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.