Evening star., 1938-09-18
MERGER OF WIRE
FIRMS CONSIDERED
F. c. c. Members Give Study
to Proposals to Keep
Service Intact.
By WILLIAM ]. WHEATLEY


Merger of the large telegraph COM
panies as a solution of their financial
troubles is being considered by some
of the members of the Federal Com
munications Commission. While there
is nothing definitely before the body
for formal action, it is known that
some members of the group are now
studying the matter and may bring
1t to a head by presenting a formal
resolution proposing that merger be
recommended to Congress at the COM
ing session.
They are seriously concerned with
the possibility of a breakdown Of the
countrys telegraphic communica-
ton system unless something definite
is done to aid the companies out OF
their troubles, the commission several
months ago having rejected request
on the part of the companies for a
fat IS per cent increase in their
rates. The commissions action in this
regard, however, was not unanimous.
Commissioner T. A. M. Craven filed
a strong dissenting opinion which was
concurred in by Commissioner Nor
man S. Case.
However, there appear to be two
obstacles to a merger of the COM
panies which are not believed to be
insurmountable One is a strong feel
ing in Congress that a merger might
tend to create a monopoly and the
other on the part of organized labor,
which fears that a merger. designed
for the purpose of effecting econ
omies, might result in wholesale dis
nissals of employees. At the same time
1t was argued that increases in wages
sought by labor would tend to in
crease the operating costs, and which
would make matters worse.
Monopoly Arguments.
On the monopoly side of the ques-
ton. it was pointed out that the COM
panies would be subject to regula-
ton in their practices and rates. and
any monopolistic tendencies could be
avoided by the establishment of rules
by the Federal regulating body which
would tend to prevent them.
On the other hand. it was indi-
Gated that the merger could be effected
without materially increasing the un-
employment lists, as the changes would
gradually be taken care of by deaths,
designations and dismissals in the
ordinary course of operation over a
period. OF course. it was pointed out
that it would very likely not prove
an active field for the employment
of those Just coming into the working
stage.
Grounds for Rate Refusal.
When the commission turned down
the rate increase on q strictly busi-
ness matter of not showing that the
companies had effected all Of the eco
Monies possible, 1t suggested that the
figures showed that in the case of
the Western Union it was only being
used at half capacity. If the COM
panies even follow this suggestion Of
the commission, it would mean that
if the half of the plant not being
used is placed out Of commission it
would be necessary to dismiss person.
mel to effect the full economies This,
it was pointed out, appears to remove
some of the argument Of labor as to
unemployment.
While there appears to be trend
In the direction Of , monopoly in the
communications field, there is q belief
in the minds Of some that the time
may not be ripe for it. 1t was for the
purpose Of prolonging a elimination
of such a trend until it could be def
nitely determined, that merger or
monopoly was the reason Commission
ers Craven and Case recommended
that the fiat Is per cent increase in
rates be given at the time it was re-
quested.
Nevertheless, it appears quite Ger
tain now that the commission will
consider the matter before the con-
vening of Congress, with a view to de-
termining whether it should make
some definite recommendation which
will preserve the Nations telegraphic
communication system