The Indianapolis journal., 1886-03-31
THE TELEPHONE In INDIANA.
The American Bell Company's Side Of the
Case-The Indiana Law Reviewed.
Special to the Indianapolis Journal.

Bell Telephone Company was read to-
day, to the meeting Of the stock
holders The whole business of the company
for the year 1885 was reviewed at length. Pres
ident Forbes refers to the Indiana law, its pro-
priety and effect. as follows:
I'm April 1885, the State of Indiana passed a
law restricting the price of rental of telephone
| to So per month and So so each. where two are
| used. This was done against the almost unani-
| nous report of the committee which had exam
ined the subject, and before whom careful testi-
mony had been placed as to the cost of telephone
1 service
| This raised at once two questions of the high
| est Importance to our licensees
| Frst-The question of the right of the Legis-
| lature to make such restrictions
| Second-The question of public policy in re-
| spect to such legislation.
| A case testing the validity of the law was
| brought and carried up to the Supreme Court of
1 Indiana, and the Central Union company, Going
1 the telephone business OF Indiana, gave testi
mony beyond dispute that telephone service in
| Indianapolis and other cities actually cost that
| company more than So per month per subscriber.
| That court has recently decided that the law is
/ valid, but has accompanied this decision by
language which implies doubt whether the law
| is either wise or just. The court based its opin
ion largely upon the so-called police power of the
| State, which is said to confer the right to con-
troll matters affecting the safety and convenience
of the public, and quoted the case of restriction
enforced against the patent owners of a danger
/ Gus oil in behalf of its position.
But there is no question as to public safety in
volved in the telephone law, and as the tele-
phone is certainly convenience to the public,
of less consequence than the supply OF food ana
| clothing, it does not seem probable that the
| right to regulate the telephone business, even
without considering the question of patent right,
exists, unless the State has the power to regu-
| late prices of all other commodities IL this
general power does exist surely the patent right
must give some protection to business which
wholly depends for it's peculiar value upon pat
ented inventions
The court made the distinction that the price
for the right to practice the invention could not
| be interfered with, but that the in
vention was embodied in tangible article like
| the telephone, the State possessed the right to
limit the price for the Of it. This is to assert
| that the State has only to take one step round,
in order to practically accomplish that which the
court itself says 1t must not do, and this whole
ground is opposed to the generally accepted
theory upon which patented articles have been
bought and put into use, and to the whole theory
of the patent law, which purports to insure full
protection for the exclusive use OF the invention
during the life Of the patent, that it seems in
comprehensive that tae view of the Indiana
court can be correct.
In consequence of this decision, the Central
Union company is obliged to close its exchanges
in the principal cities and large towns There
seems to be no other course, unless the company
is willing to do business at heavy loss until the
ratelaw can be repealed. The public will neces
sarily be put to serious inconvenience, and the
telephone company is helpless to give relief. In
Ohio and New Jersey similar bills which were
before the Legislatures of those States have
been rejected or postponed, and we nave every
confidence that the same result will be reached
in several other States including Massachusetts,,
where the same legislation has been attempted.
The Indiana is to be appealed to the
United States Supreme Court and she result
will be awaited with anxiety by many others
than those interested in telephone property If
the States possess such right as is claimed by
the Indiana court, the motive of public policy
should still operate against its exercise.
Why should the telephone business be
industries? The reasons offered that
telephone companies are monopoles, and
that they have been granted certain privileges
of location but as they are monopolies only by
virtue of the patent system, which is everywhere
accepted as part of our public policy to which
all the States are committed State in fairness
ought to destroy that which this patent system
has created, and the privileges of location which
| have been granted them are go precarious, that
sufficient obstacles are already placed in the way
of conducting their business by their being
obliged to put their money into plant of such
uncertain tenure Sound public policy is surely
against the regulation of the price Of any class
of commodities by law. Ii 1T is admitted with
telephones. it may presently be proposed for
anything else which the public wants.
In the discussion Of this matter. the circum-
stances that these patents are property bought
and paid for seems often to be wholly over
looked by those who are proposing to distribute
the benefits of the telephone to the public. 1t is
the buyer using his majority vote to fix prices,
without reference to the rights of the seller 1t
| is often asserted that telephone rates too
high, but the assertions are unacccmpanied by
any proofs, and those who make them do SO
without that knowledge of the business which is
necessary to a fair judgment
| AS the stockholders generally have not been
| able to acquant themselves with these matters,
| it may not be out of place to say few words
| about this question.
| Had an offer been made in the first place to
| put WIRE switch apparatus and operators,
| day and night at the service Of each subscriber,
| and to charge not over five cents per connection
| within usual exchange limits, can it be doubted
| that such charge would everywhere have been
| accepted as moderated IN fact the cost to the
| subscriber for exchange service varies from two
| to seven cents per connection, according to
| amount of use and quality of service required.
| and the average is not far from four cents The
| price of connections from one exchange to an
| other is from ten cents upwards, according to
| distance which compares most favorably with
telegraph messages, since Immediate response is
secured and conversation of three minutes or
| even more, allowing the exchange of several
| hundred words, instead of the ten word message
| of common use in telegraphy with considerable
| wire too, is used on an average but about five
| times day, and must be maintained in idleness
| the rest of the time while telegraph company
| only maintains as many wires as it expects to
keep busy. In Boston and its branch Offices
alone, for example, the telephone company main
| tains 4. .565 miles of wire, which are mostly in
| idleness nine-tenths of the time
| Different qualities of telephone service are
just as necessary as different qualities of cloth
ing food or railroad service, and prices of tele-
| phone exchange service must vary as surely as
| prices of other commodities, unless cities are
| willing to content themselves with the kind of
4 equipment and service which answers in viii
/ lage, which they not In small town one
| can only reach perhaps one or two hundred per-
| sons, in city as many thousand this is worth
| the difference, especially since the apparatus
| must be much more costly throughout