The principal element of expense in our business is the cost of
labor.[24] If we can do our work as cheaply as another party, it is
clear that rates can never be reduced below the point at which receipts
and expenses are equal. Any material increase of business, no matter
what the rates may be, must be attended with increased expense. And when
the capacity of the wires provided for a particular service is
exhausted, a new question is presented by the necessity for providing
additional facilities. By the extension of our lines this year west of
Chicago, and by the moderate increase in the volume of our business in
that section of the country, it will probably become necessary during
next year to provide two additional wires between Chicago and the
Atlantic coast. The cost of these wires, if erected on poles now
standing, will be about $120,000. We shall also be obliged to put up an
additional wire between Washington and New Orleans, and between the
latter place and Louisville. The cost of maintaining the lines will be
somewhat increased by the addition of these wires, and the cost of
operating at each end, and looking after them at intermediate points,
must also be included. How is the additional capital necessary to
provide such increased facilities to be raised? By reducing rates, the
result of which is, that, even if gross receipts are not diminished, the
expenses are increased? Is it not by gradually increasing lines out of
current profits, and as gradually reducing rates after facilities for an
enlarged business have been provided?
Footnote 24:
The Western Union Telegraph Company expended $2,573,434.80 for labor
for the year ending June 30, 1867. See comparison of cost of labor in
Europe and the United States on page 26.