Great Behn Design

When U.S. telephone subscribers ask for West 4251 and get East 4391, they slam down indignant receivers and call the New York (Boston, Denver, Los Angeles, Savannah) telephone system the worst in the world. Of course they really know that the U.S. telephone system is the best in the world. And if they have tried to use South American telephones, they realize the shocking extent of their exaggeration.

For south of the Mexican border, Latin American telephone systems are now on a par with the U.S. systems of 30 years ago. Some of their equipment actually dates from that period. Important cities have no direct links; rural telephones scarcely exist. Around each densely settled community is spun a small network of telephones, having no relation to neighboring networks. In all Latin America, there is less than one telephone for each 100 inhabitants. The present U.S. ratio is 16 to 100.

Reasons for laggard Latin American communications are 1) lack of capital; 2) lack of initiative, and 3) lack of imagination. Notoriously well-supplied with all three of these desirable attributes are U. S. communication companies. An enterprising executive, therefore, might well ask himself this question: Why should my company not invade this deplorably backward continent, consolidate its scattered, ineffective companies, modernize its lines, link its capitals?

Last week, it became apparent that such an executive had both asked and answered such a question. The executive was Col. Sosthenes Behn. His company was the 8-year-old International Telephone & Telegraph Corp., which last week announced plans to pay $60,000,000 for the British-owned United River Plate Telephone Co., serving 185,000 subscribers in Buenos Aires and four Argentine provinces.

By this purchase, Col. Behn drew into I. T. & T.'s system the second largest telephone company in South America. British stockholders recalled, last week, that he had already gained control of the third largest (Chile Telephone Co.) and fourth largest (Montevideo Telephone Co.), both wrested from British interests. Last June, I. T. & T. celebrated an extraordinary feat. Fighting snowstorms, landslides, it had flung its telephone lines across the 13,000-ft. Andes, linking Valparaiso, Buenos Aires, Montevideo.

Col. Behn's great design thus became obvious to the most casual observer. I. T. & T. cables stretch to the west coast of South America. Here they connect with the trans-Andean cable and telephone lines. And these lines in turn connect with the domestic telephone systems of Chile, Uruguay and now, Argentina. Thus a fast message may be relayed from New York to a house in the suburbs of Montevideo without once leaving I. T. & T. wires.

Only one major South American telephone company remains outside I. T. & T. control. Canadian-owned, this company operates from Rio de Janeiro, is the largest on the continent. It would be rash to forecast the plans of silent Col. Sosthenes Behn. But no one would be surprised if the next purchase by I. T. & T. carried its network into Rio de Janeiro.

To finance its purchase, I. T. & T. announced an issue of $57,300,000 ten-year, 4 1/2% gold debenture bonds, convertible after July 1, 1929, into I. T. & T. common stock. Heading the banking syndicate will be, of course, I. T. & T.'s early friend and first banker, the great house of J. P. Morgan & Co.