The CHAIRMAN. Everyone recognizes that in a particular area it is much more convenient for the public to have the telephone system under one direction, whatever might be said about independent local enterprise. But you want us to understand that the patent system as such has ceased to be the effective agency in maintaining the Bell system.

Dr. JEWETT. Yes. I can state my point of view quite clearly, Senator, and it pertains only to the Bell system or to things like the Bell system which are, we will say, natural monopolies, if there are such. I don't think that if you were to abolish the patent system tomorrow, or if you were to greatly circumscribe it by its fundamentals in some way-I am not talking about procedural methods-that it would make one iota of difference to the Bell system with regard to the work it did itself for the development of communication, because we do not do work for the sake of taking out patents.

Now, that isn't saying, however, that we and the public we serve would not suffer immeasurably by that, because what would happen? We would be deprived; we don't have to fear other people's using our stuff, we are a natural monopoly, we don't care, let them use it if they want to. But what we do want is to have the opportunity to get as many ideas as we can from the outside and pay for them, and anything which tended to dry up the flow of ideas from the outside, which we had the opportunity to buy or be licensed under, or what not, would tend to circumscribe and shrink down the kind of thing which we do. The CHAIRMAN. You referred a moment ago to an idea which, if it were developed, would be a fundamental departure. Now if such an invention as that were made and the Bell system were not in the position to obtain the use of it, it would be a very serious matter for the system, would it not?

Dr. JEWETT. Absolutely, and it would be more serious for the public. The CHAIRMAN. Yes, to the public and to the stockholders and everybody who is employed by the Bell system.

Dr. JEWETT. Right.

The CHAIRMAN. Mr. Dienner, I think the committee will probably allow you to go on for 3 minutes.

Mr. DIENNER. I should like to have you state for the benefit of the committee your annual budget for running the research laboratory of the company.

Dr. JEWETT. In order to state that, Mr. Dienner, I think I want to make it clear to the committee and the Senator just what this is, in view of the testimony that Dr. Coolidge gave yesterday. This laboratory of ours is different from any other laboratory in the world that I know of in that we have under one common direction everything from fundamental science research to the engineering type of engineering stuff which any manufacturer would do, and we designate the work of the Bell Telephone Laboratories as research and development because it is difficult to draw a line. Dr. Coolidge was describing what is a part of our laboratory.

Now the total budget of Bell Telephone Laboratories for the three things it does, fundamental science research, the engineering type of stuff which is done in these 15 laboratories that he was talking about; and the consulting services which the scientists give to the Bell system; those three things involve an expenditure of between 20 and 22

1 Supra, p. 911 et seq.

million dollars a year, and of that amount the consulting services and the engineering type of stuff, by a liberal or conservative division, things which probably everybody would agree to, constitutes more than half of the amount.

The best figure, and I am up against this question all the time, that I would give would be that the expense of running the kind of a thing which Coolidge was talking about yesterday, and which we call our research department, is somewhere between seven and nine million dollars, possibly, a year. Now when you contrast that with the General Electric you must remember this, or any of these other laboratories, you must remember this thing that Bell Telephone Laboratories is doing, the research and development work. There are a few other rather small ones, the R. C. A. has some, General Electric, and Westinghouse, but by and large you can say this with a fair degree of accuracy, that Bell Telephone Laboratories is doing the fundamental research development work for the Nation, the one place it is done, whereas the electrical or chemical industries, or electrical industries, General Electric does a big lot, Westinghouse, other people do things; so if you wanted to get a direct comparison of the amount of the money spent for research and development in the communication field, from the power and light field, you would have to compare Bell Laboratories with the sum total of these other places who are doing similar work.

Mr. DIENNER. I wish you would discuss briefly the concept that there are certain complex problems which are encountered in your system which are of such extensive and difficult character that they would be totally unable to be solved, except by coordinated effort of a number of men.

Dr. JEWETT. Well, of course, Mr. Dienner, that is true of the great bulk of the more fundamental problems which we are confronted with. Specifically let me take the case of transcontinental telephony, which was a big problem 20 years ago. It is just inconceivable that that problem could have been solved by any haphazard approach by individual attack on the thing. It was a thing which had definite objectives, simple objective, yes. When you came to analyze what needed to be done to project the art which now enables you to talk from here to here over to this point, find out what had to be done, you found the solution of this problem required the solution of a very large number of problems in widely unrelated fields, and the only way the main problem could be solved would be for us to attack all of these problems with a frontal attack, with expert knowledge in each company, which was on the attacking front, and when they had solved their things, bring them together into the common answer. That is the process which is used in all laboratories in all fundamental work, and there are many things in every field, not only in our business, but everywhere else, which in the present state of the science can only be solved within a reasonable time by cooperative action of people who are skilled in different techniques and arts.

The same thing is true, even more true, of this development of recent years with us by which we put 10 or 15 or 20 telephone conversations on a single pair of wires in our endeavor to get enough circuit so you can do this with no delay service; all tied up. It just could not be done except by a cooperative operation under control.

OPPORTUNITY FOR INDEPENDENT INVENTORS

Mr. DIENNER. I would like to ask you one important question. You are convinced of the necessity for research in large organizations of scientists in order to attack the complex problems. Do you see any room that is left for the independent inventor with those research organizations working?

Dr. JEWETT. Absolutely. I heard some of the testimony yesterday. I do not agree with some of it. I think that there are certain sectors where the independent inventor cannot operate; he never could, cannot now, and never will be able to operate. There are certain sectors, which I tried to indicate in my answer to the judge over here, the very fundamental things where I think the chances-in our case it happened to be 2 out of 3, I think in the majority of cases, the fundamental idea, the chances are 10 to 1 they are going to come from outside big laboratories simply because of the nature of the things. They are a creation and brain child of particular individuals who have that capacity and knowledge and heaven knows we cannot collar them all, even if we wanted to.

Now in the other sector where the independent inventor has operated, I think that instead of being restricted the opportunities are increased because every invention which we or anybody else makes, or every publication of new results which we make, gives 10 jumping-off places to one that existed before. When it comes to those things which are kind of peculiar to the nature of your business, where intimate knowledge of the day-by-day affairs are concerned, the outsider just cannot possibly know about that, and there is no way of doing it. We tried one time years ago, when M. I. T. set up a scheme 'way back in Mr. Vail's time, of trying to do some industrial development as a part of their teaching tools, to give them some problems and it just was a physical impossibility to do it because you could not set up the mechanism which enabled a bunch of people over in Cambridge, Mass., in an educational institution to have the intimate contact with the problems we will say of the Western Electric Co., at Hawthorne, Ill., or the telephone company out in the Senator's State.

There are certain kinds of things that have to be done inside the business.

Mr. DIENNER. Mr. Chairman, I have no further questions to ask the witness, and unless he has something further to say or the committee wishes to inquire further, I should be glad to have the witness released.

The CHAIRMAN. It is now after 4 o'clock and coming to time for recess. Are there any questions to be asked by any members of the committee? Dr. Lubin? Admiral Peoples? Mr. Williams? Representative WILLIAMS. I have none.

The CHAIRMAN. Judge, you have completed your questions?

Mr. DAVIS. I have nothing except, Mr. Chairman, I should like to suggest, with the permission of the committee, that Dr. Jewett, in making the reply and giving the information you called for, also advise the committee whether the Western Electric Co. makes available for purchase by independent companies those long-term tubes.1

Dr. JEWETT. Will you limit it to "makes available in some fashion, either by purchase or rental?"

1 See letter from Dr. Jewett to Senator O'Mahoney under date of January 24, 1939, which was entered in the record as "Exhibit No 244" at hearings held February 8, 1939, and included in the appendix on p. 1158.

Mr. DAVIS. Yes.

Dr. JEWETT. The reason I say that, Judge, I think there are quite a lot of arrangements with these connecting companies by which, at least in the past, certain things of our manufacture which are used generally in the Bell System have been rented to the connecting company by the local company, rather than sold.

Mr. DAVIS. Make available for use, and also whether they are of the same quality as those you describe.

Dr. JEWETT. They will be the same quality. I can answer that question right now.

Mr. DAVIS. The reason I ask that, Doctor, is because you made the remark in the course of your statements that they made available to them such as were needed for their purposes.

Dr. JEWETT. For what other reason would they want to have them? Mr. DAVIS. I thought your company might happen to have some views on what they needed, from that remark.

Mr. JEWETT. I didn't intend to convey that idea.

Mr. DAVIS. If it is other than purchase, I should suggest that you state in your reply the terms upon which they are made available.

Dr. JEWETT. May I make just a statement, a sort of confession of faith, which I would like to lay before the committee? I indicated at the beginning that I have had some interest in this whole patent history and system from a philosophical standpoint. It was intensified by my having been a member of the science advisory board. I think it is a wonderful thing. I don't think there is any question about it. I am not very much concerned, as a user of the system, with the mechanisms, changes in the mechanisms, the procedural changes, which ought to be reviewed from time to time, and have been reviewed by the Congress ever since the first laws were passed. But I would be very much concerned if anything was contemplated which struck at the roots, the fundamentals, of the system itself, and it would seem to me from some of the questions which were asked and answered here yesterday as though there is a thought that it is the inventor and what he gets from the Government which is the principal concern, whereas, I have always conceived that nothing is taken from the public domain. when an invention is made; something is added to the public domain That is what an invention is, and the public is willing to pay a price to have that thing done, and it is to the public interest, it isn't in the interest of the A. T. & T. or of F. B. Jewett or anybody else; it is in consideration of those possible changes which affect modern procedure. We don't want to give too much consideration to inventors, it is the public that should interest us.

The CHAIRMAN. In view of what you have said and in view of the testimony which was given here this morning by Mr. Flanders with respect to inventions in the machine tool trade would it be proper to summarize by saying that as through the years inventions have been made and have become public property, thereby increasing the domain of public knowledge, it has become more and more necessary for cooperative and collective action to make the new pioneering efforts which are necessary to extend human knowledge beyond the present frontiers of knowledge?

Dr. JEWETT. I think that is right, Senator, and I would add one more thing. What I have heard in the last 2 days and what we have talked about today has been civil stuff, principally. There are many

things in this world which are needed in the national defense which can only be done on a huge scale if they are going to be done at all, and so long as there is the element of war still in our presence, and so long as these people with whom we may be at war don't have the same concept of doing things that we do, so long as they are willing to set the thing up to do it on a huge scale, to me it would be suicidal for us, as a matter of public policy, to take any step which would tend to diminish our ability to do things wherever they have to be done in the huge way that may be required. There are many things in every domain of applied science that you can find where they simply can't be done, or can't be done economically, except on a huge cooperative basis.

The CHAIRMAN. And as you stated in the early part of your testimony this afternoon, they cannot be done without planning.

Dr. JEWETT. That's right.

The CHAIRMAN. And without making the production or the manufacture of devices subordinate to the uses to which they were to be put, and as you stated in closing your testimony, these extensions of human knowledge are to be accomplished by cooperative actions of groups under control. I think I quoted your exact language. My attention was called to the word "control" because in recent years there has been a good deal of tendency in some quarters to criticize that idea of control.

Dr. JEWETT. I would like to add just two more things which have occurred to me. One seemed to be from some of the questions I heard answered yesterday that the only way of extending the benefits of a patent to the public was through licenses. Now, I can conceive of hundreds and hundreds of cases where the maximum benefit to the public would be in the dissemination of the thing covered by the patent without extending the license to anybody. That is one thing. The CHAIRMAN. One question, of course, which reasserts itself over and over again in any consideration of the patent system is the effect of patent pools and cross-licensing of patents. Would you care to make any comment upon that?

Dr. JEWETT. Of course you are getting somewhat outside of my field, but I have this picture, Senator. A patent, to me, a patent property, is a temporary form of real property which has limited life, it is limited to whatever the state says it shall be limited to; it is the most fragile kind of real property that there is because its value may be destroyed overnight and you may have a perfectly valuable 'patent today, I come along tomorrow and all your work goes out. Beyond that when it comes to the use which you make of our real property, whether it is a patent or any other kind of thing, the same laws apply to it, and the only difference between the two things is that this is a very limited kind of real property. Now, you wouldn't allow me to go out and buy up all the cows in the United States and monopolize that.

The only other thing, Senator, and then I am through with the thing, apropos of what Coolidge said yesterday about publication. We all do it. Patents are only one form of publication. The Bell Laboratories ever since it was organized in 1925-and I am not sure but what it was before that-has done this; the Bell System gets out a technical quarterly called the Bell Technical Journal. It is a highly scientific magazine about the size of Harper's Magazine;