National Republican. (Washington City (D.C.)) 1872-1888, 1884-02-11


inquiry from Senator Wilson, Mr.. Bates said
that in the majority of the Western Union
contracts there was clause TO the effect that
the railroad companies along whose lines
telegraph lines were constructed should not
transport material for other telegraph compa-
mics. Explaining this, he said, while the
contracts did not provide that there should
be no transportation Of material for any other
telegraph company, the contract did pro-
vide that the railroad company should only
haul the rival telegraph companies, poles,
&C., between stations at the regular local
tariff prevailing Cor light material, which
practically amounted to a prohibition, as the
poles must be distributed, of course, along the
entire route.
Mr.. Garrett said that tho Baltimore and
Ohio Railroad company has already expended
very large sum OF money in the acquisition
of certain lines. and expected to spend n great
deal more. The time for investments in
telegraphic material seeming propitious large
quantities of material for constructing had
been contracted for at cheaper rates than had
ever been known TO previously prevail. 1t
had centered into contract obligations for
the building Of additional lines to perfect its
present compact system, and, therefore, 1t
became very important for his company to
know what course the government intended
pursuing in telegraph matters. His company
did not want to sec the government enter
terpriso after it had entered the field.
He presumed the chief concern OF the
government was in reference to what
has followed previous telcgraphic competi-
tion, viz, cancellations. While he did not
know what guarantee against consultations
would be satisfactory to congress, so far as
the Baltimore and Ohio company was con-
cerned, he might point TO its general policy,
which had in 1873 dispossessed Adams Ex-
press company from it's lines in favor Of one
now operated by ITSELF to the similar action
in regard TO its sleeping cars, and to the
whole policy of the company, which was to
make for its shareholders all the profits,
which on most other railroads foreign cor
poratioDs absorb. Despite all predictions Of
failure the Baltimore and Ohio company was
still operating its own express and sleeping
car lines, and had finally decided to throw
the Western Union and assume the manage
ment Of its own telegraphc system. This
constant policy, and the further fact that this
company had expended large sums, and had
money, extending its present system, was
the best assurance he could offer congress-
and the country that his company would, in
the future as in the past, make no consolida-
tions OF combinations inimical to tho general
welfare.
If the government desired further guar
antee the company was prepared to enter
into contract with the postoffice depart
ment for the transmission Of government
telegraph business under such guarantees as
10 rates, fidelity Of transmission, &C., as any
commission appointed by the government
considered fair and equitable. Or if congress
was determined to enter the telegraphic field,
but did not see its way clear to do so immedi-
ately, and was willing to enter into a fair
arrangement, the Baltimore and Ohio COM
pany would 60 on with the construction of
its lines SO as to afford tho public the advan-
tages accruing from competition, and extend
telegraphic facilities at the earliest date, and
would probably agree to turn over its lines
to the government at cost, plus q proper re-
muneration for its venture and for rights Of
way such as those previously referred to.
Chairman Hill said he had great respect for
the Baltimore and Ohio company, which he
regarded as one Of the soundest corporations
in the country, and admired its conservatism,
hut he could not sec how, in the interest of
it's shareholders If for other consideration, it
could refuse to combine with the Western
Union or other company which might offer
il greater advantages than 1t could secure
through competition.
Mr.. Garrett thought the day of telegraphc
consolidation was passed. The Western
Union was the result of some sixty consoli-
dations, more or less, and true, had hitherto
finally absorbed all its rivals. The Balti-
moro and Ohio company had been willing,
tho other independent lines, but when finally
consolidated with the Western Union it had
always withdrawn from its alliance with
them. He could SEQ no inducement which
could lead his company, when in possession
of a system the entire cost of which would
not exceed $3,000,000, and the nucleus of
which-that is the Baltimore and
Mt not exceeding $4,000, and which covered
the territory from which the Western Union
derived rs per cent of its entire revenue to
consolidate with that company with such
heavy burdens as its watcred capital imposed
upon it, The Baltimore and Ohio company
had theory that by building its lines for
cash and serving the public at equitable rates
that could be fixed by government tribunal
SO could make greater revenue for its stock
holders than could be obtained from CONSOLE
dation. The company must always maintain
y large telegraphic service for its railway busi-
ness, and was now only taking advantage of u
good opportunity to extend that service for
the benefit Of the public.
Chairman Hill said: "Mr. Garrett, you
propose building competing lines and making
competition general throughout the country,
and when you have made certain expend-
itures the Western Union will put down
rates to all the points you reach and will
likely raiso rates to the points you do not
reach, the result of which will be propo-
an advance. You will find it impossible TO
make money under the pressure they will
exert, and you will either run your lines at a
loss or succumb."
Mr.. Garrett answered that II the Western
Union, on watered stock OF eighty millions,
can earn dividends, that the small capitali-
2ation Of the Baltimore and Ohio Telegraph
comTany would enable it to make as salts
factory earnings Mt u much smaller rate than
the Western Union could afford 10 make. His
company was willing to do we'll and let others
do better If they could. Tho Western Union
company between New York and Chicago
has, he understood, in all thirty wires his
line would soon have twenty-seveu, and
would be as strong in Chicago as Mr.. Could
He had also just bought a district company
in New York, which would give his system
large and numerous Offices and enable it to
Immediately organize All effective service.
His company has already under lease wires
between the cities Of New York and Chicago
that yield an average rental Of $4,000, ag-
gregating fair interest on the entire amount
proposed spending so that 1t could, at any
rate live even If rates were put below bed
rock by the Western Union. But there was
this further consideration, how could the
Western Union go on paying dividends on
its $50 900, 900 of stock if IL cut rates below
what would yield o net revenue? How could
they maintain it as an investment stock? y =
Mr.. Cowen thought the answer to the point
that the Western Union would try to drive
the Baltimore and Ohio from the market by
reducing rates was in the condition of tho
telegraph business. More business was trans
acted between Chicago and New York than in
the Dominion of Canada. When the commit
tee reflected that the Baltimore and Ohio sys-