EXPENSE ON ACCOUNT OF GRAIN WIRES.-As shown in the following section, the speculative grain trade may be considered to have a major interest in systems with about 85,000 miles of private wires. On November 1, 1914, the corresponding mileage was only one-half as great. Rentals on these wires are considerably over $1,700,000 a year. The lessees supply their own specially expert telegraph operators, whose salaries may amount to not much less than the wire. rentals. There are other incidents of the service specifically chargeable to the use of private wires. Even though the cost of some of the 85,000 miles of wire above mentioned is borne by other classes of speculative business, rather than grain, and some, in part, by cash grain transactions, it appears that $3,000,000 a year is a fair estimate of the cost of grain-trade private wires.1 If the private wires did not exist, some portion of the money would go for public telegrams, and there might be a somewhat greater use of ticker service without private wires to bring quotations. But the private wires are so largely a matter of competitive service that their discontinuance would not mean a substitution of public wires (instead of the mail) for more than a fraction of orders now so sent, and the private-wire offices usually have ticker service also, where available, so that most of the $3,000,000, or whatever the proper figure is, may be considered a net cost of the special facility and of the speedy and close connection of outlying points with Chicago thus afforded. Section 5.-Extent of private-wire systems. MILEAGE OF SYSTEMS IN 1918.-The importance of the wire house among grain-trade and future-trading facilities is indicated by the extent of the private-wire systems and the number of offices. A summary statement of mileage by systems is presented in the following table. These wires are, of course, not used exclusively for grain business. 1 Details of charges and expenses upon which such an estimate may be based are contained in 50 I. C. C., 731. TABLE 16.-Mileage of private-wire systems of Chicago Board of Trade members having offices in Chicago (also one Minneapolis house), March, 1918. *Not members of the Chicago Board of Trade clearing house. Co. and Pychon & Co. 2 North American Telegraph Co. 1 Clement Curtis & Co.; also sublease American Telephone & Telegraph wires from A. O. Slaughter & 3 Benj. R. Cahn sublease from Pynchon & Co. 4 W. H. Colvin & Co. sublease from A. O. Slaughter and Simons Day & Co. 5 Knight & Co. sublease from Hornblower & Weeks. Marcuse & Co. sublease from Hornblower & Weeks and Pynchon & Co. 7 Perry Price & Co. sublease from Pynchon & Co. 8 J. J. Townsend & Co. sublease from Pynchon & Co. Nast & Co. sublease from A. O. Slaughter & Co. 10 Noyes & Jackson sublease from A. L. Baker & Co. 11 Rothschild & Co. sublease from Logan & Bryan. L The basis of the comprehensive enumeration of wire houses is the list of the Chicago Board of Trade's secretary, resulting from the supervision exercised by the Board over branch offices and correspondents to whom quotations are distributed in this way. Some of these houses have only an incidental interest in grain futures. If they are not members of the Chicago Board of Trade clearing house they do not by themselves offer complete facilities for future trading, hence the deduction of mileage made in the above summary table. A further deduction for some stock houses that are members of the clearing house would necessarily be somewhat arbitrary, and it is doubtful whether allowance for the use of wires for stock and bond business can properly be made in this way, since wires are, in the nature of the situation, used for all sorts of speculative business that may come the way of a commission merchant or broker; some grain business, for example, originating in cotton-trading districts, and stock business. coming from all over the country. Some houses with a large stockexchange business not only offer and use all the facilities for future trading in grain, but also have cash-grain departments. One stock house above listed has ceased to be a member of the Chicago Board of Trade clearing house since March, 1918. There are two or three others that are but little concerned with the grain business. The largest wire house is perhaps somewhat more supported by stock than by grain business, though it is of Chicago origin and has a cash-grain department. "Pony-wire" connections within the large cities are not shown in this table. Their extent in New York City for one system is noted at the end of the next section, and Chart 5 shows the terminal facilities of this system on a map of the financial district affected. The Postal Telegraph Co. does not now lease wires to members of grain exchanges for brokerage purposes, having discontinued such leases in the latter part of 1914.1 But the North American Telegraph 1 Under the title " Selling telegraph service by wholesale," the issue of Postal Telegraph for November, 1914, contains, among other coments, the following statement: "That company [the Bell system] furnishes most of the vizes leased to brokers. According to the statement filed by that company with the Interstate Commerce Commission, its leases to brokers and so-called 'bankers' on May 31, 1914, amounted to $2,006,828, and the Western Union leases were only $367,555, and the Postal leases were only $264,426.08. And the telephone company catches it coming and going. Those wires cost the telephone company practically nothing, because the telephone company is using, them for telephone purposes at the same time these same wires are used by the brokers for telegraph purposes. This is called the composite use.' Moreover, the telephone company loses nothing in the way of telegraph business, inasmuch as the telephone company does not do a telegraph business. Furthermore, the telephone company may wink at a dozen brokers combining and using a single wire leased from the telephone company. The telephone company is not interested in preventing such practices. It has no telegraph business to protect. The telephone company has absorbed nearly all of the brokers' leased wire business by throwing in a bonus of free telephone service." The article compares the practice of leasing wires to the possibility of a big shipper leasing a whole railroad and putting his little competitor out of business. * Co., with head offices at Minneapolis, though a subsidiary of the Mackay companies, and therefore financially to be identified with the Postal Telegraph Co., leases some mileage to brokers. In March, 1917, this company was leasing 2,000 miles of wire to one Minneapolis and several Chicago houses. Nearly all of its private-wire business dates from since the beginning of 1916. ONLY ONE GRAIN-WIRE SYSTEM WITH HEAD OFFICE OUTSIDE CHICAGO.-At Minneapolis there is a single private-wire system, with the head office in that city, that of Chas. E. Lewis & Co. There are, of course, also branch offices of Chicago wire systems, which were eight in number early in 1918. The Lewis system was, of course, markedly affected by the discontinuance of trading in wheat futures, there being little else in the way of futures at Minneapolis. At that time, in addition to two down-town offices in Minneapolis, the firm had offices at Winnipeg and Fort William in Canada, Fargo and Grand Forks in North Dakota, and in Comstock, Fergus Falls, St. Cloud, Duluth, and St. Paul in Minnesota. These were all branch offices, except the one at Fort William, which was operated as a correspondent. By the spring of 1917 the miles of wire in this system directly leased by the firm amounted to only 650. The Chicago connections of Lewis were with King-Farnum & Co., Block-Maloney & Co., Clement-Curtis & Co., and Pynchon & Co. There are no independent wire houses in Kansas City, but there are six or more branch offices of Chicago systems that have direct connection with head offices in Chicago, as well as Kansas City firms acting as correspondents of Chicago offices. LOCATION OF WIRE OFFICES OUTSIDE CHICAGO.-The specific commercial significance of the private-wire systems is better indicated by the points reached than by their mileage. Branch and correspondents' offices outside Chicago that are reached by the private wires of Chicago Board members having offices in Chicago are shown in the following table arranged by grand divisions, States, and cities or towns. The population of the latter at the 1910 census is also shown. 169514°-20-8 TABLE 17.-Branch and correspondents' offices on private-wire circuits of Chicago Board of Trade members having offices of their own in Chicago, as of March, 1918. A figure before the description indicates separate offices, one after indicates number of circuits on which the office or city is found. Only in a few cases do these extra circuits run out from Chicago. This usually means the city is a point for origination or further distribution of news and quotations. Tho same office may be a correspondent of more than one Chicago house, in which case it is entered in connection with each. Sometimes this is accompanied by the joint use of a wire to Chicago, indicated by a group of names in the column for Chicago connection. Co. Logan & Bryan.. 1 br., 2 cor. (5) .. .do. Paine, Webber & Co. Pynchon & Co.. A. T. T. W. U. A. T. T. A. T. T. A. T. T A. T. T. |