of the report. The principal item in that estimate is 175,000
miles of wire, and you will note particularly that it says "duty
free."  Now, the duty on telegraph wire is over 60 per cent.;
and more than half of the 20,000 miles of wire which the Western Union Company erected in the year 1872 it was obliged to
import, and to pay thereon duty at thle rate of about 68 per cent.,
less 10 per cent. since the 1st of July last, I think. In this estimate, then, this principal item, representing more than $6,000,000,
is for wire duty free.  Now, the committee will bear in mind 
122
that this is the witness who, presumptively, is put upon the stand,
if not to prove the statement of the Postmaster General, at least
to justify its being made; and I know it will surprise the committee, as it surprised me, on examining Mr. Chester's estimate
in detail, and on footing it up (notwithstanding that its principal
item, representing more than $6,000,000, is for wire duty free) to
find that the total is eighteen and one quarter millions of dollars.
Let me repeat: The Postmaster General alleges that all the telegraph property in the United States cost less than $10,000,000,
and that it can be all reproduced for $11,880,000, and he puts
upon  the  stand  a witness whose estimate takes $6,000,000
worth of wire at 60 per cent. less than it costs, and th,tt witness testifies that it would cost eighteen and one garter mil.
lions of dollars I
Mr. IHALE.-He says it can be put up for about 25 per cent.
below that estimate.
Mr. ORTON.-Would not that 25 per cent. be fully offset by the
60 per cent. on the wire? That is what the rest of us would
have to pay.
Now, Mr. Chairman, I propose to inquire concerning the competency of Mr. Charles T. Chester to be a Government witness
in this trial, on an indictment by the Postmaster General, of the
Telegraph Companies of the United States for not having spent
more of their own money in the development of a businesss
that has brought less average return than any other publicinvestment in the country within the last six years.
Was there no one actively connected with the telegraph business; no unprejudiced person in the United States, haviring knowledge of the facts, of whom inquiry might have been made and
whose testimony would have been entitled to weight?
Mr. Charles'T. Chester never constructed but one telegraph
line, and that was built in the City of New York within the last
three years.  It is the Fire Alarm Tele,graph of that city.  And
we have had the curiosity to investigate Mr. Charles T. Chlester's
Fire Alarm Telegraph, and have obtained from the Fire Department an inventory of the property which he put into it, and from
the Comptroller of thle City the bill which he presented to the
city for it.
He erected 625 miles of wire, and his bill for it, on file to-day
in the office of the Comptroller of the Citv of New York, is
c850,000.  Now, at the rate that Mr. Charles T. Chester, who
offers to build a line (which the Postmaster General says can be
built for $11,880,000) for eighteen and a quarter million dollars,
if you will let him import his wire free of duty-at the rate
whiclh Mr. Charles T. Chester charges the City of New York,
the telegraph lines in the United States would amount to $238,000,000!  There were eighty miles of poles.  If we maklC the 
123
calculation on the basis of the miles of poles the result would
be nearly $800,000,000! But if his bill for $850,000 were to
be audited on the basis of his estimate of eighteen and a quarter
millions, for a system of telegraph equal to that now in operation in the United States, the Comptroller would pay him but
$65,000!
MAr. SAPRGENT.-Is there not some difference in the number of
instruments and their character, between the Fire Alarm Telegraph and the ordinary business telegraph, which would account
for some difference in the cost?
MNr. ORTON.-Yes, sir; I think there is. As a general thing
it costs very much less in proportion to equip that sort of telegraph than it does to equip a regular telegraph for commercial
business.
Perhaps, Mr. Chairman, as a specimen brick, this is a little
better, clearer, and more decided a specimen than we shall be
able to produce as we go through with the other estimates and
exhibits in this report, and yet, without a single exception, on
analyzing them, the result will be substantially the same.
But I acquit the Postmaster General of an intention to do
the telegraph business of the United States so great an injustice
as he  has  undoubtedly  done  it.  This  is not  his work.
The  young  gentleman who  has  been permitted to use the
dignity of a high officer to shield himself wvhile making an assault
on private citizens and on private enterprises is the same who
appeared before this committee at the last session of Congress
as the volunteer advocate of the Government side of this
question.
I say I acquit the Postmaster General of an intention to do so
great an injustice as has been done, not only to the.Companies,
but, as I submit very respectfully, to himself and to his great
office. But I do ask that, in the further consideration of this
question, by whatever department of the Government, some
regard be paid to the fact: that there are connected with the
telegraph business in the United States gentlemen who have
been engaged in it almost since its commencement; oentlemrnen
of ripe experience, of high character, and whose opinions and
whose statements of fact are certainly entitled to as much
weight as the guesses of this clerk, who has been permitted in an
official document to assail private citizens and private enterprises in the name of the Postmaster General.
Let me say a word on the question of value. The telegraph
and railroad companies in the United States have invested,
during the last six years, more cash in the production of telegraph
property than the gross sum named in the Postmaster
General's report as the cost of all the lines in the country.
The CHAIRMAN.-Do you mean by that that more cash capital
has been invested in the actual structure? 
124
Mr. ORTO;.-Yes, sir.
The CHAIR3IAN. —You exclude stock operations?
Mr. ORTOX.-I exclude stock operations.  I mean exactly
what I say: More cash has been invested in the production of
telegraph property-not stock-but poles, wires, instruments, ap paratus, buildings, patents, etc., than the Postmaster General's
report states to be the cost of all the telegraph property in the
country.
Now, the question which becomes necessary for this com mittee to consider at the outset is the expediency of the Govern ment of thte United States embarking in the telegraph business.
The population of the United States is now about 40 millions.
The number of messages sent by all the telegraph lines in
the country in a year is less than 20 millions. This fact,
therefore, appears: that of every two persons in the United
States, one of them, once in a year, has occasion to send a
telegraph message at the average cost of sixty-two cents, or
thirty-one cents for each person. Of the 40 millions probably
39 millions never send a message at all, yet each one of them
must have, in every one of the 365 days in the year, food, and
clothing, and shelter. By what right does the Government,
organized for the common benefit, and maintained at the
common expense, propose to tax the whole people of the
United States for the convenience of so small a percentage
of the population?  Is it not a strange and anomalous condition
of things that Congress sits considering an attack upon private
parties and property by a department of the Government which
seeks to inaugurate proceedings for the acquisition of their property, and for embarking in the telegraph business at the public
expense, to promote the convenience of a mere handful of people,
not one of whom comes here to complain, or to ask for any relief, while thousands and tens of thousands are either homeless
or suffering for lack of food, fuel or clothing, and for whose
comfort the Government makes no provision whatever?
I trust, Mr. Chairman, that this committee will believe me
entirely sincere when I say that neither on this nor on any former
occasion have I intended to be wanting in that respect which is
due to the members of the committee and to the officers of every
department of the Government of the United States. Six years
ago we entered, as we supposed, into a compact with the United
States, either that we were to be permitted to go on and conduct
our business without Governmental interference, or that the
Government would take our property at the appraisement of a
jury in whose selection we should have an equal voice, and that
we should then be permitted to withdraw our capital arnd invest
it in other enterprises. Scarcely was the ink dry on the stgnature
that gave validity to that act before schemes were iitroduced 
125
into Congress, and have been pressed at every session since,
which have rendered it necessary for the officers and representatives of the telegraph to be in attendance on Congress, under
circumstances of great persona[ inconvenience, at very considerable expense, and to the neglect and injury of the business with
which they are connected. If, therefore, I have sometimes exhibited impatience, it is, first, because I am compelled tllways to
be in a hurry; and, secondly, because I have felt, as I feel now,
that we have been the injured party and not the aggressor; that
we have endeavored to keep in good faith the compact into which
we entered on the invitation of Congress; and yet we are obliged
to come here at every session to defend our property, our business, and our management from unprovoked assaults by parties
whose interests or whose prejudices tempt them to suppress or
distort the facts, or who for lack of knowledge and experience
seem unable to comprehend them.
Let me ask, on behalf of the property which I represent,
and of the interests with which I am connected, that some definite action be taken on this subject at this session.  It is dclue to
all the interests involved, as well as to the honor and good faith
of the United States, that something shall be settled.  I stated
a few momnents ago that the Company with whicli I am connected had erected, during the year 1872, 20,000 miles of wire.
The indications are that we shall be required to erect, during the
year 1873, at least 25,000 miles of wire, notwithstanding the
fact that we are now engaged in equipping our lines with an apparatus which we have demonstrated to our entire satisfaction is
capable of doulbling the capacity of every wire  we  have.
Is it unfair, MAr. Chairman, in anticipation of such an investment, involving probably an expense of a million of dollars on
the part of the Western Union Company, and perhaps another
million by railroad companies, in connection with which lines
will be constructed, that we should ask Congress to take some
action by which we can judge whether every time we make
an investment in this business we put it at hazard.  Is the million of dollars vwhich we shall probably invest during the next
year to be put at hazard? Do the United States conltemplate
proceedcling for its confiscation? At all events, are we not entitled to notice as to what the Government does contemplate, in
order that we may elect whether to incur the risk of investing
these large sums annually, or whether we will retain and distribute them among our stockholders.  I submit that between man
and man this would be only fair-that common sense of justice
which is called "fair play."  The citizen of the United States is
certainly entitled to ask this fromn the Government of the United
States.  We ask nothing more.  We admit our obligation to
deliver our property to the Government under the provisions of 
126
the Act of 1866 whenever Congress shall direct the appointment of appraisers,  and  shall appropriate  the funds wherewith to pay their award.   But we  object  to  this apparent
attempt to create  a public  opinion in advanec of the  appraisemcnt,  which  is to  operate  on  the appraisers to the
prejudice of our rights.  It is not necessary  t) discuss  the
question now, whetlher we are entitled, under tlhat Act, to
the simple cost of the poles and  wires, or whether we  are
entitled to something more. The value is to be decided by arbitration, in accordance with the terms of the Act, to which we have
agreed, and the arbitrators are the judges.  We  certainly shall
not agree to any attempt to ascertain first what the appraisement will be, in order that if it is a good bargain you may
accept it, or, if it is a bad one, you may decline it. We agree
to abide b-)y the result of arbitration as provided in the Act, and
I hope that before Congress adjourns some action will be taken
which shall be an indication to the holders of shares in the
various Telegraph Companies of the United States, whether it
will be prudent for them to continue to liold such property, and
to the managers of the Companies whether it will be prudent for
them to continue to invest a portion of their earnings in the
extension of the property, or what it will be necessary for them
to do to meet whatever shall appear to be or shall be declared to
be the determination of the Government in that respect.
THE HIUBBARD BILL.
I am quite unequal to the discussion of the details of the bill
of Mr. Ilubbard.  I now speak of the bill as I last saw it.  If
the committee have allowed any modifications of it I'hlave not
been apprized of them. But the bill, as I last saw it, is a scheme
for the incorporation by Congress of a Company authorized to
engage in the telegraph business in all the States andl Territories,
conditioned that the rates at which messages shall be sent by
this Company shall be the rates named in the bill, which rates
are apparently considerably less than the present average rates.
But there is a provision in the bill authorizing "priority messages" at double rates.  But, Mr. Chairman, every message is a
priority message.  That is what the telegraphl is for.  And
you will appreciate, I think, the force of that on learning the
following facts: It is now three years since, throughout the
territory east of the Missouri River, messages could be filed at
any telegraph office at any time during the day for transmission
at the convenience of the Company,  and for delivery on the
following(r morning at half the tariff rates.  That provision has
been in operation three years.  It is tloroughlly well known to
all people who have occasion to use the telegraph; and, althlough
the rates from New York, Boston, Philadelphia, Baltimore and 
127
WAVashington to Texas, Western  Arkansas and Kansas,  are
$3 to $3.50 for a single message, with a few hours difference of
time, and, without any inconvenience to tlhe customer as to the
filing of the message at half these rates, the fect is that at this
time, after three years of use, but eleven per cent. of the telegraph business is done under this provision of half rates.
The CIIAIPMAN.-Is that arrangement made by all the other
Companies as well as yours?
MAr. OPToN.-Yes, sir; all of them.   Mr. Thurston, President
of the Pacific and Atlantic Company, I suppose (as I did not
file a caveat) is entitled to a patent on that scheme. I think, if
he was entirely frank, he would admit that he knew we were
going to do it; but hlie did it first, because it took us a great
while to work up the details before putting it in operation, and
so he started it on his lines before we did on ours. But it has
been in operation on all the lines of all the Companies during
the last three years.  It did not at first include any territory
west of the Mississippi river.
Mr. THIURSTON.-I wish to disclaim the credit of being so
much smarter tlhan the President of the Western Union Telegraph Company, and I am  happy to concede to lhim the compliment of having originated the proposition of sending these
night despatches at half rates.  It was the principle on which
our line was first created that that should form a feature of it
when the line was sufficiently extended to do so; and  we had
it in contemplation, it seems, at the same time as the Western
Union people, without each other knowing it.
The CIAIaRMAN.-Is the fact that you have such an arrangement so generally known to your customers that thle eleven
per cent. represents the voluntary choice of the people; or is it
true that a considerable portion of your customers do not know
of the existence of that half rate?
Mir. OToxN.-\Vhen we inaugurated this scheme we considered that the people who sent and received messages every
day were the people whomn it was to our interest to notify
first.  The  half rate message blank is printed in red ink.
These blanks were distributed, as other message blanks are
distributed, freely among the customers of the telegraph.  A
small advertisement, of a size suitable to be enclosed in the envelope in which messages are delivered to our customers, printed
also in red, was printed to the extent of many millions, and was
supplied to the various offices of the Company, and a copy was
placed in the envelope with every message delivered for several
months.  We argued that in the course of three months, if an
advertisement went out with every m,ssage delivered, we should
probably, during tthat period, reach the great majority of those
who patronize the telegraph.  In addition to that cards were 
128
provided and directed to be suspended in the telegraph offices.
The blanks themselves are exposed there. And still more recently I directed an advertisement to be printed prominently on
the envelopes used for enclosing messages to be delivered. We
have taken the utmost pains to inform the public of the fact, and
we believe the public is well informed of it. Certainly that is
the case among those who are most in the habit of using the
telegraph.
The CHAIRtAmn.-Does this half fare arrangement apply to
all your rates?
MIr. ORTON.-Yes, sir; to every office east of the Missouri
PRiver, including Kansas, Missouri, Arkansas,  Louisiana and
nearly all of Texas.
The CIIAIRMIAN.-Between here and New York, and between
here and Boston, and between Boston an(l New York?
Ml. OnTON.-Yes, sir. We do not include in it the Pacific coast,
for the reason that the line is so long and the difference in time
is three hours.  The great difficulty in maintaining that line,
its liability to interruptions and the certainty that (lay an(l night
business would get confused(, has induced us to withhold putting
it into operation on the Pacific coast.  We intend, however, in
lieu of that, to reduce the rates between the Atlantic and Pacific
coasts at an early clay —to still further reduce them.  They are
onlv about one half now what they were six years ago.
Now let me return to the Hubbard bill.  I spoke of one of
the provisions of that bill, being the authority to charge double
the rates named thlerein for messages entitled to priority, and I
expressed the opinion that every message was a priority message;
and I appealed to the fact that eighty-nine per cent. of the business
of the WIestern Union Telegraph Company is priority bIusiness, or
what would be priority business under the provisions of this
bill. Therefore, taking the present day rates and night rates,
and striking the average, the priority rate under Mr. Hubbard's
bill is higher o0. the average than the present average rate. The
bill, when I last saw it, provided for an issue of $1,000,000 of
stock, without any other consideration thlan the vague expression
"for expenses of organization."  It contained no stipulation or
guarantee on the part of the corporators that any single thing
promised on the part of the corporation to be created by the
bill shouldl be performed. It is a stupendous job; an attempt
to get the sanction of Congress to a scheme to enable stock to
be floated, one million dollars of which could be divided among
the corporators, without the obligation to account for a single
dollar of it. lWhen that has been done it is a good enough
thing for its beneficiaries, if they never erect a pole or string a
mile of wire; and I predict that if that bill shall become a law
the Company created by it will never build a thousand miles of 
129
telegraph line.  And  yet it may be a splendid thing for its
promoters.  It will do the public no good, and do the Government 110no good; on the co,itrary, if this scheme should fail, would
it not hvre discredite] Governmental connection with the telegraph; wouldcl it not postpone the time (if that time is ever to
come) when the Government shall control the business?
The ClIAIRMAN. —Please to explain precisely Awhat you mean
when you say that the corporators may make a good( thing of it
without t'heir erecting a pole or buildingo a mile of line?
Mr. ORTON.-When  this bill becomes a law, I assuTme that
the first thing to be done under it is to organize the corporation; the next thing inevitably is to sell some of the stock, for
until the proceeds  of the sale of the stock are on hand they
certainly will have nothing with which to buy lines that are
already built or to build new ones.  Suppose they sell $1.000,000 of stock, and no more-they have a right to distribute
that among  the  coruorators, and  are under  no  obligation
to account  to anybody  for it.   I assume  that no  moral
question is involved  in connection  with taking that which
Congress  freely gives.  I certainly raise  no  such question.
If Congress  gives the authority to twenty or thirty gentlemen to collect $1,000.000 from the public, and to distribute it among  themselves, that is about  the  highest  right
to property I know of.   But Congress exacts nothing from
them in return, imposes no obligation on them tlhen and tlhereafter to do anythinig.  But suppose they should get $2,000,000
of stock and divide the $1,000,000, and then faithfully and judiciousl- expend the other million, and the scheme fails.  They
have burrowed a hole in the Post-office, interfered with and in
terrupted the postal service, vexed and harrassedc the. customers
of the telegrapl)h, who have been many times caught sending
messages by the Government liac to points not reached by it, disgusted the public generally; and certainly it seems to me that
the people wvill not be in a very evangelical franie of mind towards Governmental connection with the telegraph, with such a
specimen of the results before them.
But suppose it goes on and does better, what then? The
Government has created a monopoly of which it can never be
ri(l except by purchase.  There may be  no obligation on the
part of the Government to buy the existing lines; there certainly
would be an obligation on the part of the Government to buy
that line. I submit that every share of stock subscribed to the
corporation created by this Act would be so subscribed on the
inducements held out by the Government of the United States,
either that that Company is to make ten per cent on its capital,
with an added million for expenses of organization, or, failing
in that, the United States is to buy the property. 
130
Now, I read in the public prints that the Secretary of the
'reasurv has recently been before a committee of Cog,ress, asking for legisltqfion to enable him to pay a larger commission
than is now allowed by law for the negotation of bonds of the
United States at a lower rate of interest than is paid on the
greater })art of the public debt.   This bill is a scheme to
enable a private corporation, after its corporators have made
$1,000,000, to make ten per cent on all the balance of their
investment, wvithl the one million included.  What is the propriety of such a partnership, with such a quasiguarantee of such
a rate of interest, on the part of the United States, which certainly is abundantly able to go into market and borrow money
at half that rate of interest?  What is the necessity for the
Government to set u,) partners in the business who do not own
a rod of telegraph in the United States, and who never did an
hour's work at the telegraph business in their lives —what is the
propriety of the Government setting up such parties in opposition to tihe capital and experience which, for more than twenty
years, have been developing a telegraph system which, notwitlistanding the disparaging statenm-ents made concerning it in the
report of the Postmaster General, compares favorably with any
telegraph system on the globe?
Now,  a word  on the subject of rates.   More tlhanT sixty
per cent. of the cost of conducting the telegraph business is paid
for labor, yet we tre obliged constantly to meet statements and
arguments based upon the rates paid in Europe.
THE  CHAIRM:AN.-Does that refer to the running expenses,
or to the building expenses as well?
Mr. ORTON.-It refers to conducting the business.  Sixty per
cent. of the whole cost is for labor.
Mr. NIBLACK.-What do you include in the word "labor "do you include operators?
Mr. O.TOX-.-I include the wages of operators, of course. It
is a work of men and of hands, not of steam engines-a work of
individuals, the expense of which increases almost in the direct
ratio o~ the increased volume of business. It is all very well to
say that if you have an immense mass of it it can be done more
cheaply. Ask the stenographer there who is reporting these
proceedings how  much  cheaper  he can workl  if he has the
wg'k of four men put upon him at once. There is a limit to
human capacity.  If correspondence were all paid for by the
written word, would the price of it be  any cheaper if the
volume was largely increased? And yet every word of every
message is written out in detail by the fingers of the telegraph operator.  No matter how you may increase the speed of
transmission, or cheapen some of the processes, every single message is the product of the labor of human fingers. Now, I 
131
understand it to have been the settled policy of every admiinis  tration for more than forty years to secure a higher rate of
wages for labor in the United States than is paid in any other
country; and especially has it been the policy of the United
States to protect its laboring citizens fromt competition with the
product of the cheaper labor of continental Europe. In view of
this fact, and of that which I have already stated-that more
than sixty per cent. of the current expenses of conducting tele graph business is paid directly in wages- is it fair to ask thot
private capital and enterprise shall perform in this country a
service which is so largely the product in detail of labor, at rates
corresponding with a similar service in other countries?  I be lieve it is susceptible of simple demonstration that, considering
the difference in cost of labor and of material in Europe andl in
the United States, telegraphing in the United States is decidedly
cheaper than in any country in Europe-I was going to say
than the average, but I say in any country in Europe.   If you
will consider the difference simply in the wages paid to the em ployds, and the difference in the cost of materials, you will
find that telegraphing is cheaper  in the United States than
in any country in Europe.
B,  that is not all: A  day's work by the employs of the
Government is limited by law to eight hours, while the cm ploy6s of the telegraph are required to work at least ten, and in
many cases twelve hours. I assume it will not be claimed that
the same persons in the employ of the Government would do
any more work in the same time than if in the service of private parties; or that the former could hire telegraph operatives
at lower rates of wages than are now paid.  It follows, therefore, that, on the basis of eight hours as a day's work, the present
annual expenditure to operate the telegraph would yield a product twenty per cent. less than the present, or that to maintain
the present product would require an increase of force and of
expenditure twenty-five per cent. greater than the present.
Surely, the Government would not discriminate against operatives and mechanics in the telegraphic department of its business, and require them to work from two to four hours more a
day than is now required of Government clerks, mechanics and
laborers.
In the report of the Postmaster General reference is made
to the Government Telegraph of Great Britain, and considerable space is devoted to the consideration of the question of a uniform rate. Now, sir, I admit that, if it were
practicable to remove the 40,000,000 of people of the United
States into the territory comprised in the States of New England
and New York, it would be entirely practicable to establish a
uniform rate. But see how unjust it is to compare this country 
132
with Great Britain or France, each having a population approximating to our own, settled on an area but litt]e larger than
New  England, while our population is spread over an area
equal almost to the continent of Europe. Ten to fifteen miles of
telegraph mtst be constructed and kept in repair in the Un-ited
States to reach the same number of persons as in Great Britain or
France are reached by one mile; and wlen you consider that it
costs on an average eight dollars per mile of wire per annum to
keep constructed lines in repair, you will see what a difference
there is in favor of those countries of denser population. Permit
me to remark, further, in connection with the English telegraph,
which is represented to be a success (and I believe it to be a
success so far as its adminstration is concerned), that I think
very erroneous views areentertained concerning the result of its
operations financially. Whatever it may become hereafter, the
British telegraph has cost the British Government more money
every month since it has been in operation under the Governmnient than it has received in revenue from suchl operation,s.
Now, I am aware that an exhibit has been ma(le showing a
profit.  I have examined that exhibit carefully; and find that
the apparent profit resulting from the operation of the British
telegraph is obtained by charging an arbitrary sum to capital
account. There is no evidence vet to satisfy me that the British telegraph is self-sustaining to-day. And yet it ought to
be self-sustaining, and I have no doubt that it will ultimately
become self'-sustaining. Very much has been said concerning
the enormous increase in the volume of business since the English Government took the telegraph and established a uniform
rate. Let me make a statement in that connection. There are
no more messages sent in Great Britain to-day, in proportion to
the number of miles of wire and the number of stations and
of employ6s, than there were before the Government took the
lines from private hands and established a uniform rate. This
is a very important fact, because there is involved in it the very
essence of the law governing the development of the telegraph
business.
The  CHAIRMAN.-IS that the statistical rule oni which tele graph companies consider growth to be gauged?
Mr. ORTON.-I am now about to state what I consider to be
the rule. It is, that the increase in the volume of telegraph
business is more directly proportioned to the increase of facili ties than it s to any question of rates whatever; and I would
make, without the slightest hesitation, a wager covering the cost
of the experiment, that if, say, between four cities, the experiment
should be tried, in the one case, of reducing the rate one half,
and, in the other ease, of doubling the facilities without any re duction of the rates, the double volume of business will come 
133
quicker on the doubled facilities than on the reduced rates.
Now, that is my opiniion, and I would be glad to hear the views
of the other gentlemen present, with whom I have not conferred.
Mr. THURSTON.-I fully confirm the opinion of the President
of the Western Union Telegraph Company.   We have found it
so on our lines.   And to-day w  find(, as the result of our business, that, with what has been called increased rates, over those
that existed up to the 1st of May, the want of facilities alone
prevents our business increasing; and we are now increasing
our facilities in or,ler to increase our business.
Mi. SWEET.-Mr. Or,on asked nme that question to-day on the
train, andl I have been turning  the thing over in my mind.  I
believe his statement to be substantially correct, so far as my experience goes.
The CHAIRMANi.-Does that indicate to your mind that the
demand is for greater facilities rather than for cheaper rates?
Mr. SWEET.-rFor greater and more rapid facilities.   The experience of night rates will demonstrate that.   The question is
not one of cheap rates; it is upon the question of facilities, and
of the rapidity with which messages are transmitted and d(lelivered, that the increase of business depends.
'The POSTMASTER GENFRAL (to Mlr. Thurston).-You say that
your business increascs if you increase facilities, notwvithlstanlding
that the prices may be also increased.  Supp)ose your prices
were lowered, would not the business be increased by that?
Mr. THURSTON.-My experience iii telegraph business brings it
do)wn to a very small point. It is, that no man sends a telegraph
message for the mere pleasure of telegraphing. He merely sen(ls
it in order to gain time, or to make the profit which  lie exples
to gain by economiizing time, by forestalling the market, or something else; and the question with him is not so mifch the cost
of a message as the speed with which it is delivered. So, if you
take a line between two large cities, with only one wire, and if
you make the price of messages as low as you possibly can, the
public will not be accommodated, and the business will not increase; but, if you put up more wires, and increase the facilities
for telegraphing, you increase the business.
The POSTMASTER GENEr)AL.-That increase of business is obtained by multi ying the wires.
Mr. THURSTON.-Yes.   By increasing the facilities and keeping the rates at the same price.
'The POSTM.ASTER GENERAL.-Then it is unlike the postal business, and unlike the telegraph business in other countries.
Mr. THURSTON.-Take a large city like Pittsburg, where I
reside, which is a manufacturing city, and take a factory there
employing 400 people, and you will find that it is only one out
of the  four  hundred that ever uses the telegraptlh; the other 
134
399 do not send a message in a year; but the one sends fifty or
a hundred messages in a day; and we must use him as a mer ch-ant would use a customer-we must give him  the facilities
that he wanLts.   The question with himn is not one of price, but
one as to how the service is performed.
The POSTMASTER GENERAL.-That would be the question
with a great many more people if they had facilities, and if the
telegraph was cheap enough to be within their reach.
The CHAIRMuAN.-Mr. Brown, what is your opinion upon the
point?
Mr. BROWN. —My impression is that the experience in some
parts of the country has been that reducing the rates has very
v-stlv increased the business. as in the West, for instance.  I
learned foom Mr. Orton that putting the rate down to ten cenhts
betwveen Chic:0go and Milvauklee increased the business very
vastly; but miy impression has been that when a man pays 25
or 30 cents for a segar he does not care very much whether he
pays five cents rmolre or less for a telegraph message.
MIr. PALMIER (to Mr. Orton).-If ch, apcniig(r ratcs does not
increase the volume of business why do you cheapen rates?
AMr. ORTON.-lHave I been understood as saying that cheapening the rates did not increase the volume of business?
MAr. PALMER.-I thought that the tendency of your argument
was to show that it was the increase of facilities rather than the
reduction of prices that brought an increase of business.
AMrl. ORTON. —Botli of them tend undoubtedly to increase the
business, but I believe that the development of the telegraph
depends more upon the provision of increased facilities than on
the reduction of rates-assuming, of course, that the rates are not
exorbitant and prohibitary, but taking the average rates as they
are to-day in the United States. And now let me support this:
The tariff between New York and Cincinnati six years ago was
$1.85 a message. Under the active competition inaugurated by
the Company of which Mr. Thurston is the president, the rates
wAere reduced to $1.50, $1.2o, $1.00 and finally to 60 cents.  At
that rate the lines were operated for two years. The rates to
intermediate places were reduced correspondingly, the rate between New York and Pittsburgc being 2o cents. On the 1st of
AMay last, by previous agreement, the rate between New York
and Cincinnati was advanced from 60 cents to one dollar, and
between New Yorkand  Pittsburg from 25 to 50 cents.  Within
the year preceding mhe Western Union Telegraph Company had
very considerably increased its facilities between  New  York,
Pittsburg and Cincinnati. The increase in the volume of busin)ess between the stations on that route, during the months of
May, June and July of the present year, after an advance of
from forty to one hundred per cent., was greater than the increase in the corresponding months in the previous years. 
135
The ClHAIRM-.N.-IClad there been an increase in the facilities?
Mr. ORTON.-Yes, I stated that as part of my preliminary
statement.
The CHAIRMAxN.-What was the percentage of the increased
facilities?
Mr. ORTON.-I cannot answer that very well. The facilities
between two such cities as New York and Cincinnati do not de pend upon the number of wires on any one route, although that
route may be the one mainly used for the business between
those two stations.  It is the general increase of facilities East
and West on the lines that are available between the two sections.
I do not mean  to say that the way to get a larger increase
of business next year than we have had heretobfore is to make
a further increase in the tariff; I presume I shall not be misunderstood in that regard. I merely bring this illustration in
support of the opinion which I expressed as to the law governing the development of the telegraplh business-first that it is a
question of facilities, and that, until ample facilities are provided
for the existing volume of business, there is certainly no great
inducement to make a reduction of rates. It costs a good deal
of money to provide those additional facilities.  The Western
Union rT'elegrapti Company has erected within  the  last two
years a wire of unusual size irn this country-number six gaugebetween New York and Chicago.  It is now completing one
between New York and Cincinnati of the same gauge, and has
ordered another of the same gauge between Pittsburg and
Chicago.
The CHAIRM3AN.-Is there any  other relation to the size
except strengcth?
Mr. OPTON.-The question of strength does not enter into the
case at all. The distance, telegraphically, between two stations
depends upon the size of the conductor, and it is possible to
bring New York and San Francisco telegraphically within the
same distance as New York and iBoston, if you make tihe conductor large enough.  On these larger conductors we are introducing  Stearn's duplex  system.   We  not only provide  an
additional wire, but we equip it at once with an apparatus
which gives it double power.   We brin  Cincinnati and New
York nearer together telegraphically, and we make each wire
equal to two.
If I am not wearying the patience of the committee, I would
make a statement or two further in this connection.  It will cost
for the wire which we contemplate erecting between New York
and St. Louis this spring at least $100,000-for one additional
wire.  Suppose, for illustration, that there were but one wire
between New York and St. Louis, and that it had been until
recently capable of transmitting the volume of business required 
136
to be transmitted between those two cities; but the inevitable
growth, resulting partly from the use of the telegraph, and partly
from the increase of population, and the development of business, carries the development of telegraph business ten per cent.
beyond the capacity of that wire, it then becomes necessary to
duplicate the entire investment, less the cost of the poles. Now,
on this point let make a remark concerning the most unfortunate errors which the Postmaster General has permitted an uninformed person to put upon him and upon the country with
official sanction. He states that the cost for additional wires is
$30 per mile.  Now, the smallest gauge of wire we use-No. 9
-weighs 340 lbs. to the mile, and it is worth to-day in the port
of New York 101 cents per pound. It requires very little
knowledge of arithmetic to show that the cost there, before you
have considered very far the question of making a telegraph, is
about $36 a mile. And then, when it comes to transporting the
wire an average of at least a thousand miles over the United
States, hundreds of miles on the backs of pack horses to the place
where it is to be erected, together with the insulators, crossarms, tools and other requisite appliances for erecting it, I must
confess my surprise at the declaration of the Postmaster General
in an official document that additional wires can be erected in
the United States at a cost of $30 a mile.
The CHAIiMAAN-.-I have just made a little figuring here from
your statement.  I understand you to say that the Western
Union Telegraph Company would probably erect next year
25,000 additional miles of wire, at a cost of about a million of
dollars; that would be forty dollars a mile, which is not very
far from the estimate of the Postmaster General.
The POSTM.ASThiR GENERAL.-With the duty off it is less than
thirty dollars a mile.
The CIIAIRM-AN (to Mr. Orton).-Did I misunderstand you?
Mr. ORTON-Yout did not misunderstand me. I was not
trying to be exact when I spoke of the cost as being a million
of dollars, and I had in my mind only the expenditure which
the Western Union Company would rEke. In the erection of
25,000 miles of new telegraph wire, it is probable that from one
third to one-half of the total cost would be contributed by railroad companies. We are building a good deal of line every
year at the cost of our Company of onl the  wire, insulators and
instruments; the poles being provided and all the labor performed, except that of a competent foreman, by the railroad companies. Yet such lines, when completed, are as exclusively ours
for use in transmitting messages for the public as if we had
made the entire investment necessary to create them. In return
for the contribution of the railroad companies we perform service
for them on other lines. While, therefore, the addition of 25,000 
137
miles of wire mil-ght not be entered as costing the Western Union
Company in cash invested at the time more than $40 to $50 a
mile, the total cost might be twice as much, the balance being
contributed by railroad companies, or charged to profit and loss.
The addition of a single wire may, and frequently does, involve
the necessity of the reconstruction of the entire line, including
the provision of new poles of larger carrying capacity.  In that
case the cost to the Western Union Company of the additional
wire only would be charged to construction, the other expenses
being put to profit and loss account, althou,gh the value of the
whole line has been increased far beyond that of the additional
wire. But when the additional wire has been erected as many
operators are required to operate it as if it were the only
wire on that route.   It takes  just as many  operators  to
operate a second wire as it did for the first wire, and it
will transmit as much matter as the first one did, so that
the expense, in connection with the increased volume of
business, keeps proportional with the increased volume; while
every time the increase reaches a certain figure we must
duplicate the investment-perhaps not absolutely, but we must
make a very large addition to that investment.
Suppose that when the traffic of a railroad reached  certain figures it became necessary to lay down a new track, and to
provide a separate equipment for that track, and a separate staff
for each department of its operations, you will set in a moment
that a very large increase in business might become a great
misfortune.  So it has been found by our friends, who  have
sought the favor of the public in competition with the Western
Union Telegraph Company by reducing their rates, that that
was the short and sure road to destruction. And we are also
quite satisfied with the result of that experience, since the
difference in our own revenues by the larger rates enables us to
provide the additional wires, which, being provided, constitute
the ability of the stronger Company always to compete successfully with the weaker.
A single remark more. If it were true that all the telegraphs
in the country could be reproduced for ten or eleven millions
of dollars, would not that fact alone afford ample protection to the
people of the United States from any very severe oppression on
the part of Telegraph Companies? Is there any danger to the
people of the United States from companies whose property can
be duplicated for so small a sum of money?  But, whether it is
ten millions or fifty millions, or whatever the sum may be, there
is no business of like general importance that can be established
on so comparatively small a capital. A single wire between
New York and Washington governs the tariff on 40 wires.  If
the line which Mr. Thurston's.Company is, I believe, now work 
138
ing into Washington-a line of one wire-should elect to-morrow
to reduce the rate between New York and Washington one
half, it would be necessary for the Western Union Company
to follow in that reduction; for, although, if we did not follow,
the public would be obliged still to give the majority of the
business to us at the higher rate, Mr. Thurston would inevitably
get all that he could possibly do by that line, and the fact that
he was willing to do all he could at that rate would undoubtedly
enable him to get the capital necessary to put up additional
wires; and so, step by step, the difference between the two
would disappear, and unless we came down to the same rate we
should ultimately lose our business.
The POSTMASTER GENERAL.-I have one or two general re marks to make in reply to Mr. Orton.  In my presentation of
the question with regard to the postal telegrapht I am certain of
one thi tg-tlhat I have not hada particle offeeling for or against
any  Comnpany.   I have been  looking solely to the public
interest.   I have made no statement with a view to injure any
Company or to blast its prospects in the future, or to interfere
with any just compensation that may be awarded to) it for its
property.  On the contrary, I have made my statement only
after repeated solicitations from people of all grades of society,
some rich, some poor, some men in business and some in social
life, some from the East and some from the WVest; and that, too,
after Congress itself had inaugurated and carried out two or
three laborious and able investigations of the subject.
The distinguished President of the Western Union Telegraph
Company, who seems to be so exceedinl1,y full of informationl
on the subject, has taken it upon himself to deal somewhat facetiously with the report of the Postmaster General, and rather to
express himself in terms of commiseration for the weakness
therein displayed.  He has been especially severe upon the instrument that I have seen proper to use. Now, I admit that I
have had very few advantages in preparing this st~itement.  I
have not had one dollar of public money at my dlisposal except
that which I can use by the assignment of a single clerk in the
department to gather information.   I have avail-(l myself of the
services of Mr. Lines, and I think that, so far as his private ciuaracter is concerned, it will compare favorably with that of any
gentleman present-I was going to say withi that of Mr. Orton
himself, but I wish to avoid the appearance of anything offensive.  But Mr. Orton lhas seen proper to designate many of my
statements as the mere vaporings of an ignoramus, who has beenl
permitted to shield himself behind the dignity of a hih(lI officer.
Now, in the first place, I say to this committee that, so far as the
dignity of my office is concerned, I do not look to Mr. Orton, or
to any other man on the face of the earth, to protect it, or 
139
to shield it, or to guide me how I shall treat it. In the
discharge of my official duties I shall simply exercise my
proper discretion fearlessly towards Mr. Orton individually,
or towards him as President of the Western Union Telegraph
Company. But I desired to present all the facts that may
apply to this subject in all its lights, and at the same time
I desired not only to be just to the people but to be fair and
more  than just-to be liberal to the members of those co' porations who have heretofore enlisted in this business, and wlose
capital has been invested in the various lines. At the same time
I wish to be understood that mere temper in this thing will not
guide my action, as I am sure it will not guide yours. All that
we seek to get at is the truth.  To do that we want to ascertain
exactly where we stand, precisely how much property these
gentlemen have, exactly how much money they have invested;
and wshen that is ascertained, the public mind will be prepared
to say whether the Government will purchase these lines or not.
Now, we have listened to a two hours' oration from Mr. Orton,
and we have not had from him a solitary word going to show
what the expenditures of the Western Union Telegraph Com pany have been, nothing but a mere general declaration, which
would not be regarded in a court of justice as worth a button.
I appeal to any gentleman here, who is in the habit of trying
cases, if he would for a moment dream of allowing a witness to
retire from a witness stand after giving his own general opinions
and declarations, and studiously concealing every fact.  What I
have asked for in this report is simply this, not that my state ments should be taken as facts: I have presented them as the
nearest approximation to facts which the means at my command
enabled me to make, and I ask the committee to consider the
statements which- I have been enat)bled to present to themstatements all made iil good faith-and then to do what I think
prudent men ought always to do before engaging in any great
work (and especially gentlemen like yourselves, acting in a representative capacity, as members of the American Congress),
that is, simply to appoint a commission of the best men that we
can designate in the land, with ample power to ascertain precisely how  many miles of wire these gentlemen have, how
many poles they have, how many batteries they have, how
much property they have, precisely what amounts they have
expended, and then, in the language of the Act of 1866, to determine what the Companies are entitled to for their lines, property and effects. That is the agreement which they have
made.  That is all that I have asked for.  I do ilot ask you to
take my statement, and to insist on taking the property of any
telegraph Cotnpany; but I have asked you to appoint this cuiimission, auni in conliLction with it to appoint the appraisers, 
140
throwing around them such guards as you may deem proper
and right for the protetion of the people; and when those
reports are made to you, with the facts reduced to figures as
accurately as the investigations of the ablest and most impartial
gentlemen we can obtain can arrive at, then I want this committee and Congress to determine whether the me has come
when the American people shall stand on this question on precisely the same platform with every civilized people in the
world; and I believe that every nation in Europe to-day, that
has a telegrnph at aH, has put it under the charge of its Government. Even Canadn, where that step has not yet been taken,
has marched forward to the establishment of a uniform rate of
compensation, applying to the whole extent of that country
which is next to our own in extent on the North American continent. And the directors of the Montrenl Company have
already declared that on their uniform rate of 25 cents a message
they have hd at least an increase of business amounting to
25 per cent. in the aggregate.
I hive only asked the committee to avail themselves of all
proper means of investigation to arrive at the facts as accurately
as possible, and then to decide the question. I am not willing
to take Mr. Orton's mere generalities, and to allow him to make
his statement, without making the most careful scrutiny into his
detailed statement of facts.
Mr. NIBLACK.-Is it not true, also, that every Government that
has taken charge of the telegraph business his also taken charge
of the railroads, with the exception of Great Britain?
The POSTMASTER GENERAL.-Canada has not.
Mr. ORTON.-Canada has not the Government telegraph.
The POSTMASTER GENERAL. -No, it has not ie Governmental telegraph, but Canada has but one telegraph line, and
that is managed on the most liberal principles.
Mr. SWEET. -Canada has two telegraph companies.
The POSTMASTER GENERAL.-I am not as well informed on
that point as the gentleman, but in these estimates I have put
then on the basis of Government expenditure. You will
observe that I make an estimate on what these lines will cost
the Government to duplicate them. Of course that means with
all the advantages which the Government possesses. The
Government cn run lines along mail routes. It would have no
duty to pay on the necessary importations. It would have all
those advantages and al the advantages of management.
These are the arguments that I urge why Government should
people.
Mr. R. B. LINES said that, as to Mr.  Chester's estimate,
it was to be borne in mind that it was made on the figures 
141
given by Mr. Orton in his report some years since, and
that Mr. Chester stated in his letter that wire was the
most expensive item in the cost of telegraph lines, owing
to the enormous increase in the cost of coal and labor in
England, which rendered wire more than thirty per cent. higher
now than it was six months since. Mr. Chester's estimate was
on the basis of the wire being duty free, which would reduce
the cost some two million dollars.
Mr. ORTON said he made no point as to the question of duty
on wire beyond what he had done, but he should like Mr. Lines
to explain how, in the body of the report, he had committed the
honorable Postmaster General to a statement of $11,880,0)00 as
the cost of duplicating the present lines of telegraph, when the
only estimate submitted in support of that statement made the
cost eighteen and a quarter millions.
The POSTMASTER GENERAL interposed, and said he would
object to Mr. Lines giving any detailed information until some
detailed information was given by the Western Union Telegraph
Company, and he wanted it under oath /*
Mr. ORTON replied that he had had no intimation, either from
the Postmaster Generalor from the committee that any information
was desired whicii had not been furnished by the Western Union
Telegraph Company.  He had responded with the utmost alacrity
to every request made from the Post-office Department for information concerning the operations of the Western Union Telegraph Comlany,and with great particularity of detail, and yet he
had not found in the report of the Postmaster General a single
item of the statistics which he had furnished to him.
Mr. LINES remarked that the statistics furnished by Mr. Orton were all included in the report of the Postmaster General,
together with statistics from all the other Companies. Mr.
Lines proceeded to quote from the annual report of the
Western Union Telegraph Company for 1869, and also from
the report made to the House of Representatives by Hon. C. C.
Washburne, of Wisconsin, in order to prove that the estimate in
the Postmaster General's report was not at all below the figures
furnished by Mr. Orton himself.
Mr. ORTON remarked that Hon. D. A. Wells had prepared at
his request a report on the telegraph in this country and in Europe, which report had just been put in the hands of the printers,
and he asked permission to file a copy of it with the committee.
The CHAIRMAN.-We shall be very glad to have it.
(Adjourned.)
* See Note, page 142. 
142
NOTE.-Perhaps an apology is due to the public for having provoked a Cabinet
Minister to temporarily forget the proprieties of the occasion by the exposure of
errors which he had incorporated into an important official document. Respect
for the Committee and for the office of Postmaster General of the United States
restrained me at the time from making answer to the reflection upon my veracity
implied by the demand for information "under oath."  Neither by virtue of his
office, nor by any authority conferred upon him by Congress, has the Postmaster
General the right to require me to furnish information concerning the business
under my charge; y6t what he did ask for was completely and correctly furnished.
And I submit whether it would not have been more decorous to have published
with his report the information furnished concerning the operations of the Western
Union Company, exposing the errors, if any were found, than-after suppressing
my statements, and without attempting to reply to my exposure of his errors-to
insinuate that which he did not directly charge. Doubtless, an air of solemnity
would have been contributed to the propositions of Euclid if his demonstrations had
been supplemented by an affidavit in support of their correctness. But it is not
probable that the oath would have been accepted as conclusive if the demonstration had failed to convince.
W. O. 
[From the JOURNAL OP THE TELEGRAPH.]
THE POSTMIASTER-GENERAL'S REPORT.
In our last issue we reviewed, at some length, that portion of
the Postmaster-Generlil's Report relating to the telegraph, our
criticisms being more particularly directed to the erroneous state ments contained therein. It has been our aim to discuss the
questions involved in the Governmental acquisition of the tele graph in a fair and candid spirit, and with such intelligence as
the long experience and familiarity with the business of tele gtaphing enables us to employ. We have not imputed to the
Postmaster-General any improper motives in the presentation to
Congress of his singularly inaccurate and indefensible statements
relating to the telegraph.  The subject is too vast and compli cated to be understood by a merely superficial examination, such
as a Cabinet Officer, burdened with the cares and responsibili ties of an important department, is able to devote to it. A busi ness involving the employment of a capital of over sixty millions
of dollars, of ten thousand skilled laborers, of six thousand separate places where it is transacted, and an annual expenditure of
over seven millions of dollars, cannot be comprehended  or
grasped in all its details, except by a long and careful study of
the subject by persons qualified by study and experience for the
office. The mere fact that the Postmaster-General estimates the
value of such a business at less than one sixth of the capital represented in it —a capital which, for the most part, has a market
value of over 80 per cent. of its par value-shows not only that
his estimate of its value is not shared by that portion of the
public who have money to invest, but clearly indicates that he
has not given the subject the careful and intelligent consideration which is due to it. Regarding the cost of the lines the Postmaster-General says:
"The majority of lines in this country have been built very cheaply. Their
entire cost, including patents, being probably much less than $10,000,000. In
fact, the poles have been erected in many cases entirely without cost to the telegraph
companies, by the railroads along whose tracks they are built."
Suppose the railroad companies had not only "erected" the
poles, but furnished them, as well as the wires thereon, how
would this affect the question of cost?  In other words, what
bearing has the question of who pays for a thing upon the cost
of production?
A most striking commentary on the above statement of cost
le 
144
is presented in the Postmaster- General's Report, in the only estimate for constructing a similar extent of lines furnished by him,
qci]'ch gives the cost at eighteen and a quarter millions of dclollars,
providing thIe wire is imported free of duty.   When it is considered
that wire is one of the principal items  of cost, and that the
duties on it amount to sixty-eight per cent., it will be perceived
ihat the Postmaster-General's statement of cost is more than
doubled by the only authority he brings forward to establish it.
Sup,)posing, however, that it could be shown that the cost  of
building a system of telegraphs, equal to those now in operation
in the United States, would not exceed twenty-five or thirty
millions of dollars, would this fact prove that the Government
could acquire them, or would have a right to acquire them at
that sum?
Section 3 of the Act of Congress,  approved Julv 24, 1866,
upon which the Postmaster-General relies for obtaiining, possession
of the telegraphs now in operation in this country, provides as
follows:
"That the United States may, at any time after the expiration of five years
from the date of the passage of this Act, for postal, military, or other purposes,
purchase all the telegraph lines, property and effects of any or all of said companies, at an appraised value, to be ascertained by five competent, disinterested
persons, two of whom shall be selected by the Postmaster-General of the United
States, two by the company interested, and one by the four so previously selected."
Now, what is the meaning of the word value as applied to the
telegraph?  Does  it mean  the cost merely  of the poles, wire,
machinery, patents and other property, or does it include also
its business, good will, ability to earn money, etc.? The Postmaster-General assumes that it means simply the former, and
says:
" It may be proper to state that one of the companies has advanced the theory
that the Government should purchase not only its telegraph lines, property and
effects, but also the good will of its business, based on present and prospective
profits.  As it is difficult to see how mere good will can be brought before the
appraisers, under the law as it stands, it is, perhaps, unnecessary for me to discuss
at much length the merits of this claim."
If the Postmaster-General's definition of value, namely, that
it is synonymous with cost, is correct, we are sadly in need of a
new dictionary, for all of those hitherto published give an entirely different meaning to the word. Webster's definition of
value is as follows:
"The property or properties of a thing which render it useful; or the degree of
such property or properties; worth; utility; importance; rate or estimated worth;
price deemed or accepted as equivalent to the utility of anything; amount obtained
in exchange for a thing."
It will be perceived that Webster, in no instance, makes the
value of a thing depend upon its cost, and Ade must confess our
surprise that a gentleman of Mr. Creswell's well known ability
could fall into so conspicuous an error.   To illustrate the abso 
145
lute dissimilarity of the two words, and the entire absence of any
necessary relation between them, let us consider the cost and
value of an important invention. Take, for example, Stearns'
Duplex Telegraph, the cost of which to the inventor was inconsiderable, but which is already earning the Western Union Company the interest on a million dollars per annumrn, and the value
of which is almost inestimable. Or, on the other hand, take the
AMrse patent, whose. cost to the company was very great, but
which, having expired, is now without any value whatever.
It seems scarcely necessary to further discuss the question of
the dissimilarity between the cost and value of a thiing, as it
must be apparent to every reflective mind, but we will produce
one more practical illustration, on account of its direct bearing
upon the case in point.
Mfr. Frank Ives Scudamore, the Director-General of the Postoffice Telegraphs in England, in his testimony before the Select
Committee on the Electric Telegraph Bill, says:
"The sum that is charged by the companies for the construction of works generally includes a very large expenditure from first to last in getting up their plant
of all kinds; it incluLdes the cost of their leasehold property, and it iincludes the
cost of their patents, which is very considerable in each year, and it also includes
the preliminary expenses in getting bills before Parliament; it includes expense
of every kind; it is not simply the manufacture of the mere posts and wires."
Questioni by Mr. GOSCHEN:
Would yout be able to put in a statement and analyze the two and a half
millions of the companies? You are going to buy the assets of the companies,
and some of those assets represent property-that is to say, posts and wires and
instruments-assets which exist at this moment; another portion of it represents
no value present at all; that is to say, a certain amount which lhas been spent on
Parliamentary proceedings, patents which have expired, and so forth. Would you
be able to show what amount is to be placed in each of those two classes?"
Answer by IMr. SCUDAMIORE:
"I should be very glad, indeed, if you would not ask me to put in any statement
of my views as to the value of their property?"
Question l,y Mr. GoSCHEN:
" I do not mean the value; I mean the cost. The capital accounts of the various
companies will show what they have done with their capital, and it would enable
the Committee to see what the public are actually buying."
Answer by Mr. SCUDAMORE:
"I am quite sure of that; it would enable the committee to see what they would
buy, asfar as the expenditure of the companies is concerned; but that is not the only
sum involved in buying the trade of a company. For instance, if I may take a very
low case as an illustration, if you buy a public house you buy something more than the
building, and the pots, and barrels and bier engines; you buy the trade which the
man has acquired."*
The above quotation from Mr. Scudcamore's testimony showsthe view which the British Government took of their obliga
* Special Report from the Select Committee on the Electric Telegraph Bill; together with the
Minutes of Evwdence taken before them.  Ordereed by the House of Commons to be printed, 16th
Jury, 1868. Page 152.
10 
146
tions to the telegraph companies whose property they proposed
to acquire, and which they did acquire by paying for it a sum
equal to twenty years' profit. Mr. Creswell says, in his recent
report, that the profit of the telegraph companies in the United
States for 1872, was $3,500,000, and if the statement is correct
the lines are worth, on the basis of the purchase of the English
lines, $70,000,000.
"But," says Mfr. Creswell, " the manner in which the British Government recently
acquired the telegraphs cannot bo cited as a precedent for the United States.
There was no such previous agreement between Her Majesty's Government and
the companies of the United Kingdom as is contained in our Act of 1866."
The above sentence is a most remarkable one, emanating as it
does from a high officer of the Government, and taken in connection with the depreciatory manner in which the telegraph
property of the country is alluded to. Let us analyze it and see
what it actually means. It is not pretended that the British
Government paid too much for the property which they purchased, and which was seven times as much as Mr. Creswell estimates a similar property to be worth here, but simply that
there was no such agreement between the British Government
and the telegraph companies as exists by virtue of the acceptance by the companies in the United States of the Act of 1866.
Are we to infer by this that, if the British Government had possessed such a right as the Act of 1866 gives to our Government,
it would have paid the telegraph companies less than their
property is worth? Or are we to infer that our Government is
less fair in its dealings with its own citizens than the British
Government is with its subjects? Either the one conclusion or
the other must inevitably be drawn from the premises laid down.
We are unwilling however to believe that our Government is
disposed to treat its citizens in so unfair a manner, or that Mr.
Creswell would knowingly recommend it. On the contrary, we
incline to believe that this view of the case was conceived by
some assistant of the Postmaster-General, whose desire to acquire
the property for the department at a cheap rate overcame his
discretion or notions of equity.
But admitting, for the purpose of illustration, the improbable
hypothesis that our Government is capable of taking advantage
of a legal right to force a portion of its own citizens to sacrifice
a large and important property, regardless of all questions of
justice or equity involved in the case, we deny that the United
States has acquired any such right over the property of the telegraph companies which accepted the conditions prescribed in the
Act of July 24th, 1866. This Act, so far as it relates to the acquisition of the property, simply provides that the United
States may purchase it at an appraised value, to be ascertained
by five competent disinterested persons. 
I  
THE GOVEItNMENT AND THI' TELEGRAPH.
CORRESPONDENCE
BETWEEN
HON. J O SEPH
AND THE PRESIDENT OF
The Western Union Telegraph Company.
MEDILL  
EXECUTIVE OFFICE,
aeftra YORKiot ZIeltgrph (3o8l7al2t,
NEW  YORK, November. 6, 1872.
HON. JOSEPH MEDILL,
ChIicago, Ill.
MY DEAR SIR-I found it impossible to keep the promise
made you to call at your office before leaving, on account of
the pressure of business which I could not postpone, and which
occupied every moment of my time. My desire to have a
further conference with you was increased by information re ceived on the morning after our interview, to the effect that you
favored the taking of the telegraph by the Government. I
regret that any feeling of delicacy restrained you from the frank
and full expression ofyour opinions last Wednesday evening. My
opinions on this question have been formed after much study and
as careful a consideration of all the elements involved as I am
capable of giving. But I am always better pleased to listen to
the opinions of others than to express my own, and I am quite
sure that, with your ability, and your habit of reasoning your
way to conclusions, I should have listened to your views with
more than ordinary interest.
The progress of the American people is the wonder of the
world.  National prosperity is but the aggregate of individual
success. The prosperity of the average citizen of the United
States is not the result of any aid which the Government has
contributed. Our Government does most and liest for its
citizens when it leaves them free to embark in lawful enterprises,
whose success depends solely upon the zeal, energy and
fidelity with which they are prosecuted. American genius, enterprise and capital will provide for all the wants of our people,
and the question of cost loses its importance in the presence of
the constantly increasing ability to pay.
It has not been considered heretofore one of the functions of
our Government to make any necessary cheap.   On the other
hand, it has been the uniform policy for thirty years to make
many products artificially dear.  If it be right for the Government to require us to pay sixty per cent. more for telegraph
wire than it would cost without Governmental interference, in
order to insure a profit to American manufacturers of wire, is it
fair to ask us to perform telegraphic service at the rates charged
where wire and other material costs a third less, and labor less
than half?' If the policy of protecting the skilledl labor employed in every department of manufactures from the competition of 
152
the cheaper labor of Europe be correct what ground is there for
complaint if telegraphic service, whichi requires special educa tion and the greatest skill, costs more in this country than in
England?
The capital invested in the telegraph business in the United
States during the last ten years has paid less on the average than
that invested either in railroads, in mining, or in almost anv
kind of manufactures.   Yet its development has fairly kept
pace with the growth of the country without having cost the
Government a dollar, while in Europe, under Government con trol, the annual deficit, provided by taxation, has been from one
to two millions.
I claim this proposition as fundamental: That whenever our
Government undertakes to supply any public want, merely for
the sake ot making the cost less than the price charged by indi viduals and corporations, it should begin with what is most
essential to the largest number.  Is it just to impose taxes upon
all the people in order to reduce the cost of messages to the few
who have occasion to send them until after provision has been
made for supplying food, and clothing, and fuel at the lowest
possible rates?
Again, many more people travel on railways every year
than send messages by telegraph.  If, then, the Government
should take the telegraph, why not the railways? And when it
has taken these, why should it not embark in mining coal and
metals and in manufactures? In short, when the dIoor is once
opened, and our Government, instead of being merely a protecting power, becomes an aggressive enterprise, at what point
will it stop?
Personally, I have very little at stake. But I sincerely believe that it will be an unfortunate day for the country when
our Government enters upon a competition with the enterprise
of its citizens by embarking in any department of business.
Patronage is always power, and in the judgment of many
thoughtful men this source of power in our Government is already too great.
Hiave you reflected carefully upon the control which the Government would have over the press in the event of its taking the
telegraph? The telegraph company seeks only to make monev.
The press are among its best customers.  There is, therefore,
small danger that it will pursue a policy which would dissatisfy
these customers.  The Government, on the other hand, takes no
thought of profit.  In an exciting political contest, like that
throlugh which we have been passing during  the  last four
months, if the telegraph belonged to the Government would it
not be used by the party in possession for its extension and the
election of its friends? WVould not that portion of the press 
153
which supports the party in power receive valuable favors at
the expense of the portion opposed?
I submit these fewv suggestions foi your consideration. They
are but a small portion of the reasons which induce me to oppose the taking of the telegraph by the Government. I am not so
unreasonable as to expect you to take time to discuss the subject wvith me, and I submit them only because of my respect for
your opinions and my confidence in your judgment.
On the occasion of my next visit to your city I will endeavor
to redeem the promise made at the last, and then, perhaps, we
may resume the subject.
I am, yours very truly,
WNVILLIAM ORTON. 
AIAYOR'S OFFICE,
CHICAGO, December 17th, 1872. I
HoX. WILLIAM ORTON,
New York.
My DEAR SIR-Believe me that my long delay in answering
vour favor of the 6th ult. must not be ascribed to negligence or
disrespect, but solely to want of time.  I have been trying to
spaire enough to make such a reply as the importance of the
subject and my high respect for yourself merits.
Whether what I have to say will be connected or disjointed
will depend upon the "breaks" of the circuit of thought and
interruptions during its composition. I have not the aid of a
stenographer to rapidly jot down my views, but must slowly
long-hand them between other engagements and duties. With
this preface I proceed to reply to your very lucid and able letter
arguing the negative of the proposition.
Your information that I favor the taking of the telegraph by
Government is correct to this extent, that I deem it only a question of time when  it must assume that control.   " If the
Government should take the telegraph why not the railways?"
you ask. I reply, it will have to do that sooner or later. It
may be a generation hence before it is done, but eventually the
patience and endurance of the people with railway monopoly
and extortion will wear out, and the Government wiIll be ordered by them to regulate the charges of these corporations or to take
possession of them and operate them. But as the capital invested in the railroads is 200 times greater than that invested in
the telegraph, it will be proportionately more costly to purchase
and difficult to manage them; therefore, the public will submit
to imposition and plunder a long time before venturing to purchase them and undertake their management; and it may not
be done in your day or mine.   But the assumption of the telegraph would be but a small matter in point of cost. A month
or six weeks' surplus revenue, now  devoted to the buying
of bonds, would pay the expense of building as many miles of
wire as now exists in the whole Union-so that the question of
cost is not a very serious matter; and there are no legal
obstructions in the way, as the Act of Congress passed in 1866
contemplating the acquisition of the telegraph by the Governnmentt, after a stated day, was accepted by your Company as
well as others.
To my mind all the points you make against Goverment control of the telegraph apply with equal or greater force against 
155
the Government control of the mail.  If it is proper and ex pedient for the Government to manage the latter it is equally
so to manage the former. Private enterprise has much more to
complain of in the case of the mails than of the telegraph. The
Express Companies can urge all your reasons, and many in
addition, against the Government keeping the postal business
out of their hands and depriving them of large profits. The
enormous mail business, which now costs the people less than
$28,000,000 per annum, if left to the uncontrolled discretion
of the Express Companies, would  be reduced three fourths
in quantity by high charges, and the gross receipts therefor
perhaps doubled.  The smallest package, weighing less than a
newspaper, sent by express, costs its sender fifty times as much
as the Government charges for the same weight of newspaper,
or other mailable matter, for the same dlistai,ce. It would be a
national calamity to let the postal service fall into the hands of
"private enterprises," i. e., Express Companies,  who  would
manage it with an eye single to stockholders' profit. We should
then have as many rates of postage, and as exorbitant ones, as
we now have on express packages. After their experience
of the blessings of cheap and uniform Government postal service,
the people would not tolerate the oppression of private monopoly
for a single month. You refer to the comparatively fewv persons
who use the wires as a reason against taxing the many in order
to furnish cheap telegraphy to that few. But is it safe to assume
that if the Government should greatly reduce existing tolls a
serious deficiency would result, to be made good out of the
National Treasury.  I think not.  The increase of business
would keep pace wvith reduction of charges, until exceedingly
low rates were reached. Where one man will pay a dollar.
for a ten word despatch, ten men would pay a cent a word for
messages of all lengths, some of them containing perhaps a hundred words. Few persons now send despatches unless. they
have urgent business, on account of the high tariff imposed.
But lower the price sufficiently, and the number of messages
and words offered would be limited only by the capacity of the
wires to transmit them. This is no random guess work or mere
opinion of mine, but is proven by experience in Great Britain.
where a moderate decrease of tolls caused an immense expansion
of business.  You  and I remember  when  the Government
charged twenty-five cents postage on a letter; and we also remember how few were sent. WVhen it was proposed to reduce
the postage to ten cents there was a loud outcry against it.  It
was claimed that the reduction would enure only to the benefit
of merchants, bankers and speculators, and cause a great deficiency of revenue to be made up by taxing the poor man's
coffee and clothing. But the reduction actually increased the 
156
revenue and diminished the annual deficiency.   Again  and
again Congress cut down the postal tariff until it was but three
cents on a letter for any distance, one or two cents on a circular,
and one fourth of a cent on a newspaper to a regular subscriber I
and still the service is self-supporting; the reported deficiency
being caused by the franked and free matter, and subsidies paid
to ocean steamers. Like causes produce like effects, as the Government would seek no profit, but merely recompense; approximnating to cost, it might safely raze existing tolls to rates as comparatively cheap as postage on letters, and thus popularize this
lilghtning disseminator of thoughlt and intelligence, and remove
forever the sneer of thoughtless persons, that the telegraph is
patronized only by bankers, brokers, produce dealers, stock
gamblers, detectives and politicians. I claim, as a truthi of political
economy, that the consumption of whatever is desirable is always
in proportion to its cost. Make a desirable thing cheapenough and
there is no limit to the demand for it. Telegraphing would furnish
no exception to thle rule. What you state concerning the ill paying character of telegraph stock rather surprises me.   I was
laboring under the common impression that not 10 per cent. of
the market price of the Western Union Telegraph stock was ever
subscribed and paid in cash by the stockholders; but that 90 per
cent. of its present stock and value are the product of undivided
earnings, and issues of "watered" shares; that, as a matter of
fact, the public have furnished nine tenths of the capital in addition to the cash dividends and cost of maitennance and operation. If I am mistaken in this opinion the whole public are
also mistaken. But as the company has never published an
official statement, setting forth the actual facts, the public will
be apt to adhere to its present opinion until they do.  You say
"it has not been considered heretofore one of the functions of
our Government to make any necessary cheap."  I have just
specified a most notable exception in the postal.service. You
also remark, "on the other hand, it has been the uniform policy
"for thirty years, to make many products artificially dear."  Is
there not a slight inaccuracy in this statement? As I recollect,
the policy of the Government, from 1846 to 1861, was just the
reverse of that making products artificially dear; and the annual
repeal of Federal taxes since 1867 convinces me that it is not the
present policy of the Government to make products artificially
dear by maintaining high taxes and imports. You lay down a
proposition as fundamental, in regard to the duty of the Governmnent, in leaving the supply of wants to private competition.
I fully subscribe to the general principle; but I regard the
telegraph system as an exception.   You admit that " the telegraph company seeks only to make money," which is the sole
object of all pecuniary corporations. 
157
The present telegraph system is practically a monopoly. Com petition, such as will benefit the people, is out of the question.
The Western Union has established itself beyond the reach of
competition. It can crush out, absorb or control all rivals, and
exact its own terms from the public; and this it does. The
supposed competition of the other companies is little more than
a myth, so far as cheapening tolls is concerned. A monopoly
of a business is similar in effect to a "corner" on a stock or pro.
duct, and places the public at the mercy of the corporation
enjoying it. The rule of such a corporation is to perform the
least service for the most money, because profit and not public
good is the actuating motive of the share owners and managers
In the ordinary avocations of life competition regulates prices
and reduces them to the proper relative level, and Government
interference is not needed; but common carriers, millers
bakers, market men and others have had to be regulated and
controlled by the Government in order to protect the public
against their rapacity and extortion.  There should be allowed
no monopoly or combinations of private parties to speculate on
education or the diffusion of intelligence.  Wha-tever makes
education dear, or obstructs the spread of knowledge, promotes
ignorance, and injures the moral and intellectual lhealth of the
body politic. Knowledge is power, and creates wealth. Ignorance
is weakness, and its progeny are vice and poverty.  The public
schools are maintained at the expense of the taxpayers, whether
they have children to send to school or not.  WVere education
left to private enterprise the rich men's children would monopolize it. So, if the diffusion of intelligence by mail was
surrendered to the express companies, it would soon become a
luxury of the rich and a burden even on the business classes,
while the common people would be excluded from its enjoyment.  The telegraph is a quicker method of sending the mails;
a method which annihilates time and distance, and, with the
cooperation of the press, "makes all men kin."  It is the noblest
of all human inventions, and, while it is a common carrier, it
carries nothing more material than thought. The lightest of
tolls should be charged for its labors, for it is one of the great
educational instrumeneltalities of the nation and world. Its services should be as nearly free to the whole people as possible.
The greatest of all Government blunders is a tax on information,
which is like obstructing the vision and hearing of the natural
body. How cheap the telegraph could be operated by the
Government cannot be known until tried.
The new "duplex system" of transmission on a wire both
ways at the same time, and other remarkable improvements,
would enable the Government to transmit messages without
loss, at rates which would surprise the country, and speedily 
158
multiply the business manifo.d.  If I were fixing the tolls at
the outset they would be put at one cent per word, for.11 distances in the UTnited States, with a liberal discount for the press
-so liberal that the daily papers could afford to take all the
despatches their space would accommodate. By pursuing this
policy benefits would be conferred on the wlhole people to an
extent "not dreamt of in your philosophy."
From these observations you perceive that I hold the telegraph
properly belongs to the educational and postal systems of the
country, and that its mission and purpose are the diffusion of
thoughts, ideas and information among the people instantaneously;
hence, that a private corporation should not be permitted to
monopolize it for the purpose of money making and stock
gambling. Instead of being a corporate monopoly it should be
owned by the whole people and managed for their greatest
benefit, and its use made relatively as cheap as the postal
service.
You speak of the possible abuses which the Government
might practise to promote party ends.  I have no fears of that.
An administration which would make use of private information passing on the wires would quickly be removed from
power. The people are in more danger now, in that regard,
than they would be if the wires were an adjunct of the Postoffice Department. I hear of no complaints against the British
Government on this score.
You ask me if I have reflected carefully upon the control
\whichl our Government would have over the press in the event
of its taking the telegraph.  In my opinion it has nothing to
apprehend.  The press, of all agencies, is best able to take care
of itself; any discrimination (,r favoritism would be sure to be
seen, and a "howl" raised about it instanter.  The opposition
politicians would desire no better issue witli which to go before
the people. ilow long would a Postmaster General remain inl
office if found dealing harshly or unfairly with the press?  Congressmen would enact the very cheapest possible rates to the
press, in order to have the proceedings of Congress fully
reported. The influence of the State Legislatures would be in
the same direction, for the same reason.
You speak of the increase of patronage the telegraph would
give thie Government, whichl you deem dangerous. I do not
partake of these fears.  A service which you admit "requires
special education and the greatest of skill" could hardly be
connected with patronage. The present force of operators and
experts would of necessity be taken into the postal telegraph
service, with yourself, perhaps, as Director-in-Chief. Chtaiges
could only be made for caLuse, and appointments upon qualification.  Party politics would cut -but an insignificant figure in the 
159
matter. Novices could not be placed in charge of instruments
or wires.  What took place in England would happen  here,
The civil service system is bound  to be established in this
country. The popular demand is in that direction, and will
never rest satisfied until merit and qualifications are the test of
fitness for administrative office, and not partisan "bumming"
and ballot box stuffing.
I have written thus freely upon your invitation, and it is the
first time I have ventured to put any thoughts on the subject
upon paper. It is not strange that we should come to a diametrically opposite conclusion, and yet each be perfectly sincere in
his views, when our respective stand-points of observation are
considered. You remember how the slaveholders and abolitionists differed in their estimate of the "peculiar institution,"
but you and I will avoid their mistake, and not quarrel over our
difference of opinion. It would give me great pleasure to canvass
the merits of the question at issue with you some evening over
a fragrant Havana.  I much prefer the dialogue style of argument, and it is quite possible that a free exchange of views
would result in a radical change of my notions on the subject,
and in a conversion to you. views.
Very truly yours,
JOSEPH MEDILL. 
EXECUTIVE OFFICE,
Esterll  Znil ixettrap l (ComMairt,
NEW  YolK, Dec. 30, 1872.
lHox. JOSEPH MEDILL,
Chicago, 111l.
MY DEAR SIR-Your communication of December  17th, replying to mine of November 6thl, reached me last week.
It is in the main one of the fiirest, as it is the ablest of the
statements made  in favor of the assumption and operation
of the telegraph by the Government that have come under my
notice. A complete and fitting reply to all your points cannot
be made within the limited time I am now able to devote to
it, and I shall, therefore, content myself for the present with
the consideration only of those which I deem mnost important.
The statement which I had the honor to make on this subject
recently before the Committee on Appropriations of the House
of Representatives, together with a more carefully prepared
paper by Hon. David A. Wells, will be printed in a few days,
when copies will be sent you. They will contain-and especially the latter-so full and comprehensive a statement of
facts concerning the operation of the telegraph in Europe and
the United States, and of conclusions which the facts establish,
that it seems unnecessary for me to go over in this letter the
whole ground covered by them.
Your answer to my inquiry whether the Government should
not take the railways as well as the telegraph-tlhat "it will
have to do that sooner or later"-is evidence that behind the
question relating to the telegraph there is a fundamental difference in our views concerning the objects for which our Government was established, and the best modes of accomplishing them.
Those purposes are set forth in the preamble to the Constitution of the United States-" to form a more perfect union,
establish justice, insure domestic tranquility, provide for the
common defence, promote the general welfare, and secure the
blessings of liberty to ourselves and our posterity."
You  seem  to think that, in  order  to accomplish these,
the Federal  Government is to become a vast  commercial
enterprise; that one of its proper functions is to provide the
people with whatever is deemed best for their welfare at tihe
public expense, provided a larger supply can thus be furnished
at a less cost per capita than would result if such supply
depended upon private capital managed by private enterprise.
Perhaps your view is the correct one, but it differs widely from 
161
mine.  I have supposed that the "blessings of liberty" were to
be secured, and the "general welfare promoted," in the first
instance, by the protection of every citizen in person and property
while in the pursuit of all lawful avocations. This protection
the people collectively have guaranteed to each individual.
Your scheme of government appears to be a grand Fourier
phalanx-a sort of Oneida community on an immense scale whose members are to receive-not the result of their separate
skill and labor-but are to be beneficiaries in a pro rata distri bution of the net profits of the joint operations. It is not on this
plan that the successes of the American people have been thus far
achieved. While the paternal governments of the Old World
have been extending with one hand their illusive benefits, with
the other they have been heaping up burdens upon the people,
until debt and taxation are fast ripening into universal discon tent. Meanwhile, the people of the United States have abolished
"the peculiar institution" of which you speak, crushed the
rebellion which slavery invoked, and in their private capacity,
and almost wholly with private capital, have gridironed a con tinent with railways and carried the telegraph to the extremes
of civilization. Yet, in view of these important facts, you
appeal to the precedents established by European governments,
and appear to assume that they can be followed here without
being accompanied by the evils which have invariably attended
them elsewhere.
You would have the Government provide the telegraph before railways, apparently not because of any natural order of
precedence, but because it can get into the business at smaller
cost in the one case than in the other. You say: "The telegraph
properly belongs to the educational and postal systems of the
country, and that its mission and purposes are the diffusion of
thoughts, ideas and information among the people instantaneously."
I do not mean to deny that the instantaneous "diffusion of
thoughts, ideas and information among the people" is a result
greatly to be desired. It has not befbre occurred to me, however, that this is one of the functions of our Government. But
if it be, are there not other provisions to be made first?
The real basis on which rests the claim that the telegraph
should be put in charge of the Government, is, that it will
cheapen the cost. But before there can be much use for the
telegraph, people must be able to read and write; and you will
be surprised, I know, on referring to statistics, to find how many
persons of mature years there are, even in some of the older
States,            who can do neither.   What have these to do with the
telegraph  as a                 means of "instantaneous diffusion of thought
and  information?"  Should not the powers of the Federal De
11 
162
partment of education be enlarged, so as to embrace the supervision of the educational systems of the several States before
taking over the telegraph?  Should not the Government printing office also undertake the manufacture of spelling books and
New England primers, so as to insure the provision at the minimum of cost of those prime necessities for intellectual and moral
culture.
Many more persons need school books than would use the
telegraph at any price. Why should not the manufacture ot
them be undertaken by the Government, and the present
monopoly of the Harpers and Appletons, aided and abetted by
the laws conferring copyrights, be completely broken down.
And when this has been done, why should not that other great
feature of our educational system, that adjunct of the telegraph
in the "diffusion of thoughts, ideas and information among the
people"-the newspaper-also be furnished by the Government.
Within the last ten years the extent of telegraph lines in the
United States has been increased four-fold, and the average
cost of messages reduced more than half, while the cost of
school books and of newspapers has increased a hundred per
cent.
If we admit that it is the duty of Governments to make provision for the education of the people, must we not admit also
that there are other duties equally pressing which should be
discharged first. Government charity naturally proceeds with:
first, what is due to humanity; and secondly, what is due to the
State. Should not provision be made for helpless infants, the
indigent aged, the sick and destitute, the imbecile and infirm,
before large expenditure is made of public money to cheapen so
remote an incident of education as the telegraph.
You say, " Hiow cheap the telegraph could be operated by the
Government cannot be known until tried." And from this
remark and others I infer that you consider it practicable to
increase the volume of telegraphic business indefinitely, without
materially increasing the cost. In fact, this appears to be the
common belief.
In this connection let me remark that sixty per cent. of the
expenses of the Western Union Company, during the last fiscal
year, was paid for wages.  Do you believe that the Government could have hired the persons who performed these services
at lower wages, or that it would have got more work from them
for the same cost? A lawful day's work by Government employes is limited to eight hours. Ten hours is the minimum in
the telegraph service, and hundreds work an average of twelve.
Surely it will not be expected that the Government will discriminate against so large and worthy a class as those engaged in
maintaining and operating the telegraph. And yet, if it under 
163
takes the business, it must either do this or diminish by twenty
per cent. the present product of telegraph operatives without reducing the cost, or else increase the force and the cost twentyfive per cent. to maintain the present product.
Every telegraph message must be written out word by word
by the hand of an operator. In its passage over the wire it
occupies the circuit to the exclusion of everything else. One
operator is engaged in sending, and another, at the same time,
in receiving it. The average capacity of operators to send and
receive can be readily ascertained. Whether it be 300, 400 or
500 messages in a day, when the limit of the capacity of one set
is reached another set must be provided, whose capacity has the
like limit. But as the volume of business increases something
more is involved to take care of the increase than the mere provision of additional operators. The permanent addition of 400
messages a day to those now passing between Chicago and New
York, requires the provision of an additional wire between those
cities, and an additional operator at each. For every two additional wires between these places, at least one additional operator
besides those at each end will be required at an intermediate
station-say at Buffalo-to attend repeaters, and to assist in receiving and re-writing the messages when, as sometimes happens,
the weather is so unfavorable that it is necessary to divide the
through circuit into two shorter ones.
The stenographer who is taking this from my dictation can
do a certain amount of work in a day. Would the product of
his labor be any cheaper if he had twice as much to do as it is
possible for him to perform? In that case, however, the double
work would involve hiring another, and would cost only double
wages. But in respect to messages by telegraph, when the wires
and operators are fully occupied, double work means-not only
double cost for wages, but further investment of capital in the
"plant," followed by an increase in the cost of delivery, stationery
battery and repairs.
It does not matter whether the business is conducted by
private parties or by the  Government — large increase of
messages will always be followed by an almost proportional increase of operating expenses; and as fast as the limit of the
capacity of lines is reached a further permanent investment of
capital must be made to enlarge their capacity. Whether it is
better that the extensions of the telegraph shall continue to be
paid for out of the profits accruing from the business or be added
to the already large annual deficit of the postal service, and
raised by taxation upon the people, it is for the people, through
their representatives in Congress, to decide. But do not let the
people be deceived by the fallacy that the copying of messages,
word by word, by the fingers of telegraph operators, can be 
164
(lone at a nominal cost simply by increasing the work of those
who have already about all they can do.
The duplex apparatus of which you speak we have now in
successful operation; and perhaps some of the various devices
for automatic transmission may ultimately be found practicable
in this country. But the value of these appliances consists ill
increasing the capacity of wires, and thus lessening the amount
of capital which would otherwise be required to provide them,
an(d not in lessening the amount nor in reducing the cost of the
labor required to handle messages.
I am somewhat disappointed that instead of meeting squarely
some of the points presented in my letter, you seek to turn their
flank by a comparison between the postal service and the business of the Express Companies, which you present with this
general statement: " To my mind all the points you make
against Government control of the telegraph apply with equal
or greater force against the Government control of the mails."
You say further: "The Express Companies can urge all your
reasons, and many in addition, against the Government's keeping
the postal business out of their hands and depriving them of
large profits."
I know that you do not mean to ignore the fact that the
postal service has always been managed by the Government,
nor that the telegraph is the product of private enterprise.
But you must have failed to remember that the growth of the
immense and largely profitable business now conducted by the
Express Companies has been greatly stimulated by the failure
of the Post-office Department to transact a most important part
of the business which naturally and properly belongs to it in a
manner satisfactory to the public.
The expenses of the Post-office Department in excess of its
revenues have been  about $50,000,000 within  the last 15
years. During this period a profit equal to at least half this
sum has been gathered by the Express Companies, much of it
derived from business which the Post-office has neglected to do
at all, or has failed to do properly, or which the public is unwilling to trust to the risks of its mismanagement.  Much of the
Government's own business is not intrusted to its own mails, and
between some of the principal cities of the country this singular spectacle may be witnessed almost every day in the year:
On the same trains which carry the mails, packages of bonds,
currency and other valuables passing between the Treasury and
its branches are withheld from the officials in the postal cars and
placed in charge of the agents of the Express Companies. Thus
the instinct of security overcomes the temptations of the franking privilege, and the Government gives practical evidence of its
confidence in the fidelity of " private enterprise." 
165
In view of these facts, I submit that the Express Companies
have no occasion to "urge reasons against the Government's
keeping the postal business out of their hands, and depriving
them of large profits." Perhaps the charges of the Express Com panies are exorbitant, and their profits unreasonably large. But
why is it, if" it costs the sender fifty times as much to send a
small parcel by express as the Government charges for the same
weight of mailable matter for the same distance "-why is it, I
say, that the public continue to submit to such oppression at the
hands of " private enterprises," while the Government is ready
and willing, yea, anxious even, to perform the service for one
fiftieth of the Express Companies' charge?  And why isit that
in all sections of the country a considerable part of the correspondence, and especially letters covering remittances, contracts,
and other valuable papers, after being placed in stamped envelopes, whereby full postage accrues to the Government, is then
given to the Express Companies, and the charges of the latter
paid thereon in addition?
Your statement may be correct that "after their experience
of the blessings of cheap and uniform Government Postal Service, the people would not tolerate the oppression of private
monopoly for a single month." But it seems clear to me that a
considerable portion of the public either do not coincide in your
opinions concerning "the oppression of private monopoly," or
else they-" rather bear those ills we have than fly to oLhers that
we know not of."
I do not think it probable that our people would consent to a
transfer of the postal service to the Express Companies unless
upon condition that the present rate of postage on letters and
other mailable matter should not be increased, and that the
facilities now provided should be in no wise diminished. But I
apprehend if the offer were made to the Express Companies to
take charge of the postal service, and to perform it in as efficient
manner as it is now conducted for two thirds the present rates,
that the offer would be accepted, and that, in view of saving
the Treasury millions of annual deficit, and( the public millions
iu postage, the latter would overcome any sentimental attachment for Government officials, and acquiesce in the change.
I do remember the time to which you refer, " when the Government charged twenty-five cents postage on a letter."  I also
remember that the Express Companies provided stamps and undertook the transmission of letters on the same routes at
lower rates, including special delivery. The business grew so
rapidly that it threatened to seriously diminish the revenues of
the  Post-office  Department.   Of  course,  the Government
promptly interfered to check the growing evil. At the next
session of Congress a bill was passed prohibiting, under stringent 
166
penalties, the carrying of mailable matter outside the mails, and
at the same time, a reduction of postage was made to the
uniform rate of ten cents, followed subsequently by further
reductions, to the rates which now prevail.  If I am correct in
these statements, you will comprehend why it is I do not share
your hostility to "private enterprises" in general, and to the Express Companies in particular.
So confident am I in the ability of private enterprise to compete successfully with official agencies in the performance of any
service for the public requiring promptness, skill and fidelity,
that in case the Government should take the telegraph, and
should establish even so low a rate of charge as that suggested
by you, namely, one cent a word for all distances, I would desire no surer mode of acquiring a fortune than the exclusive
privilege to construct and operate private telegraph lines at such
rates of charge as I should see fit to impose. And, in that event,
I should confidently expect the Government would ultimately
become one of my best customers.
I will admit the truth of your statement, " that the consumption of whatever is desirable is always in proportion to its
cost. Make a desirable thing cheap enough and there is no
limit to the demand for it." But with this proviso: that in reducing the cost there is no deterioration of the quality.
It is a peculiarity of Americans that they rarely grumble at
the price of what is otherwise completely satisfactory.   The
competition of railroads has entirely broken upthe business
of carrying passengers on the canals, although the cost of
traveling has been thereby largely increased. And in spite of
what you deem the present exorbitant charges for railway
travel, the Pullman palace cars are crowded everywhere with
persons who cheerfully pay four dollars a day, in addition to
regular fare, for the sake of the superior accommodations.
Your surprise at my statement "concerning the ill paying
character of telegraph stock" is not greater than mine is at the
low estimate you place upon the value of the Western Union
Company's property, and your allusion to its "watered shares."
Such phrases may tickle the ear and stimulate the prejudices
of the ignorant, but they cannot, I am sure, affect the
judgment of thoughtful men. The Western Union Company is
not on trial for an alleged undue or improper expansion of capital; and if it were, its stockholders are the only proper complainants. With such details the public at large have no concern. What is it to them whether a capital of forty millions
represents that sum of cash paid in, or only four millions, and
what difference does it make to the stockholders which sum is
correct if they get no dividends at all?
During, the seven years of my connection with the telegraph 
167
business, the value of telegraph lines and property in the United
States has been increased by the expenditure of at least twelve
millions of dollars in cash. Is the capital so expended any the
less entitled to be credited with the interest thereon annually
because a portion of it accrued from the profits of companies
which paid no dividends, or which divided only a portion of
their earnings?
The telegraph system of the United States is larger in extent
and equal at least in efficiency, to that of any other country in
the world; nor is it surpassed by any other in the amount of
work which it performs. And considering the higher cost here
of labor to construct, maintain and operate it, and of material
and supplies of all kinds, and of the greater length of line required to reach the same number of people, the rates for messages in this country compare favorably with the average rates
in Europe.  In all other countries (except Canada) the telegraph is now owned and operated by the Government, and in
most of them it has been built at the cost of the State. But in
many European States the operation of the telegraph by the Government results in an annual deficit, which is raised by taxation.
Even ill England the question of profit is involved in doubt, from
the fact that the capital account is added to largely every year.
In the United States, however, its development has been the work
of private individuals, who have received no assistance worth
mentioning either from the Federal or State Governments. On
the other hand it has paid in taxes, Federal, State and Municipal,
in duties directly and indirectly, and in the value of free service
for communities in times of peril and disaster, a sum greater than
the "'ten per centum of the market price of the Western Union
Telegraph stock," which you appear to believe was the sum originally "paid in cash by the stockholders." But even if you were
correct, how would the expediency of taking the telegraph, or
the value of the property, or the rates to be charged for its
use, be affected thereby? Suppose a farmer had planted twenty
years ago a thousand fruit trees, at a cost of one dollar each, and
had expended nothing on them since except to harvest the crop
every year, would the fact of the small cost justify the demand
of a purchaser that the trees should be sold at cost, or the fruit
at a price which would be a fair interest on the cost of the trees?
The value of anything that is for sale is that sum which thev
will give for it who desire to buy. But in considering the expediency of having the telegraph in the United States operated
by the G,)vernment, the question of the value of existing telegraph properties does not necessarily enter. We admit that
the Government has the right to buy, and that the mode of
ascertaining the price to be paid is fixed by law and agreement.
If it be true, as you state, that "the present telegraph system is 
168
practically a monopoly," does not this fact prove that your impressions concerning the profitableness of the business, and the
trifling investment required to establish it, are erroneous?
The stock and bonded  capital of two  railway companies,
whose united roads connect New York and Chicago, is nearly
two hundred millions. The mere statement of this fact shows
the difficulty of opening a competing railway route between
those cities. But whether the cost of all the telegraph property
in the United States is "ten per centumn of the market price of
the Western Union Telegraph stock," or is ten or twenty times
that sum, it would not be difficult to raise the capital requisite
to duplicate every mile of telegraph wire now in operation, if it
could be made to appear probable that the business would pay.
The failure of competing telegraph companies to make profits
during the last seven years is not a sentiment but a serious
fact. Of this abundant evidence can be found among the stockholders of such companies in your own city.
We have absorbed rival lines many times, and, as like causes
will continue to produce like results, it is highly probable we
shall do so hereafter. With but few exceptions, however, this
process of absorption has been sitnply the securing of property
yielding no profit to its owners for a less sum than was expended
to create it. In view of the facility with which telegraph lines
can be constructed, is it not reasonable to suppose th:.t, if we
absorb them at a profit to their owners, they would be constructed for the express purpose of selling out to us until our capacity
to buy was exhausted?
The secret of what you call the "monopoly" of the Western
Union is an open one when you look at it from the stand-point
of fact. It is not the exclusive possession of essential patents,
nor the difficulty of raising the requisite capital, nor inability to
procure the services of persons skilled in the scientific and
practical departments of the business. The reasons are:
First. The Western Union Company has fairly met the wants
of the public who have occasion to use the telegraph, and does
its work better than its competitors.
Secondly. The expense of conducting the business is mainly
for labor, and increases in a ratio nearly equal to the increase of
the volume.
Thirdly. The annual deterioration of the plant by natural decay is equal to about eight per centum of the cost, and this must
be earned in excess of expenses before dividends can be paid.
You ask-" How  long would a Postmaster-General remain
in office if found dealing harshly or unfairly with the press?"
In reply, permit me to call attention to an incident in American
history: On the 29th of July, 1835, at the City of Charleston,
S. C., a number of persons made forcible entry into the post 
169
office, and carried off packages of books and papers and burned
them. Soon after, at a large public meeting of citizens, this
flagrant violation of the laws and of the rights of individuals
was distinctly sanctioned, and a committee of twenty-one was
appointed to take charge of tie United States' Mails, at the head of
which was Ex-Senator Robert Y. Hayne. Amos Kendall was
I hen Postniaster-Geieral.  Under date August 4, 1835, he addressed a letter to the Postmaster at Charleston, from which I
quote the following: "We owe an obligation to the laws, but a
higher one to the communities in which we live; and if the
former be perverted to destroy the latter, it is patriotism to disregard them." On the 22nd of August he wrote to Samuel L.
Gouverneur, Postmaster at New York, on the same subject. I
quote the following from that letter: "I hlave no hesitation in
saying that I am deterred from giving an order to exclude the
whole series of abolition publications from the Southern mails
only by a want of legal power, and that if I were situated as
you are I would do as you have done."
How long after the perpetration of this outrage, thus publicly
and officially approved, did Amos Kendall and his subordinates
"remain in office?" And how long is it since another Postmaster General requested the opinion of the Attorney General of
the United States as to the right of the former to break the seals
upon matter passing through thie mails, for the alleged purpose
of' ascertaining if the laws were being violated? Not many
months since Sir Frank Scudamore was charged by the English
press with suppressing a despatch giving an account of a strike
among the telegraph operators on the Government lines. The
charge was admitted, but the offense was sought to be justified,
as I remember, by the plea that the despatch contained exaggerated statements, which it was not for the public interest to
permit to be published.
In all the prinecipal cities of the country the telegraph is available every hour of every day and night from the beginning to
the end of the year; yet in the same cities, in the evenings, on
Sundays and all legal holidays the post-offices are closed, except
for an hour or two, and delivery by carriers suspended. How
long would the public submit to such exclusion from the telegraph? You will say, perhaps, this would be changed if the
Government had the telegraph connected with the postal service.
To which I should answer: why does not the Post-office Department give evidence of an appreciaton of the wants of the public,
and of a disposition to make provision for supplying them before undertaking a new service, requiring far more vigilant attention than that which it lnow  performs with only tolerable
success?
I have thus, at much greater length than I expected at the 
170
commencement of this communication, endeavored to reply to
the principal points of yours. Your experience as a journalist,
and the facility you have acquired by long practice in rapidly
arranging your views in logical order, more than offset the convenience a stenographer affords to me, whose duties are mainly
executive, and relate to almost every department of business in
every state.  If I have not succeeded in producing "a radical
change" of your nlotions on the subject, I trust that the statements herein made will, at least, afford some justification
for the tenacity with which I still hold to my own. Hoping
that an opportunity for a further canvass of the question in the
social manner you suggest may soon be presented,
I am, my dear sir,
Very truly yours,
WILLIAM ORTON.