want to borrow from their local banks and place them at the mercy of a Washington official.

It will put Government bodies into the telephone business. It will be another burden to the taxpayers. It will enlarge or add another bureau. It is not needed to accomplish what the bill presumably proposes to accomplish.

The lack of telephone service in the country is no more acute today than in the city. The telephone service is being expanded by the telephone companies proportionately more rapidly in the country than in the cities.

Senator HOLLAND. Mr. Winters, this Hull Telephone Co. of which you are the principal owner, and which you say operates about 1,100 stations or phones and 300 miles of toll circuits, is it a prosperous company?

Mr. WINTERS. Yes, sir.

Senator HOLLAND. You are making a profit?

Mr. WINTERS. Yes, sir.

Senator HOLLAND. Paying your stockholders dividends?

Mr. WINTERS. Yes, sir.

Senator HOLLAND. At the rates that you testified you charge?
Mr. WINTERS. Yes, sir.

Senator HOLLAND. It is your testimony that the percentage of farm homes which are subscribing and taking your telephones is greater than in the little towns that you serve?

Mr. WINTERS. Yes, sir. You must understand, Senator, that I am trying to take the same economic status in the country as in the town. There are certain types of people in the towns who will not have telephones because they cannot afford them.

Well, we have the same in the country, so taking the status of people who would have telephones, as compared with those in the city who would have telephones, the people in the country have a higher percentage than the people in the towns.

Senator HOLLAND. Is this what you are trying to say: That the farm homes that are occupied by people of sufficient prosperity to where they can afford phones subscribe to phone service in greater proportion than the same kind of economic homes subscribe in the city?

Mr. WINTERS. That is true in our part of the country.

Senator HOLLAND. All right, thank you, sir.

At this point in the record will be placed your prepared statement. Mr. WINTERS. Thank you, sir.

(The document referred to follows:)

STATEMENT BY W. G. WINTERS, PRESIDENT, HULL TELEPHONE Co., HULL, TEX.

Mr. Chairman and members of the committee, I am W. G. Winters, of Houston, Tex. I am the president of the Hull Telephone Co., operating seven small telephone exchanges in the towns of Hull, Daisetta, Hardin, Raywood, Devers, and Boling, and surrounding territory, situated in the counties of Liberty, Hardin, and Wharton, State of Texas. In this area we operate some 1,100 stations and 300 miles of toll circuits.

I am appearing on behalf of the Texas Telephone Association as well as my own company.

I am here not only because of my concern about the effect the pending legislation would have upon my property and the telephone industry if it should become a law, but also because of the erroneous conclusions which brought about its conception and which will continue to plague my business and the industry as a whole until dispelled.

I have been in the telephone business 40 years. As a young man I started out to learn the business from the ground up, digging holes, climbing poles, progressing through all the phases of the business such as foreman, superintendent of construction, superintendent of plant, maintenance, engineer, etc.

What I have to say is my considered opinion from a lifetime in this business and as a citizen feeling the effect of constantly added government restrictions on free enterprise.

I have read carefully the remarks attempting to justify the introduction of the Hill bill as well as those attempting to justify a companion bill in the House of Representatives, known as the Poage bill.

These remarks clearly indicate the bill is largely based on a false premise, and the people should not be misled into debating or defending statistics showing the number of telephones on farms as indicated in their station statistics reports under the head of rural telephones-their increase or decrease since 1920. There are no definitely reliable statistics on the actual number of farm telephones and never have been. While the number of telephones shown as rural in the statistics report show a reduction since 1920, the Agricultural Department statistics report shows a reduction in the number of farms since 1920. The introductory failed to mention this fact. The station statistics on rural telephone are in no sense a measure of the telephones on farms today. They were not a measure in 1920.

In 1920 and throughout the years since and today, the telephones classified in the telephone statistics as rural are a measure to the companies only of the use, location, and quantity of a certain type of equipment in their fundamental plant and the revenue produced by this type of plant. The same applies to their other classes of statistics such as the various classes of residence, business, etc

These statistics were not built up for the purpose of showing the number of telephones on the farms. There are thousands of farmer telephones all over the United States in that section of the statistics classified as residence but normally considered as city or town telephones. This is especially true of the smaller towns and villages. In my own towns at least one-half of my residence telephones are farmer telephones. Some actually live in the town or village. Likewise, in the so-called rural statistics over the country as a whole there are thousands of business and industrial telephones in this classification. In one of my towns, Devers, Tex., where we have about 110 telephones, all dial, 80 percent are farmer telephones. In another of my towns, Raywood, Tex., all our farm telephones are dial. But neither of these towns shows any telephones under the rural classification. Add to the telephones in the rural classification the farm telephones classified in the residential statistics of the small towns, villages, and hamlets of this country, and you will have a picture of the number of farm telephones. It will show a percentage of farm telephones so much higher than the figures about which so much furore has been raised that this Congress would say give the telephone companies a little more time and they will finish the job. My property is all in rural areas, not a town is incorporated-I believe my property is representative and the State of Texas, except for the metropolitan areas is simply a composite of just such towns and villages as mine.

My company is making every effort to supply every farmer in our territory with a telephone that wants one and during the coming year I believe we will have met all the wants in our territory. Sound consideration of this bill must bear in mind that if every farm that could pay for a telephone and wanted one had it there would still be a wide margin between the number of farms and the number of telephones just as there is in the cities or towns between a house count and the number of houses containing telephones. We have supplied the country need proportionately faster than we have the town need, but the proponents of this bill should bear in mind that there are in proportion to the population just as many shiftless and ne'er-do-well people in the country as there are in the city; a class of people who will bellow for the Government to provide them with something they are too lazy and shiftless or too stingy to provide for themselves. Then, there are also people in this business who have no business in it at all just as there are in other commercial lines of business, and these people are looking for someone to bail them out; who better than their Federal Government which has already passed so many paternal laws. There are areas in my own company as well as in other companies throughout the country where construction now in process will take care of all in those areas who want and will pay for service which when completed will add even more substantially to the farm coverage. Of course, there are still other areas where farmers do not have telephones, but for whom telephones will be provided within a reasonable length of time considering the manifold shortages; shortages which are rapidly being lessened each day. But

even after that there will be some not reached, as previously pointed out but the same condition will also exist in the towns and cities.

The man from Georgia who wrote the author of this bill that he has thousands of existing customers on noisy telephone circuits that this bill would improve, is either not telling the truth or if he is, should not be in the telephone business because if he has thousands of existing customers in these prosperous times, he should make his improvements voluntarily, give them good service, and increase his rates as justified by the improvements made. It is not the company with the thousands of customers already getting service that poses the problem at all; it is the areas where no service exists. In these days of high cost the smaller companies must expend these high costs not to reach thousands in an area but perhaps as many as a dozen or a score at the most in an area. Of course, when you add this up for the Nation as a whole it amounts into large figures. But figures that are growing rapidly smaller each day in my company and over the country.

The so-called mutual companies as a rule never have provided, except in rare cases, decent telephone service nor charged adequate rates and are now being forced to make their members dig down in their pockets for more money to put their plant in shape or increase their rates to a point where maintenance can be raised to the high level necessary in these modern times.

No more striking proof of this than the experience the Honorable Mr. Wickard had not long since and which he cited in support of this legislation. In some instances this is due to their own poor management and in others to the REA, as I shall point out later. In this bill they hope to avoid putting up the money by getting the Government to put it up. Numbers of these companies have been keeping the regularly established telephone companies from furnishing service in their area. Such companies should not be bailed out by the Government, but the natural forces of free enterprise should be allowed to take their course which now is and will finally force them either to set their house in order or go out of business and let the regular company nearest them take over. This has been taking place during the past 3 years on a very large scale, the so-called service-line companies being replaced by company-owned rural lines by the company operating nearest them.

Then, also, it should be borne in mind that a large part of their trouble is brought on by REA paralleling them, the very agency the proponents of this bill want the Government to invest with this job. The REA has put thousands of normally satisfactory operating telephones in the country into the unsatisfactory class by employing the same principle in operating their REA lines which they so loudly condemn when employed in the telephone plant: namely the practice of parelleling grounded telephone lines with grounded high-voltage electric lines.

I do not think a real minister of the gospel would be a real telephone man, nor do I think a real good surgeon would make a good Senator; an electric-light man is not a telephone man, nor is a Senator either. Although each probably uses the same type of food to live, reads the same newspapers, etc., but their mind interest centers on matters entirely different. A very good electric man can be made in 1 year; it takes from 3 to 5 years to make a telephone man. REA people will not be telephone people; they will have none of the attributes of telephone people nor will they ever bother to acquire them. I have had too many electric men come to me for telephone work and have yet to have a single one turn out to be a good telephone man. The science of telephony is too exact and voice currents too delicate. So, after working with the heavier currents not requiring the exact tolerance in all matters that is required in the telephone business, they cannot be made to observe strictly the principle necessary for satisfactory telephone service.

Telephone service has its highest service value when everybody has one. Telephone people are striving for that goal. But, electric people do not necessarily strive for that goal because Jones' lights are no brighter because Brown has lights, but Jones' telephone services him not at all unless Brown has one. This bill is another step along the socialistic road despite any statement to the contrary. Just like all such bills are, where the Government steps in in the guise of a great benefactor to do things for the people which they should do for themselves. When as a matter of fact, the people are paying for all of it blindly through their taxes. Here we are with the war over 4 years and taxes being used for new avenues of Government spending such as this instead of reducing the public debt. I say this will add more to the tax burden because everybody knows that money costs the Government more than 2 percent, the rate of interest to be carried by this bill, so the difference will have to come out of the tax pockets of the people. This bill will do more harm to the forward progress of the tele

phone business than anything that has happened to the industry in its history, by introducing uncertainty into the industry as now constituted, through making possible costly and disastrous competition and the possibility of municipalities and semigovernment organizations going into the business. The above things will make the borrowings of the present companies uncertain and unstable and can very easily make it impossible in many instances for present telephone institutions to borrow at all. No banker wants to lend his money where the situation is such that competition would completely rob his debtor of his ability to repay.

The whole bill smacks of the European. Why, when we have the greatest country in the world, the product of free men in free enterprise, we try to continue to pass laws in line with European practice, I am not able to understand, especially in view of the fact that every country of the world is standing with their hands out to us saying: "Give me, give me." Yet, they have their government medicine, government railroads, government utilities, government mines, government telephone service, and 35-hour week, and on and on ad infinitum. If that is so good, why are they not on top and we the beggars?

In summation, it is my considered feeling that:

1. The bill is socialistic.

2. A body blow to free enterprise.

3. It is conceived under false premise.

4. It will bring about competition.

5. It will be another stumbling block in the way of the small company when he wants to borrow from his local bank and place him at the mercy of the whims of a Washington bureau and subject him to political favoritism.

6. It will put Government bodies in the telephone business.

7. It will be another burden on the taxpayers.

8. It will enlarge or add to another Government bureau and very possibly to a separate Government bureau.

9. It is not needed to accomplish what the bill presumably proposes to accomplish.

10. The lack of telephone service in the country is no more acute than in the city.

11. The telephone service is being expanded by the telephone companies proportionately more rapidly in the country than in the cities.

Gentlemen, under a system of free men and free enterprise, I have spent a lifetime of building up a sound business. The passing of this bill will make that business unsound. It will no longer be possible to start as I did and grow over the years, knowing that by hard work and close application to attain an ideal there are no hindrances, governmental or political, to prohibit its achievement.

I thank you for your courtesy in hearing me; but, risking repetition, I wish to close with this thought that has been so often voiced but as often unheeded: The people least governed are the best governed, and the Government should never do for the people what they can do for themselves, and the telephone industry is, can, and will furnish the telephone service better without this bill and without dipping into the taxpayer's pocket which is being dipped into too deeply and too frequently already.

Senator HOLLAND. The next witness is Mr. Warren B. Clay, of Hutchinson, Minn.

STATEMENT OF WARREN B. CLAY, MANAGER, HUTCHINSON TELEPHONE CO., HUTCHINSON, MINN.

Mr. CLAY. Mr. Chairman, I believe I can save some time for your committee if I skipped portions of the printed testimony and read portions of it.

My name is Warren B. Clay. I am the manager of the Hutchinson Telephone Co., Hutchinson, Minn. I am also a member of the board of directors of the Minnesota Telephone Association, an association of independent telephone companies in Minnesota, consisting of 211 members.

My appearance before you today, in opposition to S. 1254 and similar bills, is in behalf of the Minnesota association and my own company.

For the information of your committee, I call attention to Telepnony's Directory of the Telephone Industry for 1949, and from page 20 thereof I quote the following statistics relating to Minnesota:

Population of Minnesota, 2,797,300; total number of telephones, 839,800; telephones per 100 population, 30. 1; residence telephones, 634,400; business telephones, 205,400; total independent telephones, 207,800; common battery (manual), 33,350; magneto (manual), 166,500; dial system, 9,950; total Bell-system telephones, 630,000; total number central offices, 690; independent, 515; Bell system, 175. Upon inquiring at the Minnesota Railroad and Warehouse Commission, State Office Building, St. Paul, Mr. Fancher, supervisor of the telephone division, furnished me the latest information on the number of the various classes of telephone companies in Minnesota as follows:

Class A companies, 2; class B companies, 17; class C companies, 65; class D companies, 91; class E companies, 44; class F companies (mostly farmer-owned lines), 1,851.

These 1,851 farmers' telephone companies serve approximately 45,000 telephones.

Further, for your information, I have before me a copy of the survey of rural telephone development by counties in the State of Minnesota, which was prepared under the direction of the Minnesota Telephone Association to determine the present telephone development in the rural areas of every county in the State. Information on the number of telephones was secured from the records of all the telephone companies in the State. The number of farms in the State was taken from the United States Census of Agriculture of 1945, volume I, part 8, for the State of Minnesota. The summarization of data is as follows:

Number of counties, 87; number of farms, 188,952; number of telephones in rural areas of all telephone companies as of March 24, 1949, 132,396; total telephone development in rural areas, 70.1.

As stated previously, I am appearing before you today in opposition to legislation of this nature for the following reasons:

1. Private industry is now, and increasingly so, bringing telephones to the rural areas of the country, and in due time rural demands for service will be met.

2. Legislation of this character will not accomplish all that its proponents assert, and will lead ultimately to disastrous results to the thousands of companies that are already fulfilling the demand for rural service.

3. Financing for telephone companies is now generally available through regular commercial channels at rates that are reasonable. With your permission and to cover the first point, I would like to tell you about my own company, what it has done in regard to rural service and what its prospects are in the future, should legislation such as this be enacted. I use my company as an example, for it is typical of the hundreds of independent companies operating in the rural areas of Minnesota as well as other States.

Our company serves the city of Hutchinson and the surrounding rural areas in the trade territory of the town. We have, at the present time, 670 rural telephones, all being common battery, dial telephones on metallic lines. The service, we feel, is excellent and is being rendered at a moderate cost. We make no charge for line extensions, and