Chapter II: Part 2

In Belgium, therefore, which contains only two thirds as many offices as the Western Union Telegraph Company maintains in the State of New York alone, with her commercial centres near together, with an average of less than three wires on her poles, with her 2,232 miles of line on government property and protected by its authority, want of promptness would be inexcusable, because so easily effected. Were New York and Chicago only thirty miles apart, and all the messages of the United States, now approximating thirteen millions per annum, required to be passed between them at the rate of 36,000 per day, and within an average of fifteen minutes from the time of their reception, as is now done between the Chambers of Commerce of these cities, it could be accomplished with comparative ease, and especially so were the land which the wires traversed the property of the company, and the lines guarded by the nation. Once render it easy and inexpensive to provide a reliable outward structure, and the work of the telegraph becomes a matter of simple internal organization, except as competition and the necessities of extension in a land so vast as ours adds to the ordinary cares of administration. The immense distances between our centres of commerce, the multitude of far separated radiating centres of business, the great exposure and defective protection of our lines, and constantly increasing system of wires which are constructed as rapidly as new demands for their extension are made, render the management of this company one of the most arduous and complicated of private enterprises. There is nothing in Europe or elsewhere which bears any proper resemblance to the American telegraph system, nor with which it can be properly compared.

Between the systems of Belgium and the United States we witness the following marked contrast. The companies here have only one tariff for transmission, and all take their turn. The payment of an extra franc cannot, as in Belgium, purchase priority, or give one advantage over his neighbor. This is an imposition of the government, similar to, and even less defensible, than that which in England requires four postages to secure the safety of a letter. Here the companies offer to guarantee the public against error by an extra payment of one half the ordinary tariff; but the public, because of their confidence in the company, do not avail themselves of this provision, to an extent of one in ten thousand! Messages sent in cipher, for which no extra charge is made in the United States, can only be sent in Europe by the payment of four ordinary tariffs, and in some states in Europe, and among others France, the government will not permit their being sent at all.

NECESSITY FOR THE UNIFICATION OF THE TELEGRAPH SYSTEM.

It is curious to observe that the reasons assigned for the advantages to be gained by governmental control are precisely the same which led to the consolidation under one management of the great mass of the American lines, and which has led to the unjust charge of monopoly as the work of unification has progressed.

Mr. Scudamore says: “When I began to collect the information on which this report is based, I was not free from doubts as to the propriety of the scheme; but, after patiently collecting and considering all the data which I could obtain, I found myself driven, by the mere force of facts, to the conclusion at which I have arrived. This conclusion, indeed, is almost identical with that to which the directors of the Electric and International Telegraph Company came in the year 1852, and which they thus stated to their stockholders:—

“The delays, inaccuracies, and expense of the continental telegraphs are an exemplification of the great advantage to the public of the administration _being under a single management_. _This circumstance alone admits of the establishment of a low and uniform tariff...._ The telegraph has already become a most powerful and useful agent, and has, in a measure, been adopted as a means of communication by persons employed in commercial pursuits, but, owing to the want of proper arrangement and facilities, and the fact of the management of the lines being divided _by several companies_, without unison in action or interest, the public generally have been debarred from benefiting by the immense accommodation and advantages the telegraph is capable of affording.”

In presenting the same idea, Mr. Washburne, with a looseness of statement for which we know of no proper justification, remarks as follows:—

“There can be no doubt that the superiority of the continental
system over every other is due to the fact that the telegraph there
is a government institution, while in this country it is left to
private enterprise. Individual and associated effort have done much,
but, with the confusion of our telegraphic system before us, it
would be folly to shut our eyes to the inherent weakness of all
joint-stock enterprises. Absence of responsibility, waste of labor,
irresolute councils, expensive management, want of effective control
over subordinates, are among the evils of such associations, to say
nothing of the imperative demands of stockholders that dividends
shall be made and that none shall be hazarded. Under government
control one governing body would do the work now done by twenty, and
the obligation to realize profits would not interfere to prevent the
reduction of rates or the proper extension of the system.”

Passing over the charges of “waste, irresponsibility, and irresolute councils,” which serve to round the paragraph in which they occur, the focal idea is the efficiency secured by a united control. That is the very basis of this company’s organization. Discarding as false and perilous any general assumption of the enterprises of the people by the government, and accepting its refusal to attach the telegraph to its administration, when offered to it by its inventor, as for the best interest of the nation, this company early saw that united action between the extremes of our territorial limits was as essential to its own success as to public convenience. With numerous companies, of limited jurisdiction, and tariffs on all bases,—which had to be added and dovetailed to each other whenever a despatch passed between two distant places,—there was neither certainty of correctness, promptitude, nor the possibility of a low and uniform tariff. To secure all of these the leading telegraph organizations combined. It was a step necessary alike for public usefulness and success, and is accomplishing all that could be desired. The system has penetrated farther, and compassed more territory than separate organizations could have attempted or than even government itself would have been willing to undertake. Its administration is vast, harmonious, liberal, exact, economical, and just. It uses its revenues largely to extend its realm of usefulness to the people of every section of the country. It seeks to secure the highest skill and character in its employees. Its aim is to give the wires to the use of the whole people on the lowest terms consistent with proper self-support and the just return which capital and skill demand. It will accomplish all the nation requires of it, if allowed to solve its own problem, making the wires the accepted right arm of the public industries, and the emblem of universal unity and good-will.

ESTIMATE OF THE COST OF BUILDING TELEGRAPH LINES.

Mr. Washburne says:—

“Any one at all familiar with the prices of materials and labor in
the various countries will see that, as to materials for the
construction of lines, they are cheaper here than in any European
country, and that the whole cost of constructing telegraphic lines
must be less here than in Belgium or Switzerland. In the latter
country a large proportion of the lines are erected upon iron posts,
the prime cost of which with the stone base is from $6 to $9 each,
or from five to seven times the cost of the posts usually employed
in America.

“As to the exact cost of constructing lines in the United States it
is difficult to procure reliable data. There are few questions
apparently so simple upon which so many conflicting opinions have
been printed. So simple a matter as the cost of posts, say thirty
feet long, the placing of them in the earth, furnishing and placing
the necessary iron wires and insulators and the fitting up of
stations with instruments and furniture, ought not, one would
suppose, to be a difficult thing to fix. Yet persons claiming to be
experts, and even authorities in all matters relating to telegraphs,
have differed very widely. Mr. Prescott, a telegraph superintendent,
and the author of a work on ‘Electric Telegraphs,’ estimates the
cost of a mile of telegraph, built as they ordinarily are, at
$61.80[7]....

Footnote 7:

This statement was written in 1859, and the object of the author
was to show the inferior manner in which a majority of the lines
were constructed at that time.

“This is about the cost of construction of a majority of our lines,
but if built as they should be, they would cost $150 per mile. If
additional wires are added, each wire put up would be, per mile,
$32.80.”

Mr. Washburne’s statement, that telegraph lines can be built cheaper in the United States than in Europe, is entirely incorrect. Labor, wire, machinery, insulators, and every appliance peculiar to the telegraph, are very much cheaper in Europe than in America, and large importations of wire are constantly being made from Belgium and England, notwithstanding the heavy duty.

The difference in the cost of labor in Europe and America is very great. The most recent authentic publication on the subject[8] states that the general average rates paid for all kinds of labor in the United Kingdom are as follows: For adult males, in England, $4.96 per week; in Scotland, $4.52; in Ireland, $3.16. For boys and youths, under twenty years of age, in England, $1.44; in Scotland, $1.70; in Ireland, $1.38. For adult women, in England, $2.76; in Scotland, $2.32; in Ireland, $2.06. For girls, under twenty years of age, in England, $1.88; in Scotland, $1.80; in Ireland, $1.62. These rates are stated to be high, as compared with other countries in Europe.

Footnote 8:

Wages and Earnings of the Working Classes. By Leone Levi, F. S. S., F.
S. A., Professor of the Principles and Practice of Commerce in King’s
College. London: John Murray. 1867.

In Belgium, coal-miners earn from 33 cents to $1.00 per day, the average being 56 cents. In iron-furnaces, a puddler earns from 92 cents to $1.10, and the under hands from 50 cents to 62 cents per day. In iron-foundries, a moulder earns from 44 cents to 62 cents per day. In Paris, the average for adult male labor is 76 cents per day, and for women 38 cents; but in the interior of France the price is much less. In Prussia, first-class engineers earn $1.10, and second-class 83 cents.

Among the working classes in the United Kingdom are included all who, whether as workers for others or as workers for themselves, are employed in manual labor, be it productive of wealth or not; and they are divided into five classes, viz. professional, domestic, commercial, agricultural, and industrial. The total number of workers is estimated at eleven millions, and the average weekly earnings in the United Kingdom are: Men, under twenty, $1.59; from twenty to sixty, $4.18; women, under twenty, $1.72; from twenty to sixty, $2.41. Average weekly earnings from every avocation in Great Britain and Ireland, $3.16.

Thirty per cent of the people of the United Kingdom live in houses the rental of which is less than $31 per annum, and seventeen per cent in those under $45 per year.

In the preparation of the following table we have consulted Professor Levi’s work on Wages and Earnings in England; “Government and the Telegraphs” (London, 1868); “Special Report on the Electric Telegraph Bill”; “Publications of the Statistical Bureau at Washington”; and the official records of the Western Union Telegraph Company.

_Statement showing the Average Cost of Labor in England and the United
States._

┌───────────────────────────────────┬────────────────┬────────────────┐ │ Prices paid per Day. │ England. │ United States. │ ├───────────────────────────────────┼────────────────┼────────────────┤ │Carpenters and Builders │ $1.14│ $3.25│ │Dock Laborers │ .68│ 2.25│ │Engineers │ 1.32│ 3.85│ │Farm Laborers │ .42│ 2.00│ │Iron Founders │ 1.10│ 3.25│ │Moulders │ 1.25│ 3.50│ │Letter-Carriers[9] │ .74│ 2.18│ │Printers │ 1.02│ 2.50│ │Policemen │ .85│ 3.00│ │Railroad Conductors │ .92│ 3.85│ │Soldiers │ .22│ .62│ │Servant-girls │ .16│ .48│ │Telegraph Employees[10] │ .41│ 1.29│ └───────────────────────────────────┴────────────────┴────────────────┘

Footnote 9:

The number of letter-carriers employed by the British Post-Office
Department for the year 1866 was 11,449, and the total expenditures
for the same $2,664,000, being an average of $232.68 per annum for
each man.

The number of letter-carriers employed by the Post-Office Department
of the United States for the year 1866 was 863, and the total
expenditures for the same $589,236.41, being an average of $682.77 for
each man.

Footnote 10:

The cost of labor of telegraph employees is obtained by dividing the
total amount paid for labor by the number of persons employed of all
kinds. The average price per day for operators in the United States is
$2.25, and in England 62 cents.

With a knowledge of the great difference in the cost of labor and material in Europe and America which the above statistics show, we cannot comprehend the propriety of Mr. Washburne’s assertion that the whole cost of constructing telegraphic lines must be less here than in Belgium or Switzerland.

Even our poles are purchased in the Dominion of Canada, and paid for in gold. The cost of transportation from the St. Lawrence to New York cannot be much, if any, more than the cost of their delivery at London, Havre, or Brussels.

In the United States, telegraph-poles are of cedar or chestnut,—more generally of the former. In England, the larch is the most common; in Russia, the pine; in France, pine, alder, poplar, and other white woods; and in Germany, spruce and pine.[11]

Footnote 11:

Telegraph Manual.

The cost of a telegraph line depends, like the cost of a house or any other structure, upon how it is built, but Mr. Washburne, or any other intelligent man, ought to know that the price appropriated in his bill for a four-wire line from Washington to New York cannot possibly build it, even should government build such a structure as those which a dozen years ago cursed the enterprise, and made it a reproach and shame. When government builds a line of telegraph on the plea of public necessity, it should require that its structures at least be equal to those of its citizens. It is not strange that, with the crude and cheap ideas formed by Mr. Washburne of telegraph structures, he disparages and undervalues the properties of the existing companies, and ridicules the estimates furnished Congress in their communications.

DOUBTS REGARDING THE ESTIMATES OF TELEGRAPH EXPERTS AS TO COST OF
CONSTRUCTING LINES.

We quote from Mr. Washburne’s paper:—

“In February, 1866, when, in view of the establishment of an
experimental government line of telegraph, the Postmaster-General
was called upon for information ‘in regard to the feasibility and
usefulness of establishing, in connection with the Post-Office
Department, telegraph lines,’ &c., ‘to be opened to the public at
minimum rates of charge, ... and such statistics and exhibits
predicated on cost of construction and capacity of transmission as
will best illustrate its practicability,’ he sent to Congress
lengthy statements, all of them prepared by persons believed to be
interested in or officers of existing companies, in which the cost
of a telegraphic line with six wires is put down by one writer at
$1,400 per mile, by others at $665, exclusive of river cables and
lines through cities.

“Among other statements so furnished is an amended one by Mr.
Prescott, whose statement, when made part of a work intended as
authority in telegraphic matters, is quoted above. For reasons not
explained his views underwent a marked change between 1860 and 1866,
and he makes haste to refute his own previous statements. His
revised statement is as follows:—

“‘It is well known by every person who has any knowledge of
telegraphy in this country previous to the publication of my
work in 1860, that comparatively few lines had been at that time
even tolerably well constructed; and one object which I had in
view in writing it was to call attention to this prevailing
fault, and endeavor to get a better system inaugurated.

“‘Since then there has been a very marked improvement in the
construction of telegraph lines in this country. Small poles, of
inferior wood, which required renewing every few years, have
given place to large and more enduring ones of chestnut and
cedar, and small iron wire, which offered great resistance to
the passage of the electric current, has given place to
zinc-coated wire of larger size and greater conductivity.

“‘But while the quality of the lines has greatly improved under
the experienced and liberal management of the telegraph
companies, the cost of constructing lines has kept pace with the
increased cost of everything else, and has more than doubled
within the past six years, so that lines which could have been
built in 1860 for $150 per mile could not now be constructed for
_twice that amount_. A substantial telegraph line, constructed
on the line of a railroad, with _cedar_ or _chestnut_ poles
thirty feet in length, and six inches at the top by twelve at
the butt, set forty to the mile, with most improved form of
insulator and best galvanized wire, would cost $400 per mile for
a single wire. If forty-foot poles were used (which would be
necessary if many wires were to be placed upon one set of
poles), it would cost $600 per mile for a single wire. When
fifty-foot poles are used, the cost is very greatly enhanced.

“‘Mr. Brown estimates the total cost of all the telegraph
property in the United States at “a little more than
$2,000,000.” Now, if we estimate the present cost of the lines
and their equipment at the moderate price of $300 per mile, and
the number of miles of wire in the country at only 150,000, we
have a total cost of $45,000,000, without reckoning the value of
the patents, franchises, &c.

“‘Mr. Brown states that “telegraphs properly constructed, the
timber well prepared and wire protected, will last for 20
years.” This may be true, but it remains to be proved.’”

We fail to discern any refutation by Mr. Prescott of his previous statements. His reasons for a change in the estimates for building a telegraph line in 1866 over those of 1860 hardly need be stated. If the results of the intervening years of civil war, by which a million of able-bodied men were cut off from the fields of labor, the industries of the country burdened with enormous taxes before unknown, and prices inflated by the issue of hundreds of millions of paper dollars, do not suggest them, there is small hope of profit from the practical lessons of the times.

INCORRECT ASSERTION THAT AMERICAN TELEGRAPHS ARE NOT CONSTRUCTED
ACCORDING TO SPECIFICATIONS.

Mr. Washburne says:—

“The officers of the telegraph companies, whose elaborate statement
is also forwarded by the Postmaster-General, estimate as follows:—

“‘Cost of construction, including engineering, patents, and
franchises, per mile: one wire—six wires.

“‘The cost of building lines varies according to locality, timber,
method, nature of the ground, and the wires to be borne.

“‘A line from New York to Washington should be of the best class,
and would be represented by the following figures:—

43 poles delivered at stations, $161.25 129 arms, complete, 129.00 43 holes, five feet deep, tools, &c., 30.00 Labor,—handling, preparing, erecting, &c., 25.00 Six wires, at twelve cents per pound, 240.00 Labor,—wiring, transportation, &c., 30.00 Distributing poles, 25.00 Superintendence, &c., 25.00 ———————— 665.25 ========

240 miles at $665.25, Washington to New York, $159,660 Lines through New York, Philadelphia, Baltimore, and Washington, 16,000 22 cables at rivers south of the Hudson, 20,000 Cable at Hudson River, house, boats, &c., 8,000 ———————— $203,660 ========

“‘The cost of franchises and patents cannot be given.

“‘Such a line built by government, carefully, and with reference to
permanence, with six wires, would cost $250,000.

“‘If, however, it is seriously contemplated by the government to
construct lines along the great commercial routes, and if it be the
design in so doing to remove from the system, by every attainable
appliance or improvement, all its ascertained defects, a structure
of larger poles, and wires of superior conducting qualities, will be
built. Such a line should be constructed of the most solid and
durable wood, such as the black locust, so that masses of sleet or
moist snow, so destructive to present lines, would leave it
uninjured. Heavier wires also, which, by their increased conducting
capacity, would give greater facility and certainty to transmission,
should be used.

“‘These improvements, with greater care taken in the execution of
the work than in that of ordinary structures, will, of course,
increase its cost in proportion to the care bestowed. And should the
government determine to provide facilities equal to those now
proffered by private companies, it would be necessary to erect at
least five lines of poles bearing six wires each, that being the
number (thirty in all) now in use between New York and Washington by
all the companies.

“‘A common wire line, intended to bear one, and not more than two
wires, can be built for $150 to $180 per mile, the wire being number
nine, galvanized, the poles of limited size, and costing not over
$1.25 each.’

“It nowhere appears that such lines as all these writers insist
shall be built by the government have ever been built in this or any
other country. They seem to have taken it as matter of course that
the government, if the experiment proposed should be tried, will
depart from the usual method of construction and build the novel and
costly structures for which their estimates are made. One looks in
vain in the communication sent to Congress by the Postmaster-General
for any reliable information as to the cost of a telegraphic line,
constructed as such lines are in this and other countries, and such
a line as the government, if it should be determined to build an
experimental line, would probably build.”

COST OF AMERICAN TELEGRAPHS ESTIMATED BY EUROPEAN DATA.

In reply to Mr. Washburne’s statement that no such lines as all these writers insist shall be built by the government have ever been built in this or any other country, we respectfully, but firmly, assert that he is mistaken. This company possesses thousands of miles of telegraph lines constructed after the specifications given above, and costing as much as the estimates which he so emphatically distrusts. In order, however, to set this matter of cost at rest, we will endeavor to establish it by comparison with those of all other countries of which we have been able to procure official data.

Mr. Frank Ives Scudamore, one of the assistant secretaries of the British Post-Office, and the gentleman who furnished the reports and data by which the British government were induced to monopolize the telegraph in that country, and who shows no disposition to overvalue the property or services of private telegraph companies, testified before the select committee of the House of Commons, July 9, 1868, that the total number of miles of telegraph in operation in Great Britain in 1866 was 16,000, and that the companies expended in constructing the same about £2,300,000.[12]

Footnote 12:

Special Report, Electric Telegraph Bill, ordered by the House of
Commons to be printed, 16 July, 1868. See testimony on pages 149 and
150.

The capital stock of the various companies represented a larger sum than this, and Mr. Scudamore himself acknowledges that he has got the amount under the mark rather than over it; therefore we presume that Mr. Washburne will allow this to be a fair estimate. Now £2,300,000 sterling is equal to $11,132,000 in gold, or $16,475,360 in United States legal money. This sum, divided by 16,000 miles of line, gives us $1,029.71 as the cost per mile.

The Belgian system comprised, at the end of 1866, 3,519 kilometres of telegraph lines, equal to 2,187 English miles. The cost of constructing these lines, up to December, 1866, amounted to 2,055,083 francs, equal to $411,016.60 gold, or $608,304.56 currency; which would give $274.14 for each mile of line. It must be borne in mind, however, that the Belgian government, owning all the railroads, could transport all the telegraph material free, and in many other ways greatly reduce the cost of the lines; of course the right of way cost them nothing, and with us this is an important item.

Bavaria has 2,115 miles of line, which cost for construction 843,207 florins, equal to $340,092.28 gold, or $503,338.35 in our currency. This would make the cost per mile $240. The same conditions, however, which reduced the cost of construction in Belgium tended to the same result in Bavaria.

In France there are 20,028 miles of lines costing 23,800,791 francs, equal to $4,760,158.20 in gold, or $7,045,034.13 in currency, making the average cost of each mile of line $351.75.

RECAPITULATION.

Average cost per mile of telegraph line in Great Britain and Ireland, $1,029.71 Average cost per mile of telegraph line in Belgium, 274.14 Average cost per mile of telegraph line in Bavaria, 240.00 Average cost per mile of telegraph line in France, 351.75

Total cost of telegraphs in Great Britain and Ireland, $16,475,360.00 Total cost of telegraphs in Belgium, 608,304.56 Total cost of telegraphs in Bavaria, 503,338.35 Total cost of telegraphs in France, 7,045,034.13 —————————————— Total cost for the four countries, $24,632,037.04 Total number of miles of telegraph line in Great Britain and Ireland, 16,000 Total number of miles of telegraph line in Belgium, 2,187 Total number of miles of telegraph line in Bavari, 2,115 Total number of miles of telegraph line in France, 20,028 —————— Total number of miles of telegraph in the four countries, 40,330

Average cost of construction of each mile of telegraph
line for the four countries above named, $610.76

VALUE OF WESTERN UNION TELEGRAPH PROPERTY, BASED ON EUROPEAN DATA.

The number of miles of line belonging to this company is 50,760, and the number of miles of wire is 97,416.

Taking the average cost per mile of telegraph line in England as a basis for a calculation of the cost of the lines of the Western Union Telegraph Company, we have a total value of $52,166,079.60. If we estimate the cost of our lines by the average cost of all the telegraph lines in Europe of which any statistics can be obtained, we have a total value of $31,002,177.60.

Much has been said respecting the alleged unreasonably large capital of the Western Union Telegraph Company. This company was organized in the year 1851, with a capital of three hundred and sixty thousand dollars, and constructed a line of electric telegraph from Buffalo, N. Y., to Louisville, Ky., distance about six hundred miles. The cost of the line, on a gold basis, was thus $600 per mile. The present extent of line belonging to this company, if estimated by the cost of the original line, and forty per cent be added for the premium on gold, would give us $42,638,400 as its value. On the basis of the cost of the lines of the Atlantic and Pacific Telegraph Company, the capital of the Western Union Telegraph Company would be about $100,000,000, and, on that of some other rival lines, nearly $200,000,000.

The gross receipts of the Western Union Telegraph Company from July 1, 1866, to November 1, 1868,—two years and four months,—were $16,088,498.86, and the gross expenses $9,862,272.31; leaving $6,226,225.75 as the net earnings, being an average of over seven per cent per annum on the capital of the company, which is $40,347,700. After applying $1,934,040.61 of the receipts of the past two years towards the construction of new lines, and the redemption of the bonds of the company, it has made, with one exception, regular semiannual dividends of two per cent. Such a property as this, if situated in England, or any other country in Europe, would be regarded as so valuable that its stock would be held at par, and yet it is selling in our markets at the present time at sixty-four per cent discount, or at thirty-six dollars per share! At this price the entire property, including payment of the bonded debt, would only cost $19,415,672.

Now what is the explanation of this singular distrust of the value of this great property as shown by its insignificant present market value? Less than four years ago the stock sold at above par, and its earnings and prospects were then inferior to what they are at the present time. An examination of the tables on page 39 will show that the gross receipts and net earnings have constantly increased during the past two and a half years, and there is every reason, so far as the management and prosperity of the company is concerned, why its market value should have increased instead of depreciating. The explanation for this singular state of things is to be found in the constant agitation in Congress of various schemes for the construction and operation of government telegraphs, at prices very much lower than the cost of the service. Let any industry be thus constantly menaced, and it must necessarily suffer in public estimation as a safe investment. We trust the subject will be effectually settled during the present session of Congress, and the incubus which has so long rested upon this important enterprise be removed.

ERRONEOUS ESTIMATE OF THE VALUE OF THE WESTERN UNION TELEGRAPH COMPANY’S
PROPERTY.

Mr. Washburne says:—

“The statement furnished by the officers of the telegraph companies,
for the information of the Postmaster-General, and by him forwarded
to Congress as his reply to the call for information, is well
calculated to remove all doubts as to the value of this kind of
property. Among other items of information is the following:—

“The length of wire owned by the Western Union and United States
companies is 60,000 miles.[13] The average cost, as based on the now
united capital, is $450 per mile. This embraces, besides the poles,
wires, and apparatus, the following:—

Footnote 13:

This estimate was made before the consolidation of the American
Telegraph Company and other properties with the Western Union
Telegraph Company, and when its capital was only $27,000,000.

Invested in buildings, $95,208.83
Stocks in other companies, 1,429,900.00
Office fittings, 360,000.00

“It is remarkable that while _the length of wire_ is given, the
length of line nowhere appears.[14] There is a vast difference
between the cost of a _telegraph line_ and a _telegraphic wire_. We
have seen the cost of a line with a single wire estimated at $61.80,
and each additional wire placed on the same posts, $31.80 per mile.

Footnote 14:

We have given the length of the lines, as well as the length of
the wires belonging to the Western Union Telegraph Company, on
page 32.

“In the absence of any exact information on the subject, we may
fairly estimate that the lines of the companies named average three
wires to each line. They possess, then, 20,000 miles of telegraph
line, with an average of three wires thereon. They speak of ‘single
wire lines costing $180 per mile.’ This estimate is too high for any
line now in use; but if it be adopted as the basis of calculation,
and an allowance of $45 per mile be made for each additional wire,
we have, for the 20,000 miles of line owned by the companies named,
a cost of $5,400,000, represented by a capital stock of $41,000,000!
‘The average cost’ per mile of each wire suspended on their lines,
‘_as based on the now united capital_, is $450 per mile.’ If ‘the
united capital’ had been based upon the actual cost of the property
of the company, it would have been nearer $4,000,000 than
$41,000,000.

“The ‘information’ furnished to the Postmaster-General is compiled
with the evident intent to discourage the experiment then
contemplated. It is incomplete, and is compiled with an intent to
mislead. To any one who will take the trouble to examine it
carefully, and to apply the proper tests to its assertions, it
furnishes additional arguments in favor of a careful experiment by
the government in the construction and maintenance of telegraph
lines under control of the Post-Office Department.”

To impugn the motives of an opponent is the weakest of arguments. If his statements are wrong, it is easy to show wherein, but wholesale denunciation convinces no one of the strength of the cause or the culpability of the assailed. We do not question Mr. Washburne’s honesty of purpose in making his unjust and extremely erroneous statements regarding the property or executive ability of the Western Union Telegraph Company, but we do say that he is most egregiously deceived upon all points which he has discussed.

In reply to the charges which Mr. Washburne brings against the Western Union Telegraph Company, of compiling information for the Postmaster-General with an intent to mislead, of exaggerating the cost of construction of lines, and misrepresenting the value of its own, we respectfully present the following facts respecting the organization of the company, the amount of its capital, the number of miles of line and the number of miles of route, together with a statement of the number of skilled persons in its employ.

THE ORGANIZATION OF THE WESTERN UNION TELEGRAPH COMPANY.

In the spring of 1866 there were three telegraph companies, covering vast areas of territory in the United States. Two of these companies operated lines over separate divisions of the country, but worked in connection with each other, while the third, which covered some portions of the territory of the others, was a competitor for the business of all sections. These three companies were the Western Union, with lines extending from New York to California, and throughout the Western States; the American, with lines extending from the Gulf of the St. Lawrence to the Gulf of Mexico, and through the lower Mississippi and Ohio Valleys; and the United States, with lines extending from Portland, Me., to Richmond, Va., and from New York to Kansas.

The necessity for direct communication between the East and the West, and the economy of one set of officers and employees instead of two, demanded the consolidation of the American and the Western Union; and the still greater saving to all the companies by the uniting of the lines and offices of the United States with those of the other two equally necessitated its amalgamation with the others.

Par Value. Market
Value.
The capital of the Western Union Telegraph
Company, which had sold at par and over in $22,000,000 $22,000,000
1865, was
The capital stock of the American Telegraph
Company, which sold at $180 per share in 4,000,000 7,200,000
1865, was
The capital stock of the United States 11,000,000 11,000,000
Telegraph Company was
——————————— ———————————
$37,000,000 $40,200,000

The proportion of lines and wires to the capital varied with each company, the American company having the greater number; and in the terms of consolidation these differences were equitably arranged, and the capital stock of the consolidated company was established as follows:—

FINANCIAL STATISTICS OF THE WESTERN UNION TELEGRAPH COMPANY.

CAPITAL STOCK.

At the date of the Report of October, 1865, the capital
stock of the company issued was $21,355,100
It has since been increased as follows:—
October, 1865, by conversion of bonds 500
November, 1865, by exchange for stock of California State
Telegraph Company 122,500
December, 1865, by exchange for Lodi Telegraph Stock 500
December, 1865, by exchange for Trumansburg and Seneca
Falls Telegraph Stock, 3,500
December, 1865, by issue to Hicks & Wright for Repeater
Patent, 1,500
December, 1865, by exchange for Missouri and Western
Telegraph Stock, 400
December, 1865, by exchange for House Telegraph Stock, 1,400
April, 1866, by 2½ percent Stock Dividend, to equalize
stock as per Consolidation Agreements, 472,300
April, 1866, by consolidation with United States
Telegraph Company, 3,845,800
June, 1866, by issue for United States Pacific Lines, 3,333,300
July, 1866, by consolidation with American Telegraph
Company, 11,818,800
July, 1866, by exchange for P. C. & L. Telegraph Stock, 4,100
December 1, 1867, by fractions converted, to date, 49,100
———————————
Total present capital, $41,008,800
Of the stock issued for United States Pacific
Lines there was returned to the company, as
consideration for completing construction of
Pacific Line, $883,300
The company owns also, 120,800
——————————
$1,004,100
Out of this we have issued for—
Southern Express Co.’s Telegraph
Lines, $150,000
California State Telegraph Co.’s
Stock, 124,700
Other Telegraph Lines, 80,000
—————————— 354,700
——————————
Now owned by the company, 649,400
Balance, on which we are liable for dividends, $40,359,400

BONDED DEBT.

Bonds of the American Telegraph Company, due in 1873, $89,500
Bonds of the Western Union Telegraph Company, due in 1875, $4,857,300
———————————
Total Bonded Debt, December 1, 1867, $4,946,800

The greater portion of the debt of the Western Union Telegraph Company was incurred in the grand attempt to construct a line on the Northwest Coast, and across Behrings Strait to connect with the Russian line at the mouth of the Amoor River, known as Collins’s Overland Line to Europe, which was abandoned on the successful submergence and operation of the Atlantic Cable.

The financial condition of the Western Union Telegraph Company May 1, 1868, was as follows:—

CAPITAL STOCK.

At the date of the Report of January 1,
1868, the Capital Stock of the Company,
issued, was, $41,008,800.00
It has since been increased as follows:—
By exchange for United States Telegraph
Stock, $10,800.00
By exchange for American Telegraph Stock, 2,400.00
By exchange for House Telegraph Stock, 100.00
By fractions converted, 600.00
———————————— 13,900.00
——————————————
Total Capital Stock issued May 1, 1868, 41,022,700.00
Of this there is owned by the Company, 675,000.00
——————————————
Balance on which dividends are payable, $40,347,700.00

BONDED DEBT.

Bonds outstanding December 1, 1867, $4,946,800.00 Bonds of 1875 since purchased and cancelled, 56,300.00 —————————————— Balance of Bonded Debt May 1, 1868, $4,890,500.00 Maturing as follows: In 1873, $89,500.00 Maturing as follows: In 1875, 4,801,000.00 ———————————— $4,890,500.00

PROPERTY ACCOUNT.

Telegraph Lines and Property, December 1, 1867, $47,733,640.68
Since added,
By exchange of Stocks, as per Stock
Account, $13,300.00
By Application of
Profits:—
Construction Account, $103,592.13
Purchase of Telegraph
Stocks, 23,806.66
Purchase of Real Estate, 3,011.14
———————————— $130,409.93
———————————— $143,709.93
——————————————
Total Property Account, May 1, 1868, $47,877,350.61

STOCK, BOND, AND PROPERTY BALANCES, MAY 1, 1868.

Assets. Liabilities. Telegraph Lines, Equipment, Franchises, etc., $47,051,358.49 Western Union Telegraph Stock owned by Company, 667,342.50 Productive Stock in other Telegraph Companies, 52,471.81 Real Estate, 106,177.81 Capital Stock, $41,022,700.00 Fractional Shares, 15,110.00 Bonded Debt, 4,890,500.00 Bond and Mortgage, Buffalo Property, 15,000.00 Profits used for Purchase of Property, and Redemption of Bonds, 1,934,040.61 —————————————— —————————————— $47,877,350.61 $47,877,350.61

STATEMENT OF INCOME AND EXPENSES FROM JULY 1, 1866, TO NOVEMBER 1,
1868.

1866. Gross Receipts. Expenses. Net Profits. July, $562,292.97 $410,382.40 $151,910.57 August, 548,716.96 346,742.31 201,974.65 September, 556,955.95 298,931.99 258,023.96 October, 623,528.31 344,245.07 279,283.24 November, 571,036.02 322,508.66 248,527.36 December, 551,971.40 302,596.41 249,374.99 January, 580,560.53 341,104.71 239,455.82 February, 483,441.77 314,617.26 168,824.51 March, 530,642.66 297,076.59 233,566.07 April, 545,586.30 320,869.41 224,716.89 May, 525,437.94 326,829.83 198,608.11 June, 488,754.55 318,100.99 170,653.56 July, 536,156.89 360,917.53 175,239.36 August, 570,676.85 375,970.17 194,706.68 September, 601,548.79 375,641.50 225,907.29 October, 628,836.74 393,459.92 235,376.82 November, 583,723.66 370,429.57 213,294.09 December, 576,135.19 379,291.35 196,843.84 1868. January, 539,794.00 366,446.02 173,347.98 February, 600,183.32 345,855.52 254,327.80 March, 587,962.23 335,947.64 252,014.58 April, 602,257.05 356,349.18 245,907.87 May, 597,374.47 349,165.41 248,209.06 June, 579,911.00 353,375.50 226,535.50 July, 601,730.61 396,163.66 205,566.95 August, 602,304.73 376,452.03 225,852.70 September, 630,665.36 372,197.50 258,467.86 October, 680,311.81 410,604.17 269,707.64 —————————————— —————————————— —————————————— $16,088,498.86 $9,862,272.31 $6,226,225.75

STATIONS, LINES, AND EMPLOYEES OF THE WESTERN UNION TELEGRAPH COMPANY.

The Western Union Telegraph Company alone has

3,331 Telegraph Offices,
50,760 Miles of Line,
97,416 Miles of Telegraphic Wire,
265 Submarine Cables,
6,389 Skilled persons in its employ.

ENGLISH AND AMERICAN TELEGRAPHS COMPARED.

It has been shown that, several years before there is any record of regular public telegraph business in continental Europe, the system in the United States was in popular use. There can be no question that what restrained its use in Europe for so many years was governmental jealousy of its power, and not ignorance of its capacity. The subject was freely canvassed in the public prints, and was familiar to the learned men of all European nations. Even in England, whose government aided its introduction through private enterprise, the employment of the telegraph was hindered by a tariff so high as to shut it out from general use. Respecting this latter fact, so as to give in more marked contrast the early history of the telegraph on the two continents, a few details are given.

The Electric Telegraph Company of England was incorporated in 1846, and seems to have made its first work in the connection of the railway stations, post-office, police, admiralty, Houses of Parliament, Buckingham Palace, &c. As late as 1851 only eighty stations in the provinces, including the chief cities and outposts, had been opened. Priority of service was secured to the government, and the Secretary of State was empowered, on extraordinary occasions, to take possession of all telegraph stations and hold them for a week, with power to continue so to do.

The tariff of charges adopted was, for twenty words, including address and signature, one penny per mile for the first fifty miles; one half-penny for the second fifty; and one farthing for any distance beyond 100 miles. The lowest charge was 2_s._ 6_d._, sterling. This tariff existed as late as 1851. Compare these rates with those of the American lines at the same period.

From London to York, a distance of about 230 miles, the charge was 9_s._, equal to $2.25 gold.

From New York to Boston, a distance of 220 miles, the tariff for ten words, exclusive of address and signature, was twenty cents!

From London to Edinburgh, a distance of about 400 miles, the charge was 13_s._, or $3.25, while from New York to Buffalo, 500 miles, the charge was forty cents. On the English tariff of charges, a message from New York to New Orleans would have been $11.46; the actual tariff was $2.50.

ACKNOWLEDGED SUPERIORITY OF THE EARLY AMERICAN SERVICE.

On this subject we have the testimony of one of the best of British popular publications,—“Chambers’s Papers for the People,” published in 1851,—whose words we quote:—

“The scale of charges in the United States is much lower than in this country; the electric telegraph is consequently more available to the greater part of the population engaged in commercial affairs. Apart from business and politics, the Americans have made the telegraph subservient to other uses; medical practitioners in distant towns have been consulted, and their prescriptions transmitted along the wire; and a short time since a gallant gentleman in Boston married a lady in New York by telegraph,—a process which may supersede the necessity for elopement, provided the law hold the ceremony valid. A favorable idea of the immediate practical utility of the telegraph may be gathered from a communication to the present writer from New York. ‘The telegraph,’ he writes, ‘is used in this country by all classes except the very poorest, the same as the mail. The most ordinary messages are sent in this way,—a joke, an invitation to a party, an inquiry about health, &c. At the offices they are accommodating, and will inquire about messages that have miscarried or have not been answered, without extra charge.’ The lines in the United States are carried across the country regardless of travelled thoroughfares; over tracts of sand and swamp, through the wild primeval forest where man has not yet begun his contest with nature, where even the rudiments of civilization are yet to be learned. Away it stretches, the metallic indicator of intellectual supremacy, traversing regions haunted by the rattlesnake and the alligator, solitudes that re-echo with nocturnal howlings of the wolf and the bear. Communications are maintained from North to South, East and West, through all the length and breadth of the mighty Union, and with a frequency and social purpose exceeding that of any other nation. In one stretch, Maine and Vermont, where winter with deepest snows and arctic temperature usurps six months of the year, are united with the lands of the tropics, where the magnolia blooms and palm-trees grow in perpetual summer. Subordinate lines bring the great lakes—the inland seas—into direct communication with the ocean ports on the eastern shore. Nothing stops the restless, enterprising spirit of that people.”

REMARKABLY LOW TARIFFS OF THE EARLY AMERICAN TELEGRAPHS.

There is, indeed, nothing more remarkable respecting the presentation of any great invention to the public than the fact that the electric telegraph in America was thrown open to the public, in its very inception, at the lowest tariff which has yet, under all the excitement of opposition, been adopted.

What was true of Great Britain with respect to tariffs during the early years of the introduction of the telegraph applies, as has been seen, equally to France and the other European states. Every tariff adopted was, to a large extent, prohibitory, and the facts connected with these years utterly falsify the statement that Europe has shown (until within a very few years) anything like the spirit of liberality which private companies in the United States have manifested in this matter.

Since these early years no advance was made in our tariffs until the third year of the rebellion, when the depreciation of the currency necessitated the increasing of the salaries of employees from fifty to one hundred per cent, and enhanced the price of material in a corresponding ratio, compelling a considerable increase of the tariff on despatches. Since the war closed, most of the important tariffs have been reduced to their original standard, without any corresponding reduction of the price of material or labor.

In contrast with this, we need only to point to the large advance in railway fares and transportation, in the cost of entertainment at hotels, in the prices of daily newspapers, and in that of almost every commodity or service which the people enjoy; and yet the telegraph, like all other enterprises, has been burdened with the same increase in the cost of labor and materials.

NO SIMILARITY BETWEEN THE TELEGRAPH AND POSTAL SYSTEMS.

The idea which has been repeatedly broached, that the telegraph and postal communication are in the same category, is entirely fallacious. The telegraph does that which the post cannot do, and which, before the telegraph was invented, remained undone. If the public use the telegraph at a cost of 25 cents when they might use the mail at a cost of three cents, it is obvious that the use of the telegraph implies something essentially different from the use of the post. If they use the post, with its tardy departure and delivery, instead of the telegraph with its instant and continuous departure and delivery, it is equally obvious that there is something implied in the use of the post that is not to be obtained by the use of the telegraph.

Postal correspondence and telegraph communication are two very distinct things.

A telegram announces sudden illness; death; an accident; prices of gold every five minutes; prices of stocks every hour; sudden fluctuations in the values of commodities; orders rooms at a hotel, while the sender is _en route_ and flying to the distant city as rapidly as steam can carry him; countermands orders and instructions contained in letters sent by post; orders letters to be returned unopened; orders the arrest of fugitives from justice after they have taken their departure on the railway; orders the search for a package left in the cars, and its return by a succeeding train; announces that the Merrimac has destroyed several ships of war, and may get to sea in spite of the Monitor and ravage the coast; announces that the flag has been fired upon at Charleston, and in twenty minutes arouses the entire nation. None of these things are possible for the post. Before a letter could convey the intelligence of the sudden illness, the patient is dead, or convalescent; the dead is buried; gold has changed in price a hundred times; stocks have gone up and down; the man arrives at his hotel twenty-four hours in advance of his letter; the instructions in the letters have been acted upon, and no subsequent ones can repair the damage; the fugitive from justice escapes out of the country; the package left in the cars is irretrievably lost; the Merrimac has been sent to the bottom, and the alarm caused by the tidings through the post, which must continue until another arrival, is groundless; and the flag has been insulted a month, before all the patriots of the country have heard the tidings by the slow, plodding mail.

The telegram is often the index to the more full and copious information conveyed by the post, but it does not supersede it. There is no similarity in the conveyance of matter by post or telegraph.

A letter deposited in a post-office is placed in a bag, and carried to its destination with no less labor and expense than if _ten_ letters were so deposited. The time taken in transport is the same. A leather bag covers a thousand letters as easily as a solitary note. It was this fact which led to the reduction of postage. But it was accomplished without the loss of an hour to government, without the enlargement of a coach, or any considerable increase in the compensation paid for the service. It involved no new brain-labor, no new responsibilities, no new expense. Under such circumstances high postage was a folly, and to return to it would be almost a crime.

A communication by telegraph, on the contrary, demands a calm, unoccupied brain, and a steady hand to manipulate its contents, letter by letter. A slip of the finger from the manipulating key changes its meaning; a truant thought alters the manuscript; a shadow of forgetfulness mars its whole design. It demands a whole wire for its use, and a given time for its solitary passage. Hence the necessity for multiplying the wires and enlarging the operating staff.

Added to all this is the necessity for repeating this process when destined to any point not directly reached by the originating office.

Over and over again have many of the messages left in the hands of telegraph companies to be translated or re-written before they reach their destination; very different from the sealed letter, which needs but the toss of a practised hand to change its route and put it under the cover of a new bag.

The difference between the use of the post and telegraph is well shown by the practice of the Western Union Telegraph Company, _which requires all of its employees to use the mail, instead of the telegraph, in every case where the interests of the company will not suffer by the delay_. All check errors, and discrepancies in accounts, are settled by correspondence through the mail, where the same might be done more readily, though at far greater expense, by the use of the wires. Now, if the company owning the lines, and working them, can better afford to pay the postage on its communications, than to block up the wires with its own free business, it shows a very radical difference between the expense of transmitting matter by steam, or horse-power, and doing the same by electricity.

COLLECTION AND DELIVERY OF TELEGRAMS BY LETTER-CARRIERS IMPRACTICABLE.

The plan proposed for the collection and delivery of telegrams by letter-carriers is equally impracticable. The rapid and safe delivery of messages is the great difficulty with which the telegraph companies have to contend, and the amount paid for this service forms a very material portion of the expense attending the operation of the system. How would this service be performed if left to the Post-Office Department? In 1865—the last year containing the statistics of the number of letters sent through the United States mail—the Postmaster-General estimates the number of letters transmitted at 467,591,600. No statement of the total number of letters delivered by carrier in the United States is given in the Postmaster-General’s reports for 1865 or 1866, but he states that the number of cities at which free delivery is established is 46, and the total number of carriers, 863; that 582 carriers are attached to ten offices, from which are delivered 38,060,009 letters. If the remaining 281 carriers, who are distributed among 36 offices, deliver as many in proportion, we have a total of 56,446,004 letters delivered for the year, or about nine per cent of the whole number transmitted through the mail. This does not present a very flattering result, and does not argue very favorably for the satisfactory delivery of thirteen millions of telegrams, through the same channel, at over 4,000 offices!

Compare with these meagre results the operations of the British Post-Office, which employs 11,449 carriers, and annually delivers 705,000,000 letters.