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Fourth International, July 1940

C. Curtiss

The American Telephone
and Telegraph Co.

From Fourth International, Vol. I No. 3, July 1940, p. 79.
Transcribed & marked up by Einde O’Callaghan for ETOL.

AT&T, The Story of Industrial Conquest
by N. R. Danièlian
Vanguard Press; New York. 460 pp.

The American Telephone and Telegraph Company receives more income a year than do Chile, Finland, Norway, Hungary and Yugoslavia combined. The largest single corporation in the country, it has a total capital of more than $5,000,000,000; in 1929 it employed 454,000 workers. It operates between 80 and 90 per cent of the nation’s telephone system; controls 222 vassal corporations, including Western Electric which produces 90 per cent of the world’s telephone equipment; owns over 9,000 United States patents and is licensed for 6,725 more. But even more important in the eyes of the bourgeois world – since 1880 AT&T and its forerunners have never paid a dividend of less than $7 a share, and since 1921, it has paid even through the lean years of the depression, $2.25 each quarter with astronomical regularity.

The corporation began with a total investment of less than $200,000 in 1878 and by a process of accumulation and centralization has reached the gigantic status of today. Management and ownership are completely separated. Control is vested in the hands of a virtually self-perpetuating board of directors, paid huge salaries, while the stockholders’ only function is to clip dividend coupons.

The AT&T boasts of the democracy of its ownership, of the widespread distribution of stock. However, the figures revealed by US government investigators show us the following as of September 16, 1935:

These figures are eloquent testimony of the “democracy,” of the modern corporation. Each stockholder of the group owning 10,000 or more shares owns more than 9,000 times as much stock as each shareholder of the 1–5 group. Less than 0.1 percent of the shareholders own more shares than do two-thirds.

The House of Morgan has dominated AT&T since 1907. Since that time, Morgan has sold $1,500,000,000 worth of shares, yielding a banker’s commission of nearly $40,000,000 for this service. As a result of the connection with Morgan, the Company loaned $20,000,000 to the Allies in 1916.

In order to escape income tax payments, unfavorable publicity, etc., various subterfuges are used that make even this picture a distortion of the facts, as the actual concentration is undoubtedly even greater than that shown.

Yet, it is true that AT&T is the most “democratic” of the large corporations. One can only guess at the distribution of ownership in the other corporations. Study of the income tax statistics show that less than 0.5% of the nation receive 75 to 80% of the corporate dividends.

The high dividend rates which so arouse capitalist admiration are not due to any miracle. The maintenance of the rate of profit through the depression years can only be explained by the intensification of labor, which is in the final analysis a form of cutting wages and raising hours. In 1937, business was above the 1929 levels, profits rose from $116,000,000 to $168,000,000, but the number of employees decreased by 134,000.

It scarcely need be added that AT&T actively opposes unionism through participation in the Special Conference Committee, a company union supported by 11 other giant corporations.

The modern corporation has made a wage slave of the scientist, the engineer and the inventor. Nowhere is this more clearly seen than in the Bell Laboratories, where research is carried on in both experimental and applied science. The labor power of the scientist is bought and sold on the labor market, the scientist-proletarian punches the time clock, receives wages, while the product of his toil belongs to the capitalists who hire him. That product is patents, the ownership of which becomes part of the capital of the corporation to be used either directly by it, or leased to other capitalists for use in the production of profits.

A discovery in one field of science will often find uses in many others, sometimes far removed from its original aim. For example, De Forest’s vacuum tube is useful not only in telegraphy, but in long distance telephony, in radio, television and sound pictures. By control of this patent, as with others, the Bell System finds itself a factor in industries far removed from telephones.

The control of patents, resulting from the work of the Bell Laboratories, the accumulation of large surplus funds demanding investment, the fear of competition, as for instance, from the radio, explains the constant tendency of AT&T to invade other fields, particularly those connected with its patents. Here they come into contact and clash with other industries. Competition is no longer a struggle for the customer, waged by a host of small concerns, but a war of giants to see who shall dominate a monopolized field. The chief instrument used in this war, besides finances, is the control of patents. It is a struggle, not mainly at the point of consumption, but in the laboratory.

Two groups are dominant in the electrical communications and manufacturing field: the telephone group composed of AT&T and its subsidiaries; and the radio group, consisting of RCA, General Electric and Westinghouse. with the addition of some minor groups. (The telegraph companies are sinking into relative unimportance.) After a period of war between the groups a peace treaty was signed on July 1, 1926 delimiting the zones of monopoly of each, with an exchange of patents for use in those zones.

Telephony, both wire and wireless, with the exception of broadcasting went to the telephone group; telegraphy and radio broadcasting was allocated to the radio group. Telephone equipment manufacturing went to the telephone group, while radio and communication household equipment is the domain of the radio group. Wire television and facsimile process went to the telephone group, while radio television and fascimile went to the radio group.

The manufacture of radio transmission equipment is shared between the two.

The only “no man’s land” in the agreement is sound movies. In this field intense warfare has raged. For a long time, the movie-goer could see on the “title page” of the talkie, only the trade mark “Western Electric Sound System” or “Western Electric Microphonic Recording.” But the radio group did not leave unchallenged the domination of the Western Electric.

In order to bolster its position, the subsidiary of Western Electric, ERPI (Electrical Research Products, Incorporated) loaned money to studios and movie houses to aid them in placing Western Electric recording and reproducing equipment. Having loaned millions, the crash of 1929 found the AT&T taking over studios and theaters, becoming at one time the second most important financial interest in the movie industry.

The Bell interests were not successful in maintaining a monopoly in the sound motion picture field. In June 1936, Warner Brothers, Fox Film, and Columbia Pictures installed RCA recording equipment in their studios to supplement Western Electric equipment.

Capitalist economy has run its course. Its end result is the gigantic monopoly, in which the capitalist is a useless parasite. Of what use are the owners of the corporations? The picture which Mr. Danièlian draws of a single company, is to a great extent, true of all corporations and companies and American economy as a whole. The workers are exploited by these concerns; the consuming public is victimized through monopoly prices. Mr. Danièlian, writing in the style of Ferdinand Lundeberg does not draw any conclusions from his study as to the future of industry. The class conscious worker, will draw the only correct one: the necessity of the transition to socialism!

 
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