Government Assumption of Control over Telegraph, Telephone, and Cable Systems
Title
Government Assumption of Control over Telegraph, Telephone, and Cable Systems
Creator
Burleson, Albert Sidney, 1863-1937
Identifier
WWP25564
Date
1918 November 29
Description
Statement crafted by the Postmaster General on government control of telegraph and telephone.
Source
Library of Congress, Woodrow Wilson Papers
Publisher
Woodrow Wilson Presidential Library & Museum
Subject
World War, 1914-1918--United States
Contributor
Bryan Le Beau
Language
English
Provenance
Document scan was taken from Library of Congress microfilm reel of the Wilson Papers. WWPL volunteers transcribed the text.
Text
Under the Joint Resolution of Congress, approved July 16, 1918, I have taken possession and assumed control and supervision of the telegraph, telephone and cable systems and have designated the Postmaster General to exercise supervision, possession, control and operation thereof, during the period covered by said Resolution. This terminates by operation of law upon the Proclamation by the President of the exchange of ratifications of the treaty of peace. Hostilities having ceased, it is now only a question of time as to when this control will end, unless Congress takes immediate steps to provide otherwise.
The Governments of all the principal nations, the United States alone excepted, now operate their telegraph and telephone systems. This practical unanimity among nations gives proof of deep and fundamental reasons for the postal control of electrical as well as the other forms of communication. In fact, the need of communication is a primary need of the individual existing independently of his means or circumstances, and rises higher than those considerations of quid pro quo which must actuate the private investor. Again this service, especially the telephone, is interdependent and complimentary in character and cannot be made fully efficient for a single class without extending its use to all classes; that is the service is in its nature reciprocal and must be made approximately universal to give the required or adequate service. This universality has been realized by our Postal System - for it reaches and serves everybody. The electrical means of communication should be added to it, to attain the same sufficiency. Moreover considerations of economy call for this unifying and nationalizing step. In hundreds of thousands of instances throughout the country the citizen must bear the burden of paying for two telephones, while hundreds of thousands paying for the telephone of one company are denied communication with the patrons of another competing company in the same community. This waste of capital and the facilities of communication becomes grotesque when we witness, frequently three and sometimes four of the pole lines of competing telegraph and telephone agencies running together for thousands of miles along the same highway, when but one should better suffice. Economy of operation and cheap communication are not attainable in these circumstances. It has been said ‘there is a road to every man’s house, and there should be a telephone on the inside”. I concur in this statement, which is attainable in the United States, and suggest that no part of the reconstruction program could prove of greater service in the employment of industry and labor and the ultimate advantage of society than this needed extension and improvement of electrical communication.
The principle of Government ownership and control of the telegraph and telephone is not only sound but practicable and is sanctioned by that section of the Constitution which provides, through Government control of Post Offices and Post Roads, for Government monopoly of all means of communication known at the time of its adoption. As early as 1844 when the Morse telegraph was in its infancy Congress made an appropriation looking to its absorption by the Postal Service, and the Postmaster General recommended that it be made a part of the Postal monopoly in 1845 and again in 1846. Since 1867 many Postmasters General have urged upon Congress the adoption of similar measures with respect to the telegraph, and President Grant made a like recommendation to Congress in 1871.
The reasons in support of Government ownership of the telegraph apply as well to the telephone. Several Postmasters General have also recommended the purchase of the telephone by the Government.
That the present Congress appreciated the necessity for the protection of users of the telegraph and telephone which the companies have never been able to afford, is shown by the fact that by the Act approved October 29, 1918, providing for the protection of users of the telegraph and telephone service and the properties and funds belonging thereto during Government operations and control. This Act, among other things, protected the public against the tapping of such lines or wilfully interfering with their operation and against divulging the contents of any telephone or telegraph message by any person not authorized or entitled to receive the same, and made other provisions for the protection of the public in the use of the telephone and telegraph systems of the same character as those provided for the United States mails. It is doubtful if these safeguards could be made effective to the operation of these properties under private ownership specially as to intrastate business.
From information now at hand it appears that the physical value of the Western Union Company properties will not exceed $155,000,000., and that of the Postal Telegraph Company will not exceed $28,000,000. The other telegraph companies are very small and their physical value will not exceed in the aggregate $2,000,000.
The physical value of the property of the so-called Bell Telephone System is about $1,200,000,000., and the physical value of the properties of the other telephone companies is roughly estimated at not to exceed $400,000,000.
The question of public ownership of electrical means of communicating intelligence has been so thoroughly discussed for many years that public sentiment should now be more or less crystallized on the subject, and I take it that the principal obstacle in the public mind to the permanent retention by the Government of the properties is the anticipated expense of the purchase at this time when such heavy drains are being made upon the country to pay the expenses of this great war. But this objection is only provisional, for a continuation of the present system of annual compensation or lease of the properties is clearly feasible and may be employed with a sinking fund to retire the capital investment. I am not prepared to recommend at this time any particular method for effecting a purchase of these properties. I may, however, point out that the difference between the cost to the Government for obtaining an amount of money sufficient to purchase these properties and the total cost which the public now has to bear by reason of the higher interest rates on bonds and other obligations of the companies, and the dividends upon the stocks which the public is also now required to pay would establish an amortization fund which would pay for the properties entirely in about twenty-five years.
By act of July 24, 1866, and the acceptance by the telegraph companies of the provisions thereof, the United States obtained an option to purchase the telegraph properties at their appraised value at any time after five years from that date, which option is still in full force and effect. With respect to the telegraph properties I have directed the Postmaster General to proceed under the Act of 1866 and to submit reports showing the result of his action thereunder which will be submitted for your consideration.
I urge upon the Congress immediate action looking to the continuation of Government control of the telegraph and telephone properties and to make provisions for their purchase.
The Governments of all the principal nations, the United States alone excepted, now operate their telegraph and telephone systems. This practical unanimity among nations gives proof of deep and fundamental reasons for the postal control of electrical as well as the other forms of communication. In fact, the need of communication is a primary need of the individual existing independently of his means or circumstances, and rises higher than those considerations of quid pro quo which must actuate the private investor. Again this service, especially the telephone, is interdependent and complimentary in character and cannot be made fully efficient for a single class without extending its use to all classes; that is the service is in its nature reciprocal and must be made approximately universal to give the required or adequate service. This universality has been realized by our Postal System - for it reaches and serves everybody. The electrical means of communication should be added to it, to attain the same sufficiency. Moreover considerations of economy call for this unifying and nationalizing step. In hundreds of thousands of instances throughout the country the citizen must bear the burden of paying for two telephones, while hundreds of thousands paying for the telephone of one company are denied communication with the patrons of another competing company in the same community. This waste of capital and the facilities of communication becomes grotesque when we witness, frequently three and sometimes four of the pole lines of competing telegraph and telephone agencies running together for thousands of miles along the same highway, when but one should better suffice. Economy of operation and cheap communication are not attainable in these circumstances. It has been said ‘there is a road to every man’s house, and there should be a telephone on the inside”. I concur in this statement, which is attainable in the United States, and suggest that no part of the reconstruction program could prove of greater service in the employment of industry and labor and the ultimate advantage of society than this needed extension and improvement of electrical communication.
The principle of Government ownership and control of the telegraph and telephone is not only sound but practicable and is sanctioned by that section of the Constitution which provides, through Government control of Post Offices and Post Roads, for Government monopoly of all means of communication known at the time of its adoption. As early as 1844 when the Morse telegraph was in its infancy Congress made an appropriation looking to its absorption by the Postal Service, and the Postmaster General recommended that it be made a part of the Postal monopoly in 1845 and again in 1846. Since 1867 many Postmasters General have urged upon Congress the adoption of similar measures with respect to the telegraph, and President Grant made a like recommendation to Congress in 1871.
The reasons in support of Government ownership of the telegraph apply as well to the telephone. Several Postmasters General have also recommended the purchase of the telephone by the Government.
That the present Congress appreciated the necessity for the protection of users of the telegraph and telephone which the companies have never been able to afford, is shown by the fact that by the Act approved October 29, 1918, providing for the protection of users of the telegraph and telephone service and the properties and funds belonging thereto during Government operations and control. This Act, among other things, protected the public against the tapping of such lines or wilfully interfering with their operation and against divulging the contents of any telephone or telegraph message by any person not authorized or entitled to receive the same, and made other provisions for the protection of the public in the use of the telephone and telegraph systems of the same character as those provided for the United States mails. It is doubtful if these safeguards could be made effective to the operation of these properties under private ownership specially as to intrastate business.
From information now at hand it appears that the physical value of the Western Union Company properties will not exceed $155,000,000., and that of the Postal Telegraph Company will not exceed $28,000,000. The other telegraph companies are very small and their physical value will not exceed in the aggregate $2,000,000.
The physical value of the property of the so-called Bell Telephone System is about $1,200,000,000., and the physical value of the properties of the other telephone companies is roughly estimated at not to exceed $400,000,000.
The question of public ownership of electrical means of communicating intelligence has been so thoroughly discussed for many years that public sentiment should now be more or less crystallized on the subject, and I take it that the principal obstacle in the public mind to the permanent retention by the Government of the properties is the anticipated expense of the purchase at this time when such heavy drains are being made upon the country to pay the expenses of this great war. But this objection is only provisional, for a continuation of the present system of annual compensation or lease of the properties is clearly feasible and may be employed with a sinking fund to retire the capital investment. I am not prepared to recommend at this time any particular method for effecting a purchase of these properties. I may, however, point out that the difference between the cost to the Government for obtaining an amount of money sufficient to purchase these properties and the total cost which the public now has to bear by reason of the higher interest rates on bonds and other obligations of the companies, and the dividends upon the stocks which the public is also now required to pay would establish an amortization fund which would pay for the properties entirely in about twenty-five years.
By act of July 24, 1866, and the acceptance by the telegraph companies of the provisions thereof, the United States obtained an option to purchase the telegraph properties at their appraised value at any time after five years from that date, which option is still in full force and effect. With respect to the telegraph properties I have directed the Postmaster General to proceed under the Act of 1866 and to submit reports showing the result of his action thereunder which will be submitted for your consideration.
I urge upon the Congress immediate action looking to the continuation of Government control of the telegraph and telephone properties and to make provisions for their purchase.
Original Format
Report
Files
Collection
Citation
Burleson, Albert Sidney, 1863-1937, “Government Assumption of Control over Telegraph, Telephone, and Cable Systems,” 1918 November 29, WWP25564, World War I Letters, Woodrow Wilson Presidential Library & Museum, Staunton, Virginia.