This action was rationalized by the departure of so much of the work force to Europe to fight the war, concern over the deterioration of the service, and fear of spies. The USG agreed, during hostilities, to assume responsibility for AT&T's debt and maintain AT&T's historic shareholder dividend. AT&T's management would remain in place and continued operational control of the company.
USG control of the telephone services went, according to reports, poorly. The Postmaster quickly realized the complexity of the electronic communications network. In order to maintain the operations of the network, the Postmaster raises telephone rates, something AT&T had been repeatedly sought and been denied before state commissions. One year later, after the cessation of hostilities, control of the telegraph and telephone networks were promptly returned to private hands.
By the President of the United States of America
July 22, 1918
Whereas, the Congress of the United States, in the exercise of the constitutional authority vested in them, by joint resolution of the Senate and House of Representatives, bearing date July 16, 1918, resolved:
That the President, during the continuance of the present war, is authorized and empowered, whenever he shall deem it necessary for the national security or defense, to supervise or to take possession and assume control of any telegraph, telephone, marine cable, or radio system or systems, or any part thereof, and to operate the same in such manner as may be needful or desirable for the duration of the war, which supervision, possession, control, or operation shall not extend beyond the date of the proclamation by the President of the exchange of ratifications of the treaty of peace: Provided, that just compensation shall be made for such supervision, possession, control, or operation, to be determined by the President: and if the amount thereof, so determined by the President, is unsatisfactory to the person entitled to receive the same, such person shall be paid 75 per centum of the amount so determined by the President and shall be entitled to sue the United States to recover such further sum as, added to said 75 per centum, will make up such amount as will be just compensation therefor, in the manner provided for by Section 24, Paragraph 20, and Section 145 of the Judicial Code: Provided, further, that nothing in this Act shall be construed to amend, repeal, impair, or affect existing laws or powers of the States in relation to taxation or the lawful police regulations of the several States except wherein such laws, powers or regulations may affect the transmission of Government communications or the issue of stocks and bonds by such system or systems.And, whereas, It is deemed necessary for the national security and defense to supervise and to take possession and assume control of all telegraph and telephone systems and to operate the same in such manner as may be needful or desirable:
Now, therefore, I, Woodrow Wilson, President of the United States, under and by virtue of the powers vested in me by the foregoing resolution, and by virtue of all other powers thereto me enabling, do hereby take possession and assume control and supervision of each and every telegraph and telephone system, and every part thereof, within the Jurisdiction of the United States, including all equipment thereof and appurtenances thereto whatsoever and all materials and supplies.
It is hereby directed that the supervision, possession, and control and operation of such telegraph and telephone systems hereby by me undertaken shall be exercised by and through the Postmaster General, Albert S. Burleson. Said Postmaster General may perform the duties hereby and hereunder imposed upon him, so long and to such extent and in such manner as he shall determine, through the owners, managers, board of directors, receivers, officers, and employees of said telegraph and telephone systems.
Until and except so far as said Postmaster General shall from time to time by general or special orders otherwise provide, the owners, managers, board of directors, receivers, officers and employees of the various telegraph and telephone systems shall continue the operation thereof in the usual and ordinary course of business of said systems, in the names of their respective companies, associations, organizations, owners, or managers, as the case may be.
Regular dividends hitherto declared, and maturing interest upon bonds, debentures, and other obligations may be paid in due course; and such regular dividends and interest may continue to be paid until and unless the said Postmaster General shall, from time to time, otherwise by general or special orders determine, and subject to the approval of said Postmaster General, the various telegraph and telephone systems may determine upon and arrange for the renewal and extension of maturing obligations.
By subsequent order of said Postmaster General supervision, possession, control or operation, may be relinquished in whole or in part to the owners thereof of any telegraph or telephone system or any part thereof supervision, possession, control or operation of which is hereby assumed or which may be subsequently assumed in whole or in part hereunder.
From and after 12 o'clock midnight on the 31st day of July 1918, all telegraph and telephone systems included in this order and proclamation shall conclusively be deemed within the possession and control and under the supervision of said Postmaster General without further act or notice.
In Witness Whereof, I have hereunto set my hand and caused the seal of the United States to be affixed.
Done by the President, in the District of Columbia, this 22d day of July, in the year of our Lord 1918, and of the independence of the United States the 143d.