Part 4

Among the working classes in the United Kingdom are included all who, whether as workers for others or as workers for themselves, are employed in manual labor, be it productive of wealth or not; and they are divided into five classes, viz. professional, domestic, commercial, agricultural, and industrial. The total number of workers is estimated at eleven millions, and the average weekly earnings in the United Kingdom are: Men, under twenty, $1.59; from twenty to sixty, $4.18; women, under twenty, $1.72; from twenty to sixty, $2.41. Average weekly earnings from every avocation in Great Britain and Ireland, $3.16.

Thirty per cent of the people of the United Kingdom live in houses the rental of which is less than $31 per annum, and seventeen per cent in those under $45 per year.

In the preparation of the following table we have consulted Professor Levi’s work on Wages and Earnings in England; “Government and the Telegraphs” (London, 1868); “Special Report on the Electric Telegraph Bill”; “Publications of the Statistical Bureau at Washington”; and the official records of the Western Union Telegraph Company.

_Statement showing the Average Cost of Labor in England and the United States._

┌───────────────────────────────────┬────────────────┬────────────────┐ │ Prices paid per Day. │ England. │ United States. │ ├───────────────────────────────────┼────────────────┼────────────────┤ │Carpenters and Builders │ $1.14│ $3.25│ │Dock Laborers │ .68│ 2.25│ │Engineers │ 1.32│ 3.85│ │Farm Laborers │ .42│ 2.00│ │Iron Founders │ 1.10│ 3.25│ │Moulders │ 1.25│ 3.50│ │Letter-Carriers[9] │ .74│ 2.18│ │Printers │ 1.02│ 2.50│ │Policemen │ .85│ 3.00│ │Railroad Conductors │ .92│ 3.85│ │Soldiers │ .22│ .62│ │Servant-girls │ .16│ .48│ │Telegraph Employees[10] │ .41│ 1.29│ └───────────────────────────────────┴────────────────┴────────────────┘

Footnote 9:

The number of letter-carriers employed by the British Post-Office Department for the year 1866 was 11,449, and the total expenditures for the same $2,664,000, being an average of $232.68 per annum for each man.

The number of letter-carriers employed by the Post-Office Department of the United States for the year 1866 was 863, and the total expenditures for the same $589,236.41, being an average of $682.77 for each man.

Footnote 10:

The cost of labor of telegraph employees is obtained by dividing the total amount paid for labor by the number of persons employed of all kinds. The average price per day for operators in the United States is $2.25, and in England 62 cents.

With a knowledge of the great difference in the cost of labor and material in Europe and America which the above statistics show, we cannot comprehend the propriety of Mr. Washburne’s assertion that the whole cost of constructing telegraphic lines must be less here than in Belgium or Switzerland.

Even our poles are purchased in the Dominion of Canada, and paid for in gold. The cost of transportation from the St. Lawrence to New York cannot be much, if any, more than the cost of their delivery at London, Havre, or Brussels.

In the United States, telegraph-poles are of cedar or chestnut,—more generally of the former. In England, the larch is the most common; in Russia, the pine; in France, pine, alder, poplar, and other white woods; and in Germany, spruce and pine.[11]

Footnote 11:

Telegraph Manual.

The cost of a telegraph line depends, like the cost of a house or any other structure, upon how it is built, but Mr. Washburne, or any other intelligent man, ought to know that the price appropriated in his bill for a four-wire line from Washington to New York cannot possibly build it, even should government build such a structure as those which a dozen years ago cursed the enterprise, and made it a reproach and shame. When government builds a line of telegraph on the plea of public necessity, it should require that its structures at least be equal to those of its citizens. It is not strange that, with the crude and cheap ideas formed by Mr. Washburne of telegraph structures, he disparages and undervalues the properties of the existing companies, and ridicules the estimates furnished Congress in their communications.

DOUBTS REGARDING THE ESTIMATES OF TELEGRAPH EXPERTS AS TO COST OF CONSTRUCTING LINES.

We quote from Mr. Washburne’s paper:—

“In February, 1866, when, in view of the establishment of an experimental government line of telegraph, the Postmaster-General was called upon for information ‘in regard to the feasibility and usefulness of establishing, in connection with the Post-Office Department, telegraph lines,’ &c., ‘to be opened to the public at minimum rates of charge, ... and such statistics and exhibits predicated on cost of construction and capacity of transmission as will best illustrate its practicability,’ he sent to Congress lengthy statements, all of them prepared by persons believed to be interested in or officers of existing companies, in which the cost of a telegraphic line with six wires is put down by one writer at $1,400 per mile, by others at $665, exclusive of river cables and lines through cities.

“Among other statements so furnished is an amended one by Mr. Prescott, whose statement, when made part of a work intended as authority in telegraphic matters, is quoted above. For reasons not explained his views underwent a marked change between 1860 and 1866, and he makes haste to refute his own previous statements. His revised statement is as follows:—

“‘It is well known by every person who has any knowledge of telegraphy in this country previous to the publication of my work in 1860, that comparatively few lines had been at that time even tolerably well constructed; and one object which I had in view in writing it was to call attention to this prevailing fault, and endeavor to get a better system inaugurated.

“‘Since then there has been a very marked improvement in the construction of telegraph lines in this country. Small poles, of inferior wood, which required renewing every few years, have given place to large and more enduring ones of chestnut and cedar, and small iron wire, which offered great resistance to the passage of the electric current, has given place to zinc-coated wire of larger size and greater conductivity.

“‘But while the quality of the lines has greatly improved under the experienced and liberal management of the telegraph companies, the cost of constructing lines has kept pace with the increased cost of everything else, and has more than doubled within the past six years, so that lines which could have been built in 1860 for $150 per mile could not now be constructed for _twice that amount_. A substantial telegraph line, constructed on the line of a railroad, with _cedar_ or _chestnut_ poles thirty feet in length, and six inches at the top by twelve at the butt, set forty to the mile, with most improved form of insulator and best galvanized wire, would cost $400 per mile for a single wire. If forty-foot poles were used (which would be necessary if many wires were to be placed upon one set of poles), it would cost $600 per mile for a single wire. When fifty-foot poles are used, the cost is very greatly enhanced.

“‘Mr. Brown estimates the total cost of all the telegraph property in the United States at “a little more than $2,000,000.” Now, if we estimate the present cost of the lines and their equipment at the moderate price of $300 per mile, and the number of miles of wire in the country at only 150,000, we have a total cost of $45,000,000, without reckoning the value of the patents, franchises, &c.

“‘Mr. Brown states that “telegraphs properly constructed, the timber well prepared and wire protected, will last for 20 years.” This may be true, but it remains to be proved.’”

We fail to discern any refutation by Mr. Prescott of his previous statements. His reasons for a change in the estimates for building a telegraph line in 1866 over those of 1860 hardly need be stated. If the results of the intervening years of civil war, by which a million of able-bodied men were cut off from the fields of labor, the industries of the country burdened with enormous taxes before unknown, and prices inflated by the issue of hundreds of millions of paper dollars, do not suggest them, there is small hope of profit from the practical lessons of the times.

INCORRECT ASSERTION THAT AMERICAN TELEGRAPHS ARE NOT CONSTRUCTED ACCORDING TO SPECIFICATIONS.

Mr. Washburne says:—

“The officers of the telegraph companies, whose elaborate statement is also forwarded by the Postmaster-General, estimate as follows:—

“‘Cost of construction, including engineering, patents, and franchises, per mile: one wire—six wires.

“‘The cost of building lines varies according to locality, timber, method, nature of the ground, and the wires to be borne.

“‘A line from New York to Washington should be of the best class, and would be represented by the following figures:—

43 poles delivered at stations, $161.25 129 arms, complete, 129.00 43 holes, five feet deep, tools, &c., 30.00 Labor,—handling, preparing, erecting, &c., 25.00 Six wires, at twelve cents per pound, 240.00 Labor,—wiring, transportation, &c., 30.00 Distributing poles, 25.00 Superintendence, &c., 25.00 ———————— 665.25 ========

240 miles at $665.25, Washington to New York, $159,660 Lines through New York, Philadelphia, Baltimore, and Washington, 16,000 22 cables at rivers south of the Hudson, 20,000 Cable at Hudson River, house, boats, &c., 8,000 ———————— $203,660 ========

“‘The cost of franchises and patents cannot be given.

“‘Such a line built by government, carefully, and with reference to permanence, with six wires, would cost $250,000.

“‘If, however, it is seriously contemplated by the government to construct lines along the great commercial routes, and if it be the design in so doing to remove from the system, by every attainable appliance or improvement, all its ascertained defects, a structure of larger poles, and wires of superior conducting qualities, will be built. Such a line should be constructed of the most solid and durable wood, such as the black locust, so that masses of sleet or moist snow, so destructive to present lines, would leave it uninjured. Heavier wires also, which, by their increased conducting capacity, would give greater facility and certainty to transmission, should be used.

“‘These improvements, with greater care taken in the execution of the work than in that of ordinary structures, will, of course, increase its cost in proportion to the care bestowed. And should the government determine to provide facilities equal to those now proffered by private companies, it would be necessary to erect at least five lines of poles bearing six wires each, that being the number (thirty in all) now in use between New York and Washington by all the companies.

“‘A common wire line, intended to bear one, and not more than two wires, can be built for $150 to $180 per mile, the wire being number nine, galvanized, the poles of limited size, and costing not over $1.25 each.’

“It nowhere appears that such lines as all these writers insist shall be built by the government have ever been built in this or any other country. They seem to have taken it as matter of course that the government, if the experiment proposed should be tried, will depart from the usual method of construction and build the novel and costly structures for which their estimates are made. One looks in vain in the communication sent to Congress by the Postmaster-General for any reliable information as to the cost of a telegraphic line, constructed as such lines are in this and other countries, and such a line as the government, if it should be determined to build an experimental line, would probably build.”

COST OF AMERICAN TELEGRAPHS ESTIMATED BY EUROPEAN DATA.

In reply to Mr. Washburne’s statement that no such lines as all these writers insist shall be built by the government have ever been built in this or any other country, we respectfully, but firmly, assert that he is mistaken. This company possesses thousands of miles of telegraph lines constructed after the specifications given above, and costing as much as the estimates which he so emphatically distrusts. In order, however, to set this matter of cost at rest, we will endeavor to establish it by comparison with those of all other countries of which we have been able to procure official data.

Mr. Frank Ives Scudamore, one of the assistant secretaries of the British Post-Office, and the gentleman who furnished the reports and data by which the British government were induced to monopolize the telegraph in that country, and who shows no disposition to overvalue the property or services of private telegraph companies, testified before the select committee of the House of Commons, July 9, 1868, that the total number of miles of telegraph in operation in Great Britain in 1866 was 16,000, and that the companies expended in constructing the same about £2,300,000.[12]

Footnote 12:

Special Report, Electric Telegraph Bill, ordered by the House of Commons to be printed, 16 July, 1868. See testimony on pages 149 and 150.

The capital stock of the various companies represented a larger sum than this, and Mr. Scudamore himself acknowledges that he has got the amount under the mark rather than over it; therefore we presume that Mr. Washburne will allow this to be a fair estimate. Now £2,300,000 sterling is equal to $11,132,000 in gold, or $16,475,360 in United States legal money. This sum, divided by 16,000 miles of line, gives us $1,029.71 as the cost per mile.

The Belgian system comprised, at the end of 1866, 3,519 kilometres of telegraph lines, equal to 2,187 English miles. The cost of constructing these lines, up to December, 1866, amounted to 2,055,083 francs, equal to $411,016.60 gold, or $608,304.56 currency; which would give $274.14 for each mile of line. It must be borne in mind, however, that the Belgian government, owning all the railroads, could transport all the telegraph material free, and in many other ways greatly reduce the cost of the lines; of course the right of way cost them nothing, and with us this is an important item.

Bavaria has 2,115 miles of line, which cost for construction 843,207 florins, equal to $340,092.28 gold, or $503,338.35 in our currency. This would make the cost per mile $240. The same conditions, however, which reduced the cost of construction in Belgium tended to the same result in Bavaria.

In France there are 20,028 miles of lines costing 23,800,791 francs, equal to $4,760,158.20 in gold, or $7,045,034.13 in currency, making the average cost of each mile of line $351.75.

RECAPITULATION.

Average cost per mile of telegraph line in Great Britain and Ireland, $1,029.71 Average cost per mile of telegraph line in Belgium, 274.14 Average cost per mile of telegraph line in Bavaria, 240.00 Average cost per mile of telegraph line in France, 351.75

Total cost of telegraphs in Great Britain and Ireland, $16,475,360.00 Total cost of telegraphs in Belgium, 608,304.56 Total cost of telegraphs in Bavaria, 503,338.35 Total cost of telegraphs in France, 7,045,034.13 —————————————— Total cost for the four countries, $24,632,037.04 Total number of miles of telegraph line in Great Britain and Ireland, 16,000 Total number of miles of telegraph line in Belgium, 2,187 Total number of miles of telegraph line in Bavari, 2,115 Total number of miles of telegraph line in France, 20,028 —————— Total number of miles of telegraph in the four countries, 40,330

Average cost of construction of each mile of telegraph line for the four countries above named, $610.76

VALUE OF WESTERN UNION TELEGRAPH PROPERTY, BASED ON EUROPEAN DATA.

The number of miles of line belonging to this company is 50,760, and the number of miles of wire is 97,416.

Taking the average cost per mile of telegraph line in England as a basis for a calculation of the cost of the lines of the Western Union Telegraph Company, we have a total value of $52,166,079.60. If we estimate the cost of our lines by the average cost of all the telegraph lines in Europe of which any statistics can be obtained, we have a total value of $31,002,177.60.

Much has been said respecting the alleged unreasonably large capital of the Western Union Telegraph Company. This company was organized in the year 1851, with a capital of three hundred and sixty thousand dollars, and constructed a line of electric telegraph from Buffalo, N. Y., to Louisville, Ky., distance about six hundred miles. The cost of the line, on a gold basis, was thus $600 per mile. The present extent of line belonging to this company, if estimated by the cost of the original line, and forty per cent be added for the premium on gold, would give us $42,638,400 as its value. On the basis of the cost of the lines of the Atlantic and Pacific Telegraph Company, the capital of the Western Union Telegraph Company would be about $100,000,000, and, on that of some other rival lines, nearly $200,000,000.

The gross receipts of the Western Union Telegraph Company from July 1, 1866, to November 1, 1868,—two years and four months,—were $16,088,498.86, and the gross expenses $9,862,272.31; leaving $6,226,225.75 as the net earnings, being an average of over seven per cent per annum on the capital of the company, which is $40,347,700. After applying $1,934,040.61 of the receipts of the past two years towards the construction of new lines, and the redemption of the bonds of the company, it has made, with one exception, regular semiannual dividends of two per cent. Such a property as this, if situated in England, or any other country in Europe, would be regarded as so valuable that its stock would be held at par, and yet it is selling in our markets at the present time at sixty-four per cent discount, or at thirty-six dollars per share! At this price the entire property, including payment of the bonded debt, would only cost $19,415,672.

Now what is the explanation of this singular distrust of the value of this great property as shown by its insignificant present market value? Less than four years ago the stock sold at above par, and its earnings and prospects were then inferior to what they are at the present time. An examination of the tables on page 39 will show that the gross receipts and net earnings have constantly increased during the past two and a half years, and there is every reason, so far as the management and prosperity of the company is concerned, why its market value should have increased instead of depreciating. The explanation for this singular state of things is to be found in the constant agitation in Congress of various schemes for the construction and operation of government telegraphs, at prices very much lower than the cost of the service. Let any industry be thus constantly menaced, and it must necessarily suffer in public estimation as a safe investment. We trust the subject will be effectually settled during the present session of Congress, and the incubus which has so long rested upon this important enterprise be removed.

ERRONEOUS ESTIMATE OF THE VALUE OF THE WESTERN UNION TELEGRAPH COMPANY’S PROPERTY.

Mr. Washburne says:—

“The statement furnished by the officers of the telegraph companies, for the information of the Postmaster-General, and by him forwarded to Congress as his reply to the call for information, is well calculated to remove all doubts as to the value of this kind of property. Among other items of information is the following:—

“The length of wire owned by the Western Union and United States companies is 60,000 miles.[13] The average cost, as based on the now united capital, is $450 per mile. This embraces, besides the poles, wires, and apparatus, the following:—

Footnote 13:

This estimate was made before the consolidation of the American Telegraph Company and other properties with the Western Union Telegraph Company, and when its capital was only $27,000,000.

Invested in buildings, $95,208.83 Stocks in other companies, 1,429,900.00 Office fittings, 360,000.00

“It is remarkable that while _the length of wire_ is given, the length of line nowhere appears.[14] There is a vast difference between the cost of a _telegraph line_ and a _telegraphic wire_. We have seen the cost of a line with a single wire estimated at $61.80, and each additional wire placed on the same posts, $31.80 per mile.

Footnote 14:

We have given the length of the lines, as well as the length of the wires belonging to the Western Union Telegraph Company, on page 32.

“In the absence of any exact information on the subject, we may fairly estimate that the lines of the companies named average three wires to each line. They possess, then, 20,000 miles of telegraph line, with an average of three wires thereon. They speak of ‘single wire lines costing $180 per mile.’ This estimate is too high for any line now in use; but if it be adopted as the basis of calculation, and an allowance of $45 per mile be made for each additional wire, we have, for the 20,000 miles of line owned by the companies named, a cost of $5,400,000, represented by a capital stock of $41,000,000! ‘The average cost’ per mile of each wire suspended on their lines, ‘_as based on the now united capital_, is $450 per mile.’ If ‘the united capital’ had been based upon the actual cost of the property of the company, it would have been nearer $4,000,000 than $41,000,000.