outside, that is the vacuum tube type of thing which came clear from outside.

The second one, technically, according to the rules of the game, came from the outside, although that decision was the result of a long carried-out contest between a man on the inside and a man outside. between Pupin and George Campbell, but the result is that Pupin slightly ante-dated Campbell so two came from the outside. The third came from the inside.

Mr. DAVIS. Of course, the Pupin patent on the loading coil is one of the fundamental patents.

Dr. JEWETT. That is one of those I consider fundamental.

Mr. DAVIS. And the courts held that was a valid patent.

Dr. JEWETT. They held it was a valid patent and Pupin rather than Campbell was entitled to be considered the inventor.

Mr. DAVIS. What was the third?

Dr. JEWETT. The third is what is known as the filter patents, the wave filter patents which have made possible practically all of radio telephony and much of the carrier current type of stuff which we do, which was an invention of the same George Campbell. It was the result of a high line mathematical attack on the whole problem of transmission of high-frequency currents over circuits.

So that out of the three things which I picture as fundamental patents, one certainly came from the outside, a second one came from the outside although it came almost simultaneously from the inside, and the third came from the inside.

Mr. DAVIS. The telephone receiver was a fundamental patent, wasn't it?

Dr. JEWETT. Of course, that goes back to Bell's time.

Mr. DAVIS. And that was a Bell patent.

Dr. JEWETT. There wasn't any "inside" then.

Mr DAVIS. I know, but I want to follow my line of inquiry. Now the transmitter, that didn't originate in the laboratories of your company, did it?

Dr. JEWETT. The fundamental idea of the transmitter?

Mr. DAVIS. That was originated in '78 by Berliner, was it not? Dr. JEWETT. The fundamental idea of the transmitter is covered by a Bell patent. The particular form of microphonic transmitter is claimed by Berliner and Edison and others. I don't know who they

were.

Mr. DAVIS. Of course recognizing the fact that you have been describing for some time, that refinements have been made, and we assume improvements, no doubt, I am talking about the fundamental patents, the key inventions, the principles involved, and all of these subsequent developments have simply been a development or improvement or refinement of the same key invention.

Dr. JEWETT. No; I certainly wouldn't agree with you on that, but I am perfectly willing to agree, if you like, that many of the things which came into the telephone business in the first 10 years of its life, 15 years, inevitably came from the outside. It was a little bit of a thing, there wasn't much inside. When it comes to the period of the last 25 years, there are only three of these things.

Mr. DAVIS. Are those key inventions, or refinements of them, still under patent control?

Dr. JEWETT. I don't know about the filter patents, I don't know how they stand because I have forgotten the age of them, but the

fundamental Pupin patents and the fundamental DeForrest patents

have expired.

Mr. DAVIS. But there are still patents on refinements.

Dr. JEWETT. Oh, unquestionably.

Mr. DAVIS. Well, how about the transmitter and receiver?

Dr. JEWETT. The same thing there.

Mr. DAVIS. One of them originated in '76 and the other in '78. Dr. JEWETT. The same is true of everything, Judge.

Mr. DAVIS. Is anybody manufacturing telephone apparatus in the United States to any degree except the Western Electric?

Dr. JEWETT. Oh, certainly, and there are a lot of transmitters and receivers that are being manufactured which are quite free from any Bell patents that may exist at the present time. That art is so old and so wide open that there is no control from the Bell system on that thing except insofar as specific adaptations and modifications are concerned. The Kellogg Co., Stromberg-Carlson, and a lot of people are making transmitters, and so far as I know they or anybody else can make pretty good microphonic transmitters without by your leave from the Bell system at all.

Mr. DAVIS. You mean for general telephone use?

Dr. JEWETT. Sure.

Mr. DAVIS. I didn't know that.

Dr. JEWETT. The art is like making agricultural apparatus. The fundamental patents on some of the Deering or McCormick stuff have run out, but those companies have probably got a lot of patents on detailed improvements of the stuff, but still there are other people making agricultural apparatus.

I don't see how you can escape that sort of a situation. If you go on in a continuing art, you will have these subsidiary patents, and so long as they pertain merely to improvements, until something fundamentally new comes along, while they may increase in number as the years go by, in value they tend to decrease because they pertain to more and more minute things. Of course when somebody comes along-take the telephone transmitter, if some fellow comes along now with an idea of a transmitter which is other than a microphonic transmitter, which is as good or better than a microphonic transmitter, he has then a fundamental idea with regard to transmitters.

The CHAIRMAN. But the original ideas on which the system was founded and built up are now open to the public?

Dr. JEWETT. Certainly. Bell's patents expired years ago.

The CHAIRMAN. But there are still in existence patents upon improvements which are substantially as effective in maintaining the strong position of the Bell system.

Dr. JEWETT. No; I don't think so, and I don't think the position of the Bell system is maintained by patents at all at the present time. The CHAIRMAN. What maintains it now?

Dr. JEWETT. I think the thing that maintains the Bell system is the fact I think it would be maintained as it is if there were no patents. because of the fact that it is one of those few things which people have recognized as a natural monopoly. We tried in this country and tried in every country to work on a different basis and they have all come to this thing. That doesn't mean it is a monopoly that has to be run by one person, but rather telephony as it exists is a monopoly for the agency operating it.

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.'

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.