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user. They secured the patents and kept them out of use. The court held they had a perfect right so to do. (U. S. v. Bell Telephone, 167 U. S. 224.)
Senator Dill. There is not any such law now, but I am asking you if such a law would be constitutional.
Mr. BURKAN. Congress has no such power, because the framers of the Constitution were careful to fix the price in the Constitution itself. They fixed the price by saying “exclusive right”; then they were careful to prevent Congress from giving somebody an absolute monopoly in a trade by adding " for a limited time." The word “exclusive" at that time meant the right to exclude all the world from using that which you have created. The inventor gets nothing from the law that he did not have before, and the only effect of his patent is to restrain others from dealing with or using his device (United States v. Shoe, 247 U. S. 57). If Mr. Buck writes a piece of music, he creates it. It is his labor, his effort, and his skill. Congress does not create it. It is his property; he can take that manuscript to a radio broadcasting station and sing it into the microphone. No other station can use it. That is his common-law right. But the people of the United States would like to have Mr. Buck at some time or other publish it so that the people might become the owners of it. So Congress says, “Mr. Buck, we will make an agreement with you. If you will agree to deposit in the Library of Congress a copy of that sheet of music, we will exclude all the world from using it for 28 years upon condition that at the end of the 28 years it becomes ours.” That is all copyright
You have no power to do otherwise. I have also pointed out that there is decision after decision holding that a court is not bound as precedent by an erroneous decision. I also showed that in the Trade Mark Cases Congress passed an illegal copyright statute; under the guise of copyrights and patents it was sought to protect trade-marks; the Supreme Court nine years afterwards declared that act unconstitutional.
I also argued yesterday that Congress may appropriate for public uses private property only under due process of law and upon the payment of just compensation, and that that is a judicial question. The reason for that is to protect private property and private parties from an appropriation of their property in the manner sought to be done here, without judicial inquiry, without production of books, papers, and records, without parties submitting to direct and cross-examination under oath. Somebody says, “ Here is a price I have computed and you put it into the law.”. Do you not think that is confiscation? Do you think that is a fair way to determine the value of property? Here is an industry which concededly out of the sale of radio products alone grossed $450,000,000, and they say that 90 per cent of the productiveness of that $450,000,000 was due to music; and then when the representative of the American Telegraph & Telephone Co. is asked by a member of the committee to state the profits from its stations, their receipts, and the cost of operation, he states, “I prefer not to answer."
When the New York State Legislature passed an act with respect to telephone rates—and it had the right to pass such an act, because
the telephone is a public utility--the telephone company challenged the rate. The court said: “ The legislature had power to pass the act, but we are now going to determine whether or not it is confiscatory." In court the telephone company produced its books and records, and showed it was not getting a reasonable return upon its investments, and thereupon the law was declared unconstitutional.
Now, what right have you to confiscate our property in the fashion attempted here. The Supreme Court has held, even in the case of concededly public utilities operating under a franchise from the United States Government (where Congress has the undoubted power to appoint a commission to determine the rates) that that commission operates as a judicial body, exercising judicial functions, and must pursue its inquiry to fix the rate in accordance with judicial procedure.
If you want to fix a rate, assuming you have the power so to do, these corporations, the American Telegraph & Telephone Co., the Radio Corporation of America, the Westinghouse Co., the General Electric Co., and all the others involved, must appear before a judicial body, produce their books and records, and lay before it the cost of operation, expenditures, receipts, and profits connected with broadcasting
Senator Dill. If we get the new radio bill passed, they will.
Mr. BURKAN. The new radio bill is not going to help this situation. Solicitor Davis admitted that the bill passed in the House does not give the Government the power to regulate their prices at all—the rates and prices broadcasters shall charge for their service and facilities.
Senator Dill. The bill may be different when it gets in the Senate.
Mr. BURKAN. I hope it is, for the benefit and protection of the American people.
The use that has been made of that instrument by the American Telegraph & Telephone Co. in hooking up 16 stations ought to be a warning to you gentlemen of the danger in permitting these people to operate these stations without restriction. You are giving them free rein in the use of a very dangerous instrument. While to-day they are supporting your bill, to-morrow they may oppose your candidacy, and you have no way of retaliating.
Senator DILL. I suspect they will.
Mr. BURKAN. Now, it is not an answer for them to say, “Well, we have not made any money during the last year and therefore we ought not to pay.” The evidence shows, and I have read it into this record, that Mr. Sarnoff, of the Radio Corporation of Americaand I wish to pay him every tribute of respect, because that gentleman at every hearing has been honest, straightforward, and truthful; he has never dodged or sidestepped, or evaded any question put to him. He told the committee on radio control that the reason he broadcasts is because it enables him to sell his product; that radio devices get out of order, people want new devices or new sets, tubes, and replacements. So long as broadcasting continues business is promoted and stimulated. He stated that part of the price charged for the article is for this service. Broadcasters are not philanthropists, are not doing it simply in the public interest. It is purely in the interest of business to promote and stimulate the sales of their
products. Sarnoff declared to the committee, “We are not philanthropists at all; we are broadcasting because a receiving set without broadcasting is like a refrigerator without ice.” Now, I like that sort of testimony. I like that sort of man. He did not try to deceive the committee. He did not stand up there and say, "We did not make any money out of broadcasting, and we are doing this in the public interest solely."
Senator DILL. Do you not think it is better to pay for broadcasting indirectly in that way than put a charge on the listener?
Mr. BURKAN. Do you not know what they are doing now? Do you not know that they testified before the Committee on Radio Control that they are working upon wired wireless” now. Solicitor Davis said that it was a probability. Do you now know that "wired wireless ” is served through the medium of wires ? When they have that thing perfected, if you pass the bill and fix the rate, every man is going to have a little machine in his home where he is going to drop a nickel in a slot or pay for the service as a part of his regular bill and in that way get him to pay for his entertainment. Let us not be deceived by this general talk.
“Wired wireless" is coming, and when it is perfected—and it is only a matter of days—every listener in in America is going to pay, and do not be deceived by this claptrap. They are working on that now and they have been doing that for a long time, and they are experimenting at this very minute on Staten Island.
Senator Dill. Has it occurred to you that the Government, having the power of license, can control that whole situation?
Mr. BURKAN. Whether they can or not, I am going to. again repeat what I said yesterday. If the United States Government will take over the operation of these broadcasting stations, we will do something in the public interest-we will give to the American people our songs free. We are just as patriotic as they are, but as long as these men are going to operate these stations for profitfor commercial purposes we are going to charge. In justice, fairness and in equity we are entitled to bargain with them just as they bargain with a man who comes to their stations for service and says, “I want time on your stations, and they reply, “$600 per hour.” Congress does not tell them they must accept but $20 an hour. Not only that, but if you offer them $600 an hour they may or may not accept it. They do not grant the service to everybody, nor make it available to all.
Before the committee considering radio regulations in the Senate, Senator Dill, you sat on that committee—there was testimony that broadcasters have refused, time and again, to make stations available to various people who wanted to pay for the time, and who desired to speak on subjects of public interest.
Mr. BURKAM. Listen to this. Mr. Harkness testified on radio regulation before the House committee, as follows:
Mr. Davis of Tennessee. Now, do you assume the right to reject applications for service?
Mr. HARKNESS. We do.
Mr. Davis of Tennessee. And in actual experience, have you had occasion to reject a great many?
Mr. HARKNESS. Yes; I can say frankly we have, because we take the same position that is taken by the editor of any publication. He has the right to accept or reject any material presented to him.' You can not walk into a newspaper office to-day and get them to publish anything you care to present. We felt that was a privilege which the owners of the broadcasting stations also possessed.
Mr. LARSEN. How do you regulate that; do you require them to reduce it to writing? Mr. HARKNESS. Yes. Mr. LARSEN. And you censor that?
Mr. HARKNESS. We do just the same as an editor would do with any article presented to him for publication. We do not censor—we edit. We feel if the matter is unfair or contains matter which the public would not care to hear, we may reject it.
So Mr. Harkness, who undertakes to write a bill for the American people fixing a price for the composers' songs, also undertakes to determine what is fair or unfair for the people of the United States to hear; and so, in time, the American Telegraph & Telephone Co. is going to tell us what we are to have as breakfast food, what clothes to wear, and what political beliefs to entertain. The most solemn obligation you owe to this Nation and to yourselves is to control and regulate this instrument by strict Government regulation, taking away from them the power to make and unmake or destroy.
The manner in which radio was used to influence this bill is but a feeble illustration of the dangerous power they possess; they reach every home, every schoolhouse, every barn, everywhere. Mr. Harkness, of the American Telegraph & Telephone Co., is the one who can determine what is fair or unfair, and he reserves the right to see your speech in writing before you deliver it.
Suppose Gene Buck has desired to go on the air and to present his side of this question, do you believe the American Telegraph & Telephone Co. would have allowed him to deliver such a speech? Would they allow me to deliver a speech on their 16 interconnected stations? Why, they would choke me off. I could talk and keep on talking, but not å word would go to the listeners-in. Let us be fair about this matter, and assuming you have the right to fix prices, let them produce their books and records. You are going to be staggered at the profits this industry has made in the last year. They have taken in $600,000,000 directly and indirectly from the operation of radio. They say that 90 per cent is due to what we have created; all they have paid us is $113,000, and they even begrudge us that amount.
Senator Dill. Now, Mr. Burkan, you want to be fair-
Senator Dill. But you do not want the record to show that you say that this $600,000,000 came to the broadcasters. They have only invested a few million dollars.
Mr. BURKAN. Came to the broadcasters? Is there any doubt about it? I am going to convince you I am right in what I say.
Senator Dill. Take, for instance, the newspaper radio stations of the country and also the department store stations
Mr. BURKAN. They are drops in the bucket. Let us be fair about it.
Senator Dill. They are all we have in the Northwest.
Mr. BURKAN. Now, let us see what you have and let us see what they are getting and what they are doing. I am talking on this
question because it is the duty of the legislature, when a bill is presented, not only to ascertain the mischief that compels the legislation but also its tendency, effect, and purpose. That is your solemn duty, and I am here to hedp you in the performance of that duty.
Broadcasters get up before you and say, “Our radio broadcasting station is not making any money.” That is the most ridiculous and the most senseless argument ever presented to a body of intelligent men. We know that is not so. The test for the determination of the question whether a given activity of a business is prosperous is by taking into account all the other activities of the same business and ascertaining the real and normal relation of the particular activity to all the activities of the business. Great transcontinental railways maintain dining rooms in various stations; some of them maintain and operate hotels; nearly all maintain dining-car service, and we know that in a great many instances they lose from such operations. Can they come to you and ask for a subsidy upon the plea that they are losing from this or that particular operation ? But the test is, What is the real and normal relation of the losing activity to all the activities of the particular railway company? What is the normal and real relation of Station WEAŤ broadcasting station to all the operations of the American Telegraph & Telephone Co.? I am going to concede that Station WEAF is losing money; I am going to concede it is always going to lose money; but what is the normal and real relation between that station and all their activities?
In the first place they have land wires that do good business during the day, but the nights are the slow periods. So they hook up 16 interconnecting stations and they get now $3,750 per hour, and reducing that by the discount they get at least $2,750. That charge will prevail so long as there is competition, but when the competition is over and when they control all the stations it is going to be $5,700 per hour.
This is only one activity. Then there is the Western Electric Co. We all know that company is a subsidiary of the American Telegraph & Telephone Co. They own it outright, body and soul. What is the business of the Western Electric Co.? Under this pooling combination or arrangement they made in 1919 or 1920 with the Radio Corporation of America, the Westinghouse Co., the General Electric Co., the Western Electric Co., or the American Telegraph & Telephone Co. has the exclusive right to make and sell broadcasting transmission apparatus. Is there any profit out of that activity? Does the company earn a profit out of the use of the land wires ? Has it not been shown here that even when they broadcast a speech by the President of the United States in the interest of the public they make a very substantial charge. You would think they would lend their wires to that purpose gratis, because it is really in the public interest to broadcast the President's speech. The public likes to hear from its President. When it hooks up its wires for the purpose of having the people hear Vice President Dawes's speech of acceptance, which is also a matter of public information, does this great philanthropic company put its wires to this use for nothing? It certainly does not.
There is unchallenged and uncontradicted testimony given at the hearings on the radio control bill before the Interstate Commerce