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cable traffic between Germany and North America has increased quite a lot during the past few years, averaging I should say around 3,000,000 or 4,000,000 words a year.

I have here a table showing comparative foreign trade figures for the United Kingdom and the United States, beginning with the early days of Atlantic telegraphy, from which will be noted the expansion of American foreign trade and how it has been gradually approaching that of the United Kingdom. I don't think it necessary to read the figures for the 12 years covered, and accordingly will mention the figures for 1862 and 1928. In 1862 the total trade of the United Kingdom amounted to $1,905,000,000 compared with $380,000,000 for the United States. In 1928 the totals were $9,930,000,000 for the United Kingdom and $9,220,000,000 for the United States.

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I Converted at rate of 4.86 for all years, except 1920 and 1925, when 3.66 and 4.83 respectively were used.

Senator Dill. Have you any recommendation or any opinion to give about the wisdom of allowing wireless and cables to be united under Government control?

Mr. SHOUP. Well, Senator Dill, that depends entirely upon the remaining facts to be brought out. As I have said, the entire question is very complicated, particularly in the matter of fixing international rates. This thing we do know, though; we know that our American trade is increasing and that we need an adequate system of international communications. I think that the question is not so much a weighing of the advantages and disadvantages of monopoly, as it is whether two or three American companies can compete with the British merger. I think in the last analysis it comes down to that.

Senator Dill. The question as I see it, is whether the services, wire and wireless, shall be united into a monopoly, or shall they be under separate control and thus be competitive. They have been competitive up to this time as the law requires.

Mr. SHOUP. Well, I suppose, to be entirely dependent upon radio you can not compete with the wire companies.

Senator Dill. The result up to this time has been to reduce cable rates.

Mr. SHOUP. Yes, sir.

Senator Dill. And your figures show that the Marconi beam stations were ruining the profits of the cables of England.

Mr. SHOUP. Yes; but in that connection it should be said, probably, they were operated at cheaper rates than the cables. They were handling the most of the deferred traffic. The full-rate traffic, I believe, was going mostly to the British cables.

Senator KEAN. The full rate traffic went to the cables because the cables were giving a positive service, and the other service was always liable to interference. So anything that involved money or anything of that kind went by cable, while anything like a statement or something of that kind went by radio.

Mr. SHOUP. That is true. As one witness pointed out, if radio and cables are merged there is of course the danger of the radio being made subservient to the cables. That is, I mean its full development might be retarded, or there is that possibility at least.

Senator WHEELER. That would be by reason of the fact that the cables are already in operation and they might not want to do away with them entirely and substitute something else.

Mr. Shoup. The consensus of opinion seems to be that radio will never supplant the cables.

Senator Dill. In your work in the Bureau of Foreign and Domestic Commerce, what is your impression as to the effect, that is, whether it would be a handicap or a help, to our trade by having a merger of these services or a lack of a merger, as to having competition?

Mr. Shoup. Well, competition of course is desirable, there is no doubt about that, but

Senator Dill (interposing). What do you think it would do to the trade, would it help or hinder the trade of the United States to foreign countries?

Mr. SHOUP. As to that I do not know.

Senator WHEELER. Would it give them a better or a poorer service?

Mr. SHOUP. Well, I should think it would give them a better service, because the two would be closely coordinated. The tion of the modern system of communications seems to be a radio and cable network, so coordinated that if transmission defects appear in the one method you can go over to the other. But in the last analysis—well, let us take the gross operating revenues of the Western Union in 1928, and they amounted to $136,450,000. Now, compare that with the Radio Corporation of America in 1928, and their gross revenue for transoceanic communications and marine service amounted to about $6,000,000.

Senator Dill. That is only a very minor part of the Radio Corporation's activities, however.

Mr. SHOUP. Yes, sir.

Senator WHEELER. And of course radio is only in its infancy as compared with the cables.

Mr. SHOUP. Yes, sir.

The CHAIRMAN. When you quoted the Western Union's revenue, are they domestic as well as transoceanic?

Mr. Shoup. Yes, sir.

The CHAIRMAN. "There is no segregation of domestic and transoceanic revenues in that report?

Mr. Shoup. No, sir.
The CHAIRMAN. Is that all you have to present?

The concep

Mr. SHOUP. I should like to say that I have quite a few clippings from the British press, which I think the committee might find useful by way of reference at least, and which I can leave with you. Senator Dill. What is the nature of thos: clippings?

Mr. SHOUP. Well, some of them concern the debates in the Parliament on the British merger bill and some of them are policy debates, and all that sort of thing, and others are a discussion of various phases of the merger. I think you will find some of them very interesting

Senator WHEELER. I think they should go into the record.
Mr. Shoup. I will have photostats made for you.

Senator DILL. You might leave them with the committee and we will go over them and decide whether they should go into the record.

The CHAIRMAN. That may be done.
Mr. SHOUP. All right.
The CHAIRMAN. Judge Sykes, will you please come around.
Commissioner SYKES. Certainly.



The CHAIRMAN. Have you looked over bill S. 6 at all?
Commissioner SYKES. Yes; I have read the bill.
The CHAIRMAN. Have you any comments to make on it?

Commissioner SYKES. I have no prepared statement. I should like to say, however, that I think the bill is a meritorious one; I think the growth of radio communications and the establishment of a very complete system of radio communications, as well as a set-up of continental radio communications competing with wires in this country as well as all over the world, would render it a good thing to have some body with the right to control and regulate both wires and wireless communication. They are so interrelated, in the matter of rates, and the question of delivering messages or traffic from the one to the other, that in my judgment it is now of sufficient importance to render necessary the establishment of some such body as the bill provides.

I shall be glad, Mr. Chairman, if I can answer any questions.

The CHAIRMAN. Have you analyzed the bill at all, paragraph by paragraph, so as to indicate any desirable changes?

Commissioner Sykes. No; I have not done that.

The CHAIRMAN. You are leaving that to the general counsel of the commission?

Commissioner SYKES. I understood that a request had been made of the general counsel of the Federal Radio Commission to do that, and that he was s doing, and that at some later period he would make a report to you.

The CHAIRMAN. And that is what would be approved by the Federal Radio Commission?

Commissioner SYKES. Yes, sir; that will be considered first by the commission, and it will come in with the approval of the Federal Radio Commission.

Senator Dill. There is one question I should like to ask you, Judge Sykes, because of your experience on the commission, and that is the question as to the advisability of continuing the zone system.

Commissioner Sykes. Senator Dill, I am a very strong advocate, indeed, of the zone system. I think it is a very good thing. I think primarily that a commissioner from a zone knows and understands conditions in that zone better than someone who does not live there, and that his knowledge of the internal problems in that zone are exceedingly valuable to the other members of the commission.

Senator Dill. Have you any opinion to express as to the boundaries of the zones being proper at the present time or improper?

Commissioner SYKES. I think they are working very nicely. The lack of population in one zone I think is offset by the territory in that zone.

Senator Dill. Of course under the Davis amendment you are in a very awkward position about the number of small-power stations when you consider the matter of area, are you not?

Commissioner Sykes. Yes; that is true, but I do not know how you might rearrange the zones so as to cover that.

Senator Dill. If the law did not make a requirement for equality in the number of stations, would it not relieve the commission of a lot of problems to-day that are very difficult for it to meet?

Commissioner Sykes. In other words, if we could use a very valuable facility regardless?

Senator Dill. Yes.

Commissioner Sykes. I will tell you what I think we are trying to do: We have equalized very well in accordance with the Davis amendment so far as the zones are concerned, and perhaps then I think we might be excused if we go ahead and find that we can use a surplus in some other part of the country.

Senator Dill. No, what I have in mind primarily is this: The first zone up here to the north of us is a very small zone in area compared to the enormous area of the fifth zone.

Commissioner Sykes. That is true, and the second zone possibly, too.

Senator Dill. Undoubtedly a great many more stations of small power could be located in the fifth zone, in the great broad area of the West, without interference with anyone else, than could possibly be located in a zone small in area such as the first or second zones.

Commissioner SYKES. That is true.

Senator Dill. Would it not solve a great many of your problems from the standpoint of serving the listening public in the zones large in area, if that requirement of equality were removed as to the number of stations if not the number of wave lengths?

Commissioner Sykes. I think this is an idea that might be helpful along that line, to probably add to the present bill a further proviso that if after the equalization, facilities may be further used in other zones, if the commission could be empowered so to do. That would permit us to use where we can territorially, say in the fifth zone and some in the third zone, the extra facilities. I think an amendment would cover that. I do not think you would have to repeal the Davis amendment at all to do that, but I think a proviso permitting the use of these frequencies when we can, because of separation and so forth, might help the situation.

Senator Dill. Because at the present time when a lot of little communities in the western country want a station for their own and they apply to the commission, you are confronted with the law requiring equality

Commissioner Sykes. Yes; it is pretty rigid on equal division among the zones.

Senator Dill. Well, I know that House Members did not consider that that was necessary to be followed, nevertheless the commission is confronted by that situation. It seems to me that that part of the Davis amendment ought to be in some way made less stringent.

Commissioner Sykes. I think an amendment along that line that would permit further use of radio facilities might be helpful.

Senator Dill. Have you given any thought to the proposal to charge a license fee for broadcasting and for other uses of radio licenses?

Commissioner SYKES. The commission as a whole has not considered it. However, we referred the matter to the assistant secretary of the commission, and had him get up certain figures and data, which he has submitted to the commission. But the commission has never acted upon it. If you would like a copy of that I will give it to you.

Senator Dill. I do not know whether you would want to put it in our record until the commission acts upon it.

Commissioner SYKES. No; I should prefer not to do it.

Senator Dill. Have you any impressions that you would like to give us, as to your own opinion?

Commissioner Sykes. Do you mean as to the advisability of putting a tax on broadcasting stations?

Senator Dill. On those who secure licenses.

Commissioner SYKES. While it is a very valuable franchise that these people are given, and I do not see why it should be objectionable to have some kind of tax on them, yet our experience shows that very few broadcasters are making any money out of broadcasting, and therefore I really question the desirability of putting a tax on broadcasting stations at this time. Now, where the money is being made in radio from my experience is in the manufacturing end of it, and there you meet some grave constitutional questions as to how you could reach them with a tax. I am not prepared to say how you could do it.

Senator Dill. Of course, when you speak of radio stations not making money, yet they get advertising out of it, and in that way they make money.

Commissioner Sykes. Yes; indirectly I feel satisfied that that is true, or at least they are quite anxious to continue in business.

Senator Dill. There are a number of stations whose owners have built up tremendous businesses as a result of thus advertising their names.

Commissioner Sykes. I know, as to lots of them, that is true, and I am inclined to agree with you that it has very much helped their business.

The CHAIRMAN. That is 'a matter that might be investigated in order to determine the facts.

Senator Dill. Yes. What have the Federal Radio Commission's activities cost the Government per year, about?

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