printed matter. The right of the patron to obtain the alternative use of the telephone is specifically qualified and restricted to- Intervals designated by the patron between the hours of 6 a. m. and 10 a. m. and also between the hours of 4 p. m. and 6 p. m. of any day, for use by the patron between said hours only and only for one-half of the time in the aggregate included therein, respectively, namely, each minute of telephone use to be deemed equivalent to two minutes of telegraph use. Some contracts are for duplex Morse service, which permits sending messages over a single wire in both directions at the same time. As appears in the above form, the amount of rental per month, not the rate per unit of service at which the rental is computed, is named in the contract. THE WESTERN UNION CONTRACT.-The Western Union contract is less comprehensive in its provisions, does not contemplate the alternative use of telephone service, and provides for the termination of the arrangement on 30 days' notice only after the contract has been in force for one year. This is the general contract "for use of wire." The more specific contract "for use of circuit" contains most of the provisions safeguarding the interest of the company that have already been mentioned.1 1 The form is as follows: This agreement, made this day of 191. between the Western Union Telegraph Company, hereinafter called the Company, and hereinafter called the Lessee, of Witnesseth, that for and in consideration of the covenants and agreements herein contained the parties hereto have mutually agreed as follows: 1111 M. and o'clock First. The Company shall furnish during every week day between the hours of o'clock M., throughout the term of this agreement, for the exclusive use of the Lessee, a circuit with the necessary instruments and current for single Morse operation connecting one office of the Lessee at No. Street in Street in ; and said circuit shall also be connected with the main offices of the Company in said places. The Company shall maintain the circuit in good working order and in the event of its interruption shall upon notice from the Lessee of such interruption restore the circuit as promptly as practicable, and in case of continuous interruption of more than two hours' duration the Company shall abate the rental hereinafter specified during the continuance of such interruption. The Company retains the right to use said circuit except and otherwise than during the hours in which it is herein set apart for the use of the Lessee; and the Company also reserves the right to withdraw said circuit from the Lessee's use during said time or any part thereof it is necessary for the Company's service without liability to the Lessee except as to abatement of rental during the time of withdrawal. Second. The Lessee agrees to pay to the Company for the use of the circuit herein specified the sum of dollars ($) at the beginning of each and every month during the continuance of this agreement, and the Lessee also agrees to furnish and pay the salaries of operators to work said circuit. Said operators shall be subject to the approval of and satisfactory to the Company and shall not while in the service of the Lessee be employed by or have any business connection with any other party or parties without the consent of the Company, and said operators shall be subject to the established rules and regulations of the Company but shall act as agents of the Lessee in the transmission and receipt of messages over the circuit herein provided for. The Lessee may have connected with said circuit additional offices not more than one-half mile distant from the Company's main office if such additional offices can be reached by a circuit on existing routes of the Company, either at its termini or at any intermediate place reached by it, at an additional yearly rental of five hundred dollars "LEASED 66 WIRES NOT STRICTLY SUCH.-Such a lease is more properly described as a contract for the use of wires (but not of any identified physical line) within certain specified hours. There is no continuous occupation or possession of any particular wire and not even an exclusive use of the wire, since the telephone company, at least, is presumably sending its telephone messages over the same ($500) for each office so connected, the Lessee hereby agreeing to pay said rental monthly in advance and to furnish and pay the operators as hereinbefore provided. In cases where such offices are more than one-half mile from the Company's main office an additional charge will be made for the excess. Said additional offices shall be subject to the conditions all and singular of this agreement. No connection to be charged for at less than two months' rental. Third. It is agreed that the circuit herein provided to be set apart for the benefit of the Lessee shall be used by the Lessee only in the transmission of messages concerning the business and affairs of the Lessee, and that the circuit shall not either directly or indirectly be used in any manner for the transmission of messages for the public or for any person or persons other than the Lessee. It is further understood and agreed that in the event of a failure to pay for the use of the said circuit as herein agreed, or in case in the opinion of the Company there is any other violation of this agreement by the Lessee or its employees, the Company may at its option terminate this agreement forthwith without notice to the Lessee and take possession of said circuit and instruments, and the Lessee hereby agrees to pay to the Company any damage due to such violation of this agreement, including the rent for the unexpired term herein provided for, or until this agreement could have been terminated on notice given by the Lessee as hereinafter provided. It is further agreed that said circuit and apparatus shall at all times be and remain the property of the company and shall be accessible to its employees, and that nothing herein contained shall have or be construed as having the effect of vesting in the Lessee any right, title, or interest to or in the same except the right of using the same in the manner and during the term and upon the conditions herein provided. It is expressly stipulated that the Lessee shall neither sell nor give away nor bulletin in any place accessible to the general public any copy or copies of quotations of stock or other markets which the Lessee may send or cause to be sent for use over said circuit, nor shall the Lessee permit any outside party to copy such quotations for use or publication. Fourth. The Lessee agrees not to permit any other wire or circuit to be connected with the circuit herein provided for without the consent of the Company. It is understood and agreed that the Company shall in no wise be responsible for errors or delays or other defaults or mishaps in or to messages which may be transmitted by the operators employed in the offices of the Lessee on the circuit herein provided for; and that all messages sent by the Lessee (other than those transmitted on the circuit herein leased) over the lines of the Company shall be held to be subject to the printed rules and regulations of the Company and shall be sent under and subject to the conditions incorporated in its regular message blanks. It is understood and agreed that the circuit and instruments furnished hereunder shall not be used by the Lessee in any manner directly or indirectly in violation of any Federal law or the law of any of the States in or through which said circuit and instruments are located or pass. of day The provisions of this agreement shall be and continue in force from the 19, until the day of 19-, and thereafter until the expiration of thirty days after written notice shall have been given by either party to the other of an intention to terminate the same, unless sooner terminated by the Company as provided in section third hereof, and the same shall not be assignable or assigned by the Lessee except upon the written consent of the Company to be endorsed hereon. In witness whereof the parties hereto have hereunto set their hands the day and year first above written, THE WESTERN UNION TELEGRAPH COMPANY, By Witness as to signature of wire that is being used by the broker for sending quotations, etc., by telegraph. Different wires may be hitched up on different days, and the American Telephone & Telegraph contracts provide for the substitution of private telephone service from moment to moment for the telegraph service, except during peak-load hours, the former service being counted on a double-time basis. Not only is the company not required to furnish the same wire from day to day, but the wire furnished may be roundabout, instead of direct. This is especially likely to occur when there is a breakdown between the points served, but may be due to congestion of business and inadequacy of facilities on the main line for the time being. In fact, the circuit may be routed one way in the morning and over an entirely different portion of the country in the afternoon, according to the convenience of the company. The rate is based upon the shortest railroad distance between the two points, regardless of the actual routing of the service. HOURS OF USE.-The American Telephone & Telegraph contracts grant the right of use from 6 a. m. to 6 p. m., but the wires are not actually used so long. The wires are released at about 3 p. m. unless the day's business has been very heavy and longer use thus made necessary. "Good night" is the signal for the shutting off of service for the day. The alternative telephone service is apparently covered by the hours of telegraph service being shorter than those contracted for. SUBRENTAL.-The terms of the contracts preventing the use of the leased wires by others relate to employment for messages in competition with the service of the regular telegraph and telephone companies, but are not construed as an obstacle to partial subrental to a correspondent or to reciprocal business arrangements by which the latter contributes toward paying the rental. The correspondent's contribution, however, is usually made through the division of the commission with the Chicago firm. Of course, the question does not arise in the case of a branch office. Occasionally, but rarely, a correspondent pays some specific amount for the use of the wires. On some wires between New York City and Chicago the entire rental is paid by the New York firm, and on others there is in effect a joint rental, often between several Chicago firms. Doubtless such wires are used more for stock than for grain business. A "fair proportion " of grain and stock business exchanged frequently constitute additional considerations. ALLEGED PRIORITY OF RIGHT OF PUBLIC MESSAGES.-The telegraph companies affirm that the public-message service is always given the preference as compared with applicants for private-wire service. Only when idle, spare, or unassigned wires can be found is a lease entered upon. A Western Union representative stated that 30 or 40 per cent of inquiries of his company seeking the lease of private wires had been turned down. But this company has usually been willing to erect an additional wire if insured of a sufficiently long-term contract. With the American Telephone & Telegraph there is less occasion for rejection of an applicant for private Morse service on account of lack of facilities, since the telephone wires are available for this as a superimposed service. This company in 1915 estimated that it had half a million miles of wire available for private wire Morse service as compared with 134,000 leased. This situation is, of course, a factor in the predominance of the Bell system in the private-wire telegraph field. The possible use of an alternative talking service is alleged by a competing company to be the important special inducement. But brokers prefer the telegraph for their general purposes. This may be in part due to the fact that the telegraph will carry when the telephone will not. Section 4.-Rates and costs. AVERAGE RATES PER MILE.-The rate charged for the use of private wires is often summarily stated as $20 a mile per year. With additional charges for drops, etc., and with reference to the somewhat higher rates in some parts of the country, the average cost for rentals is somewhat greater than this. For statistical purposes $20 per mile is a conservative average, and in fact an understatement. The rate of $20 per mile has been the prevailing and basic rate since the beginning of the practice of leasing wires." The American Telephone & Telegraph Co.'s rate is the same as that of the Western Union and its rate for private telephone lines is $40 per mile because that service requires two wires and the telegraph service only one. The duplex telegraph service is charged for at a somewhat higher rate. 1 Testimony in I. C. C. case. 2 W. U. Brief, p. 9. 4 3 A. T. & T. Reply Brief in I. C. C. case, p. 10-11. Testimony of Mr. Adams, of the Postal Co., in the I. C. C. case. The Interstate Commerce Commission describes the rates as follows: "The rate for private-wire Morse service is usually $20 per mile per annum, the mileage being that of the short-line railroad between the designated terminals and via the route of the drops, if there are any. It appears that in some of the southeastern States the rate is $25 per mile per annum. There are occasional 'flat' or ' scheduled' rates between certain cities which closely approximate the mileage rate. For the addition of drops en route there is a charge of $500 per annum each, except that the charge for New York to Chicago service includes one drop en route, with additional drops at the rate of $1,000 per annum each. "Where a drop is desired at a point not directly en route the service is performed over a branch line, termed a 'leg,' extending from the direct line to that point. For such service the charge is at the customary rate for the leg mileage plus the charge for the additional drop." (I. C. C. 50, p. 736.) Western Union Brief in I. C. C. case, p. 10. A. T. & T. Brief, pp. 101-102. Annual revenues from Morse service private wires and average revenues per mile were as follows: ". Annual amount. Per mile. Western Union (year ended Apr. 30, 1914).. $1,084, 837.66 626,034.36 2,218, 638. 23 23,929, 510.25 1 Of qua'ified significance; see following note. $22.62 36.22 1 15.79 19.10 The low average for the American Telephone & Telegraph Co. is not explained, though it may be due to the allotment of some of the revenues to other system companies and failure to include the gross rental in question as American Telephone & Telegraph revenue.» This is, of course, for all classes of private telegraph-wire service. GROWTH OF REVENUES, 1905-1914.—As appears from the following table showing revenues by years, the service was almost at its low point in 1914 for the 10-year period. Leased-wire service is sensitive to general business conditions. The American Telephone & Telegraph Co., however, shows increases. If one may judge by the development of the grain wires since 1914, that year shows the low point in private-wire service in the last 15 years. TABLE 15.-Receipts of the telegraph companies from leased telegraph wires, 1 Material from statements of companies in I. C. C. file for Docket No. 5421, Private Wire Contracts. 2 Contract rentals less receipts from leased pole space in 1914 ($54,578) assumed to be constant. 3 Exclusive of revenue from wires leased to press associations but including those leased to common canirs. Special contract service revenue for years 1905 to 1912, inclusive, apportioned between telephone and Morse on the basis of actual for 1913 and 1914, no separation having been made between the two classes prior to 1913. a 50 I. C. C., 735. 66 On this point the American Telephone & Telegraph reply brief says: There is no explanation in the record as to why revenue per mile on the leased wires of the telegraph company need exceed that of the telephone company unless it be found that the telephone company has counted the actual miles under contract to its various lessees and reported such on the 12-hour basis, whereas the telegraph companies have included their day and night leases in their calculations, as they had the right to do, and it may be true further that the telegraph companies have a larger proportion of their entire leased wire service upon a 24-hour basis." |