opinion. Matters of this sort lie outside the economic problems with which my discussion was concerned.

The immediate occasion of the potash law of 1910 was thus the wish to get rid of the American contracts just referred to. Yet the events of previous years had paved the way for drastic control of the industry. The German government had played a large part in the history of the potash industry from its inception; there had been agitation in 1905 for a state potash monopoly; previous measures, such as the Gamp law of 1905 and the mining law of 1907, had failed signally to bring the relief desired for the industry; this bill itself had been under discussion from February until May 1910, all these circumstances indicate that the German government had long been determined to keep in its hands full control of the industry and of the prices of the products.

That the law has not secured all the ends desired by the German government, and in particular has not prevented an increase in the number of mines and in their output, is now admitted. Neither can it be said to be a measure for conservation, except in the sense that the German government wishes to retain for itself and its subjects the benefits of a natural monopoly of supply. German potash supplies are virtually inexhaustible, and the law of 1910 was neither necessary for conserving them nor designed for that end. It was a tactical manoeuver directed against the American purchasers, and successful against them because of the unwillingness of the American government to exercise a vigorous influence in their behalf.

H. R. TOSDAL.

HARVARD UNIVERSITY.

PUBLIC OWNERSHIP OF TELEGRAPHS AND TELEPHONES

THE report entitled, Government Ownership of Electrical Means of Communication, prepared by a committee of the Post Office Department and transmitted to Congress by the Postmaster General in response to a Senate Resolution of January 12, 1914, contains the evidence upon which the Postmaster General based his recent declaration that the policy of government ownership of telegraphs and telephones should be adopted in the United States.1 Congressman David J. Lewis of Maryland, a leading advocate of government ownership of telegraphs and telephones, founds his case for public ownership largely upon evidence of a similar character to that contained in this report. The American Telephone and Telegraph Company, on the other hand, challenges the validity of much of this evidence. The importance of the subject, as well as the conspicuous position of the parties concerned, warrant a brief examination of this evidence and of its significance for the problem of public ownership.

The Post Office departmental report consists in the main of a statistical comparison of postal, telegraph, and telephone services and rates in the United States and abroad. The postal service everywhere is in the hands of the government; the telegraphs are government enterprises in every important country except the United States; and the telephones are administered as a part of the governmental telegraph monopoly in almost every important country except the United States. With respect to postal development as measured by the number of letters received per capita per annum, the United States leads all the rest. With respect to telephone

1 See Annual Report of the Postmaster General for the fiscal year 1913.

2 See Congressional Record, December 22, 1913, and January 17, 1914.

American Telephone and Telegraph Company, Commercial Engineer's Office, Commercial Bulletin No. 7, March 2, 1914.

development as measured by the number of local calls per capita, or by the number of instruments in use, the United States leads all the rest. With respect to telegraph development as measured by telegrams received, the United States is surpassed by eight other countries, and by one of them, New Zealand, in the proportion of eight to one. From these statistics the Postmaster General infers that private ownership of telegraphs in the United States has been less efficient, as compared with other countries, than public ownership of the postal service, and that consequently the American people might expect a more efficient telegraph service through the "postalization" of the telegraphs. Congressman Lewis draws the same conclusion from similar statistical evidence.

By another statistical comparison the Post Office departmental report shows that the number of telephone calls per employee in the United States is low as compared with many important foreign countries, whilst on the other hand, the number of pieces of mail handled per postal employee in the United States is high as compared with foreign countries. From this comparison the inference is drawn that the telephone systems of the United States as well as the telegraphs are inefficiently managed, compared with the governmental telephone systems of foreign countries, or with the postal system of the United States. By other statistical comparisons the Post Office departmental report indicates that telegraph and telephone rates in the United States under private ownership are higher than abroad under public ownership, whilst postal rates are substantially the same. Consequently, it is inferred that "postalization" of the telegraphs and telephones in the United States would bring about lower rates as well as a more extended service than is now the case. In short, the Postmaster General concludes that the cheapest and most popular service can be expected only under public ownership. Congressman Lewis draws the same conclusions.

The American Telephone and Telegraph Company is equally positive in its assertions to the contrary. It denies

that the institutional inefficiency either of the American telegraph service or of the telephone can be demonstrated by such statistical comparisons as are employed by the Postmaster General. On the contrary, it contends, the institutional efficiency of both services is "clearly superior to that of any governmental system." The low comparative development of telegraphs in the United States, in its opinion, is explained by the "greater efficiency and distribution of the telephone." 1 The greater efficiency of the American telephone system becomes obvious, in the opinion of the telephone company, when one compares the actual services rendered by the telephone in the United States, with those rendered by the telephone under government ownership abroad. Telephone rates, both local and long-distance, are lower, when consideration is taken of the differences in the character of the service and in the value of money in the United States and abroad. In short, the company claims that both telegraph and telephone rates are actually lower in this country, and that the service, considered as a whole, is more widely extended than anywhere else on earth. In the few countries where the telegraph development, taken alone, is greater than in the United States, the superior foreign development is easily explained by circumstances which reflect no credit on governmental ownership as compared with private ownership in the United States.

Thus the controversy over the comparative merits of government and private ownership becomes a controversy over the comparative merits of government and private statistics.

It must be confessed that the Postmaster General's statistics leave much to be desired. Comparisons of the number of telegrams received or of the number of local or long-distance telephone calls per capita are misleading, unless it also appears that the service rendered by the average message or call is substantially the same. This does not appear from the Postmaster General's comparison. Comparisons of tele

p. 5.

1 See Annual Report of the American Telephone and Telegraph Company for 1913,

graph and telephone rates likewise depend for their validity upon proof of the substantial identity of the services for which the rates are charged. Moreover, comparisons of rates are inconclusive, unless account is taken of the comparative value of money in the various countries, and of the various degrees of profitableness of the systems compared. If, as in fact is generally the case, a government telegraph system is unprofitable, the amount of the deficit must be distributed over the traffic in order to estimate the true cost to the public of the service rendered. Statistical comparisons designed to reveal the comparative efficiency of different telegraph or telephone systems are especially liable to misinterpretation. A comparison of the number of messages delivered per employee by the telegraph administrations of different countries may indicate that those countries with a low ratio of messages delivered per employee possess a comparatively inefficient service; but it may also indicate that the service is comparatively widespread. A wide extension of an efficient service into places with comparatively little traffic — a highly commendable situation, one would think will yield a low ratio just as the maintenance of an inefficient service exclusively in the larger business centers will yield a high ratio.

These criticisms of the Postmaster General's statistics do not warrant one's jumping to the conclusion that his figures, revised in the light of fuller and more exact information, would prove the superiority of private ownership. So far as concerns the Postmaster General's case for public ownership, they warrant nothing more than the bringing in of a Scotch verdict, not proven. A judicious man, like the author of the telephone company's Commercial Bulletin No. 7, will use statistics, not for the purpose of proving much by them, but to save himself from having unproved conclusions foisted upon him by others.

The objection to the statistical evidence presented in the Post Office departmental reports is not the difficulty of drawing from it some valid and trustworthy conclusions, tho that difficulty is real enough. The serious objection lies