Omaha daily bee., 1909-12-12
OF The WIRE FIELD
Another Chapter of the Story of Tele-
phone Expansion.
MAsTERLY MOVES OF COMPANY
Waning Power and Final Absorption
of Western Union-VRst Financial
OperatIOns-President
Vail.
Concluding Article.

lean Telephone and Telegraph company,
have their own ideas on the subject, which
do not run in tune with those of many
public regulating bodies and many theorists
upon the subject OF public service indus
tries. The VIZ, err does not propose to dis
cuss the question from what might be
called the external point Of ~view-that is
to say, he will not argue whether 1t be
better for the consumer to have two rival
telephone services to which he may sub
scribe. or a single one operating in his
locality. But from the internal point Of
view, looking at the subject from the
standpoint Of the corporations themselves,
there are some figures which are very
interesting.
In the United States on July l. 1909,
there we're about $4,000 telephone com
panies or systems having in round figures
6,50O. on stations or individual telephones.
The Bell system proper, comprising thirty
associated operating companies and about
1850 connected independent companies, had
a total OF 1895. 25 stations. OF these the
Bell system proper, with its thirty COM
panles Immediately associated, had 3,215,-
25 stations. There are further. 1900
companies not connected with the system,
having an average of sixty-two stations a
company, and these are made up largely
Va 6iiihh IuIhl dNGONluAApllHf pOiAit oSNhAilb
connection with the Bel. system and being
too isolated to obtain 1t and some con-
tented with their present individuality.
Dividing all the companies into groups.
companies having less than 10000 capital
have mad failures aggregating 10 per cent
of their entire number during the last
few years. There are about $50 companies
In this group, with outstanding capital
obligations of $25, 100000, and about $4,000
stations, being a capital of about 500 a
station. There are thirty-five companies
with a capital between 1901 900 and $780,
600. having a total of $50, 900, 900 capital and
calming 10S,O0 stations, which brings
their total capitalization to s1S5 a station.
Thirty-elght companies with the outstand-
ing capital OF sis5, 10000 claiming 764, 900
stations, have an outstanding capital Of
Se42 a station. These companies have very
few toll lines and their equipment Is
largely local and involves a vastly smaller
expenditure than long distance establish
ments, yet the American Telephone and
Telegraph company and its thirty sub
salaries directly connected and its 1.732,-
089 miles of wire, has a total capitaliza-
ton outstanding in the hands of the pub
lie OF approximately $500 100000 with Its
8,215, PAS stations. This is a capitalization
OF a little less than $3.50 a station. The
economies involved in such a situation
are too obvious to need extended descrip-
lions.
Fight ON Western Union.
Returning now to the historical mar
rative, we find the American Telephone
and Telegraph company coming down
through the nineties with a more or less
active fight on its hands all the time
with the Western Union. The Mackay
$3.50. til wa.nwNguaa an4aHal Aha ta1a.
graph field and had started through the
Postal companies their own attack upon
the traditional monopo1st Of Geographic
communication. Jay Gould went to his
reward and the Western Union passed
into the domination OF his son. George, who
headed the Gould financial interests. But
there was this difference, that while Jay
Gould's railroad interests contributed
strength to the telegraph company. his
sons were a distinct element Of weakness
There is no space here nor is this thu
time to narrate the troubles of the Goult
railroads due to the seeming ability o.
the present head OF the family to be OF
bad terms periodically with nearly all o.
the large financial interests. OF COURSE
George Gould has made his alliances, anC
his roads have felt the influence OF TIT
support Of various aggregations Of cap
lAuit baN NhNg ass h3ND wi hNpANOo ~
warfares with other lines, and so far hal
the Gould influence deteriorated between
Jay Gould and George Gould that instead
OF being able to use the Western Union a.
a club In fighting his railroad wars, Georgl
Gould has had to protect 1t as additiona
territory open to invasion by his financial
antagonists.
The row with Cassatt over the Western
Unions contract with the Pennsylvania 1
an excellent example of what this means
It requires no imagination of a seer L
picture what would have happened II tn
president OF any railroad had torn up tn
telegraph poles Of the Western Uniol
along his lines when Jay Gould was run
ming the show. The very campaign tina
brought Jay Gould into the control of tn
Western Union company, away back 4
1850. illustrates one possibility Of sue.
rashness. Gould tackled the Wester1
Union stock when 1t was selling far abov
par, as a standard Vanderbilt issue, an
beat IL down into the f~ifties, and whe
some of his brokers formed a pool to Sc
him out, and he discovered It, he scare
them so with the threat Of criminal pros
ecutlon Tor conspiracy that one or two O
the pool speedily sold out a second tim
ON their fellows, and Jay Gould gathere
In this stock wherewith TO cover the shor
sales that he had made in his campaig
on the Vanderbilts. lie had 10 per cen
of the stock Of the Western Union In hi
strong box before the Vanderbuts kne,
what was happening. There are fe,
presidents or managers of railroad ne
that care to invite this kind OF antayoni 81
as q price OF asserting thelc views in m
matter Of a telegraph contract.
bad management.
OF course Jay Gould did not have IN
composition Of the Postal Telegraph com
pany, which his son and successor did hav,
That should be taken into consideration /
figuring the Western Unions decline unit
now, at last. the Gould family holding
have passed into other hands. Yet IN
course OF the earnings Of the company dur
ing the last few years is worth considera
alton as rejecting some serious difficult
In Its management. The gross reeeip;
have shown a steady increase. Runnln
over II roughly, In jumps OF five years. "
see, for instance, that from 1850 TO 1850 IN
gross Increase from 81. 10000 to over s9s
O0o0o The net revenue. however, Increase
in the decade only from B,SSS 900 to s., a2
M. Five years more finds the gross esrr
ings hanging at about the same point an
the net falling Off 70 tS.IlyOO0 BY 1900 N