The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1884-05-23
How the Various Organizations Might
but DO Not, Enrich Themselves.
The Defeated Free Traders Threaten to Carry
Their Grievances to Chicago and Make
Things Lively in the Convention.
THE TELEGRAPH BUSINESS.
Imperfections Outlined by the Senate Com.
mittee on Post-Roads,

Senate committee on postofices and postroads
on the subject of postal telegraph, has been com
pleted by Senator Hill. 1t gives a summary of
! the history, increase of debts rentals and cap
ital stock of the Western Union company, and
the value of its property. leased and otherwise
and says its capital stock of $50 0OO 900 has
arisen, nearly the whole of it. from stock divi-
dends and from purchases made of the lines of
other companies. which were paid for by issues
of stock. 1T is evident the report continues
that the prices which the Western Union paid
in its stock for the competing lines were vastly
in excess of either the cost or the earning ca
paeity of the property acquired it was
claimed before the committee by the president
of the Western Union that it had from time to
time expended out of its current earnings con-
siderable money on construction account-that
J is to say, in addition to the lines and equipments
over and above their maintenance. This may
be true to some extent, but cannot be true to an
extent justfying the enormous stock dividends
which the company has made, nor was the ap-
preparation of current income to the construc-
ton account sufficient to prevent payment of
munifcent cash dividends to the share
holders who received in that way
from 1867 to 1883, both inclusive S34, 600 600 in
addition to stock, dividend amounting to $25,-
SO7 l9O As the prices paid by the Western
Union in its own stock'do not furnish even an
approximate idea of the actual cost of the lines
which ithas purchased from the other companies,
and as the representatives of the Western Union
who alone possess the information, have given
no definite or detailed account of the amounts of
money it has itself expended in construction of
lines, the committee have endeavored to ascer-
tain what it would now cost to reproduce lines
equal in every way to those which the Western
Union has acquired in all ways. The
committee believe it to be large
estimate to assume that the number of miles of
wire actually used and necessary to its business
of transmitting kilograms is 1000 The COM
mittee believe. also, that the average cost of
wire, including poles, construction and instru
ments for telegraphing would not exceed so
per mile, which would make a total Of $24 800
/ 600. The exact excess of capitalization of
Western Union beyond the actual cost of its
lines and beyond what it would now cost to re-
produce similar lines, cannot be determined, but
that it is enormous is entirely undisputed.
In reference to the inquiry whether this ex-
cess Of capitalization, arising from stock divi-
dends and from the purchase of their lines at
inflated prices, paid in stock, has operated in,
juriousy in the way of increasing the charges of
the Western Union for transmission of tele-
grams, the committee deem it sufficient to say
that their own conclusion corresponds with the
opinion of the cOuntry-that its effect in that
direction cannot be matter of doubt. and that
1t has been very great that it has swollen the
capitalization of the Western Union, and has
created at one and the same time %
cover, an inducement. and, in some
senses, necessity for excessive charges
for kilograms. So long and SO far as the public
could be made to believe that the nominal CAPT
tai was a real one, it made to induce ac-
/ QnpSeQce excessive chaTppS. while
of the actual nature of the nominal capital does
not diminish the pressure, it exposes the motives
which impol the managers of the company to
keep up the charges which are essential to the
maintenance of the present dividends upon the
| immense mass of its watered stock.
For the purposes of relieving the country Of
the burden Of charges for kilograms which are
too high, OF making those charges
more equal as between different localities
and different classes of kilograms. and of guard
ing against the mischief and danger of leaving
control of the telegraphie business of the country
IN the hands OF a private company, which enjoys
a practical monopoly, the committee have re
ported the accompanying bill Senate bill. 2022
The report says the constitutional right of the
government to establish postal tele e-raph is un-
doubted, and that there are obvious and suifi-
cent answers to the objection that such limo
will operate iniuliousy upon private teegraphs.
The report asserts that the passage of the postal
telegraph bill will reduce the average charge per
telegram from 30 cents to p cents
Immediately and to &c cents in FIVE
years, and will secure unifornits
of charges, irrespective of the amount of bust
ness i'll different places, for kilograms to news
papers and to commercial news associations, and
continues as follows:
Under the present telegraphic system there
IS a possibility of species of censorship which
Is one of the most alarming dangers which me-
mace the country arising IN two distinct ways
each Of which requires separate consideration.
The first is the power which the telegraph com
paneS themselves have III manipulating news
flor sinister purposesi and the second is the
same power possessed by the Associa ted Press and
other similar associations not themselves
owning telegraph lines. but making
special compacts for transmission of telegrams
over lines owned and managed by others. It
will appear that the power of the telegraph
company in this respect will be entirely taken
away by the pending bill and that the power Of
the Associated Press and similar associations VIII
be greatly reduced
For the purpose, the report says, ''of giving
fabulous fortunes to its inside managers and
their friends the Western Union need not send
untrue market quotations. 1t has only to give
true quotations single hour, or less than that,
in advance. TO those whom it means to
favor, and the work is eftectually accomplished.
No such power should be allowed to exist III this
| country. Even il no past abuses can be shown to
have occurred or even if it be believed there
have been, in fact no abuses of it, the tcmpta-
tion to abuse 1t is enormous, and will sooner or
later prove irresistible. The bill viii efectu
/ ally take the power away from the Western
Union or any Other private telegraph company.
by the low rates which it secures to every
body and by the still lower rates which it Sc
cures to commercial aeWs associations COmpetl-
/ tiOn in furnishing commercial and financial
news TO all points and places is not to be cN.
/ rectod under this DILL bat it will be sulHcenr
70 .l-nres. az it is sure to do competition faces
/ u!sAiug such news to the more imporGhg With
whereby the field for psQhtVbly t"DT