Part 4

The estimated cost of a line from Fort Lee on the Hudson to Philadelphia was $15,000--a modest sum to ask of the great city of New York, but the men of capital looked over their immaculate collars at the ticking machinery, and into the faces of the hungry exhibitors, and up at the wire straggling among the chimney pots, and then down at the meagre furniture, and said “No;” each man feared to be the first fool. But what capitalists would not do, humbler men did.

One of the first men in New York to invest his money in the new device was the keeper of an eating-house on Nassau Street, and who afterward became one of the directors.

The money needed was finally raised, but chiefly outside of New York. It was provided in this original subscription that the payment of fifty dollars should entitle the subscribers to two shares of fifty dollars each.

A payment of fifteen thousand dollars, therefore, required an issue of $30,000 stock. To the patentees was issued an additional $30,000 stock, or half of the capital, as a consideration of the patent; the capital was, therefore, $60,000 for the first link.

Trustees were appointed to hold the patent rights and property until the organization was effected.

The incorporators were:--

S. F. B. MORSE, B. B. FRENCH, GEO. C. PENNIMAN, HENRY J. ROGERS, JOHN S. MCKIM, J. T. TRIMBLE, W. M. SWAIN, JOHN O. STERNS, A. SYDNEY DOANE.

“THE MAGNETIC TELEGRAPH COMPANY.”

Early in November, 1845, the line was first opened between Philadelphia and Norristown, Pa. distant 14 miles, so as to gratify public curiosity, while the building was going on beyond. This was completed to Fort Lee on January 20, 1846, and from Baltimore to Philadelphia, June 5, the same year.

No attempt was made for a long time to cross the Hudson.

In April, 1850, two gutta percha covered wires were submerged at Fort Lee, which for a time did good service. Shortly after the formation of the Magnetic Telegraph Company (the Pioneer Telegraph Company in America), numerous organizations followed. In 1859, the company amalgamated with the American Telegraph Company.

THE WESTERN UNION TELEGRAPH COMPANY AND ITS ORIGIN.

In April, 1854, a combination was agreed upon between the Erie and Michigan Telegraph Company and the New York and Mississippi Valley Printing Telegraph Company. The united capital being $500,000 under the name of the Western Union Telegraph Company, by an act of the legislature of Wisconsin, dated March 4, 1856, and of the State of New York, of April 4, 1856.

The following year the Michigan Southern Telegraph Company was added to this combination.

The headquarters of the Company were at Rochester, N.Y. Other companies joined the united companies and the Western Union found it necessary to transfer its headquarters to New York, but the most notable of these consolidations took place in 1866, when the United States Telegraph Company, as well as the American Telegraph Company, joined forces with the Western Union, thus virtually embracing the entire telegraph business of the country.

In this year the capital was readjusted and appointed to the various interests forming the Western Union combination.

Soon after the union of the many conflicting telegraph interests had been effected, and through fear of a burdensome monopoly, a move was made towards the nationalization of the telegraphs. As a matter of course, this was strenuously opposed by the telegraph company’s representatives, and public sentiment was with the company.

Although politicians as a rule were favourably inclined to such a step, the majority of the people were against it, or indifferent, with the result that the movement dropped out of view, and has so far as known never been revived up to this period.

In telegraph operations little attention had been given to electricity as a science in America. Any improvements which had been made in connection with telegraphic appliances, except in repeating appliances, were of a comparatively trifling and unscientific character.

Marshall Lefferts had done much to show the value of statistics, and had laid down important ground work for systematized and scientific methods; he had even introduced some of the electric tests by which the telegraph wires afterward became so potential, but no clearly defined system had been in practice.

The battery man still multiplied his cells, emptied his carboys of nitric or sulphuric acid, and bathed his zincs in mercury, to raise the telegraphic steam; the patient operator turned and returned during the long hours of the weary nights the spring of his relay, to catch the erratic movements of the armature as it vibrated before the changing currents on the line.

Cromwell Varley, a well-known electrician whose accomplishments as a gentleman of education as well as a scientist had preceded him in the frequent appearance of his name in the records of scientific investigation, had arrived in New York. Mr. Orton, at this time the President of the Western Union Company, invited Mr. Varley to make a thorough investigation into the condition of the lines and apparatus owned by the Company.

The report made by Mr. Varley, minute and exhaustive, revealed a startling condition of things--half of the wires were found to be practically unavailable.

The best wires in the service showed a resistance far above the proper standard.

A popular relay was found to have a resistance equal to one hundred miles of number 8 wire, the use of which was choking the most important circuits.

The chief value of Mr. Varley’s report, indeed was in giving a practical illustration of the immense value of a scientific electrical training.

The electrician now came to be an important factor in American telegraphic work.

To this report also may be fairly traced the beginning of a series of improvements and inventions which have made famous the American name.

By removing the obstructions to the electric current and reducing resistances in wires, magnets and batteries to a minimum, the great possibilities of the wires were discovered in accomplishments which were never dreamed of.

The duplex and quadruplex are great advances on the old condition, and would have been inoperative had they continued.

The visit of Mr. Varley had another result--the consolidation of so many important organizations under a single administration had unavoidably brought together more or less discordant elements; each company had its own peculiar methods, ideas of management, limitations of authority, rules of order, etc., as well as of tariffs and compensation. It was of the utmost importance that, in order to unity of management, distinct and clearly defined ideas of duty should be made to permeate the entire working force so as to make conflict impossible, and work quick, certain, harmonious.

It was scarcely less desirable also, now that the value of electric knowledge had been demonstrated, that by some means its attainment might be rendered easy and general, and a stimulus given to its acquisition. Under these circumstances Mr. Orton established the journal of the telegraph, and its usefulness soon became apparent; its clippings from the scientific journals of European and Home papers on electric art soon came to be the theme of almost universal interest.

A copy of this paper was mailed to every office of the Company as soon as issued. It became not only the vehicle for executive orders for the announcement of new offices and of changes in the tariff, but imperceptibly, yet markedly, the means of infusing an “esprit de corps” and sense of brotherhood throughout the telegraph service.

At the solicitation of Mr. Orton, Mr. James D. Reid accepted the management of the journal of the telegraph, by whom it was admirably conducted for a number of years, with the praiseworthy results previously noted.

In view of the recent boundary arbitration between the United States and Great Britain, it may be interesting to recall the circumstances which led the American Government to become interested in Alaska as a connecting link in a telegraph project, to connect Europe and America by land wires.

When, in 1858, the Atlantic Cable proved a failure, and was looked upon as an utter impossibility, a Mr. Collins, the American commercial agent resident at St. Petersburg, proposed to construct a line of telegraph overland from the United States (via) Behring Strait and Asiatic Russia to Europe.

Perceiving the importance of the project, Mr. J. Cochrane, a member of Congress and of the Committee on Commerce, reported to that body on Feb. 18, 1861, a bill appropriating $50,000 for “The Survey of the Northern Waters, Coasts and Islands of the Pacific Ocean and Behring Strait, having reference to telegraphic connection with Russia,” and expressing full faith in its possibility.

In the United States Senate, Feb. 17, 1862, Mr. Latham also made an elaborate report, revealing the vast progress of telegraphs in Europe and the enthusiastic and enlightened action of the Russian Government in the proposed extension of her telegraph system to the Pacific.

A line had already been mapped out from Kazan, through Circassia.

From Omsk a line was traced out with the design of reaching India through the Northern Central gate of Asia. Still another was projected from the Amoor line to Pekin, Shanghai, Amoy and Hong Kong--thus, to reach the trade of China, these projects showed the value of the telegraph to commerce.

Mr. Latham asked an appropriation of $100,000 for a survey of the route from California to the Amoor.

Russia offered her aid and a rebate of forty per cent. on American messages when communication was established.

Russia had already assured the construction of the line 7,000 miles from Moscow to the Pacific.

Secretary Seward took a deep interest in the enterprise, in a report to the Senate, May 4, 1864.

On the proposition of Mr. Collins, he said: “I think it may be regarded as settled that the United States cannot neglect to employ telegraphic communication with foreign countries, and yet expect to maintain a healthful commerce with them; that the United States cannot hope to inspire respect, confidence and good will abroad, and to secure peace with foreign States, without using the magnetic telegraph when it is possible. I do not know any one object lying within the scope of our foreign relations more directly important than the preservation of peace and friendship with Great Britain and Russia; nor can I conceive of any measure of nationality that would more effectually tend to secure that great object than the construction of this proposed international telegraph.”

The sentiments thus officially expressed by Mr. Seward were responded to by all intelligent men, and the Russian line was the most popular of the enterprises of the period.

The proposition to construct the Russian American line was first formally submitted by Mr. Collins to the Western Union Telegraph Company, Sept. 28, 1863, and again at a meeting of the board of that company in Rochester, N.Y., March 16, 1864.

It was in the form of a letter from Mr. Collins, requesting the acceptance of his project to connect Europe and America by way of the Behring Strait, and offering, if accepted within twenty days, to transfer his rights and privileges under certain conditions.

The terms offered by him were accepted by the board of directors.

Soon after this construction commenced, beginning at New Westminster, B.C., the terminus of the California State Telegraph Company. The line in a few months was carried to the Skeena river. Meanwhile Mr. Serge Abasa, a Russian gentleman who had entered the service of the Western Union Company, was despatched to the Asiatic coast between the mouth of the Amoor and Behring Strait.

Mr. Abasa reported, January 18, 1866:--“Inform the directors, the entire extent between Anadyr and Okhotsk district has been surveyed, but the route of the line has been determined by me in person, and notwithstanding the scarcity of laborers in the country, I have commenced preparatory works in Anudirsk, Jijiginsk, Yamsk, Taousk and Okhotsk.”

In the midst of all this enthusiasm, however, the Great Eastern, at the docks of an English harbor was having a cable coiled in her immense hold for another attempt to lay a submarine line between Europe and America.

When it was announced that at last victory had come, and that the continents were speaking to each other with easy garrulity, the overland line was abandoned.

It was a question of two thousand miles of cable against sixteen thousand miles of land line, half of which was along an uninhabited coast. The advantage of the cable was too palpable; orders were, therefore, issued recalling the men.

Already some eight hundred and fifty miles of line had been built, and was in operation between New Westminster, B.C., and the Skeena River.

The United States Government were duly notified of the stoppage of the work by the Western Union Telegraph Company, to which the Secretary of State wrote the following reply:--

I am not one of those who have been disappointed by the complete and magnificent success of the International Atlantic Telegraph.

I regard it as tributary to an expansion of our national commerce, and ultimately to our political institutions, both of which are important forces in the progress of civilization.

I would not have the Atlantic become dumb again if thereby I could immediately secure the success of the Inter-Continental Pacific enterprise which was committed into your hands. Nevertheless, I confess to a profound disappointment in the suspension of the latter enterprise.

I admit that the reasons you have assigned for the suspension seem to be irresistible. On the other hand, I abate no jot of my former estimate of the importance of the Inter-Continental Pacific Telegraph.

I do not believe that the United States and Russia have given their faith to each other and to the world for the prosecution of that great enterprise in vain.

W. H. SEWARD.

The loss was very great to the enterprising company who had undertaken the responsibility, but everything was paid up without a murmur. The sum expended amounted to $3,170,292.

That the Western Union was enabled to defray this enormous expenditure without in any way impairing its stock value or credit proved the solidity of the Company even at that period of its history.

The friendly intercourse between the American and Russian authorities in connection with their telegraph project was, no doubt, the direct cause of the subsequent negotiations between the two Governments for the sale and purchase of Alaska, the advantages of which the astute Secretary of State, Mr. Seward, became cognizant, and finally consummated the transfer of that territory from Russia to the great Republic.

In the early days of telegraph enterprise the necessity soon became evident that, in order to provide the requisite facilities for public convenience and for the economical employment of capital, the consolidation of the many struggling companies was self-evident. This policy has been carried out effectually by the Western Union Telegraph Company, which gradually absorbed by lease or purchase upwards of fifty concerns from the date of its organization at Rochester, N.Y., to the removal of its offices to New York. In 1866 this Company had virtually absorbed all rival and opposing companies of any importance.

The commanding position reached by the Western Union in 1866, with its growing ramifications covered by 75,000 miles of wire, has steadily advanced until the present. It embraces in its great system over 1,000,000 miles of wire, over 23,500 separate offices, two atlantic cables, a cable to Cuba with connections throughout the West Indies, and close direct connections with all parts of South America. In Canada the Great Northwestern Telegraph Company, which leased the Montreal and Dominion Telegraph Companies, is controlled by the Western Union Telegraph Company. So also is the Nova Scotia and New Brunswick Telegraph Companies.

In 1872, six years after its reorganization, the Western Union owned in

Pole mileage. Wire mileage. 62,033 137,190 In 1882 131,060 374,368 ” 1892 189,576 739,105 ” 1902 196,115 1,029,984

In 1872 it had 5,237 offices ” 1882 ” 12,068 ” ” 1892 ” 20,700 ” ” 1902 ” 23,567 ”

In 1872 it transmitted 12,444,497 messages ” 1882 ” ” 38,842,247 ” ” 1892 ” ” 62,387,298 ” ” 1902 ” ” 69,373,095 ”

In 1872 its receipts were $ 8,457,095 77 ” 1882 ” ” 17,114,165 92 ” 1892 ” ” 23,706,404 72 ” 1902 ” ” 28,073,095 10

In 1902, 2,506 miles of poles and 57,218 miles of wires (of which 28,767 miles were copper) and 329 offices have been added to its system.

The increase in the number of messages transmitted in 1902 over 1901 was 3,717,834.

This increase does not include messages sent by brokers, press association and others over wires they lease from the Company, nor railway messages under contracts.

The receipts for the transmission of regular commercial messages increased in 1902 over the previous year $1,348,531.34 and from leased wires $451,749.64.

The maintenance and reconstruction of this enormous system cost the Company in 1902 $3,591,069.17, and $2,188,101.03 were expended in the construction of new lines during the same year.

Through the re-arrangement of the operating forces and substitution of direct working circuits for repeating or relay offices a reduction of $388,746 has been effected and the service besides greatly improved.

In 1903 contracts were made early in that year with various railway companies for the building of 16,800 miles of line.

The capital stock of the Company is $100,000,000, on which a dividend of 5 per cent. per annum is paid, payable quarterly.

The Company has had the good fortune to have secured men of conspicuous ability to direct its affairs from its inception to the present time.

THE POSTAL TELEGRAPH CABLE COMPANY.

This Company was organized in 1881. Its original promoters expected by the use of compound steel and copper wire of large size and the use of the Leggo-automatic and Gray-harmonic apparatus to transmit a large volume of business by the use of so few wires and at such a speed that a uniform and low rate would produce a revenue sufficient to justify a capitalization largely in excess of the cost of the plant.

The name postal was chosen upon the theory that the new plan of construction and method of transmission would bring the property into extensive use in competition with or perhaps as an auxiliary of the Post-Office department.

How far the purpose of the founders was speculative need not now be considered. Probably some of them were sincere in their beliefs, but they were ignorant of the telegraph business, and the fallacy of their plan was soon demonstrated.

In order to help a friend, who had become largely involved in the bonds of the Company, Mr. John W. Mackay found himself in control of the property in 1884. He had in the meantime been induced to interest himself in the organization of a new cable service between Great Britain, France and the United States, of which, through the failure of some of those who were to join in the enterprise, he also came into control. Having “put his hand to the plow,” so to speak, although the business was wholly new to him, he was not the man to turn back, and the more he examined the merit of the business itself, the better satisfied he became that, if it could be properly conducted in its details and the complicated and chaotic condition of the numerous comparatively small, but ruinously competing land line companies could be brought into right form and order, a successful and in every way creditable business worthy of the employment of his ample resources could be built up.

When the Western Union Company, early in 1881, under the leadership of Mr. Jay Gould, acquired control of the Atlantic & Pacific, the American Union and the combined Canadian telegraphs, and formed an alliance with the cable companies, it then seemed as if competition in the telegraph business had come to an end, and many of its ablest men were of that opinion, but by the end of 1884 more extensive and more injurious competition had been built up in the United States than had ever existed before, and the possibility of bringing order out of such chaos seemed remote, but Mr. Mackay was not discouraged.

Early in 1884 he secured the services of Mr. George G. Ward, who had been brought up in the business of the telegraph in England, and had been in the service of the cable companies almost from their inception, and was Superintendent of the Direct United States Cable Company from 1875 to 1883. Under his direction the first of the Commercial Cable Company’s cables was completed in December, 1884.

Early in that month Mr. Albert B. Chandler entered Mr. Mackay’s personal service, having been assured of his purpose to permanently establish a telegraph system upon sound and just principles respecting which they were in full accord.

Mr. Chandler had served in almost every capacity known to the telegraph business, from operator in 1858 to President in 1879, and had won the confidence of proprietors of telegraph property, of their officials and employees, and the public as a practical, energetic and conservative manager. Under his guidance as receiver, the mortgage which had been placed upon the property of the Postal Telegraph Company under complete misapprehension of its earning power, was foreclosed.

The Postal Telegraph Cable Company, of which he became President and General Manager early in 1886, was organized. Extremely complicated and vexatious litigation, chiefly a legacy from the smaller companies, was gradually removed, and when, near the close of 1887, the various fragmentary companies had been acquired by either the Western Union or the Postal Companies, competition, based upon the cutting of rates, rebates and other wasteful practices which could only end in destruction, was promptly terminated by the competing companies.

Since then the telegraph business has been carried on in the United States in a more business-like and progressive manner than ever before.

There is so little friction between the two companies apparent to the public, that it is sometimes charged, or at least suspected, they are in actual alliance, but such is not the case. Competition for patronage was never so sharp as now, but it is based upon excellence of facilities and service and treatment of patrons, and not upon any form of buying patronage with money, which has proven the ruin of so many companies whose chief purpose seemed to be to do the most harm in the shortest time, in order to sell or lease their property for more than it was fairly worth.

Probably no two men ever had more complete control of large interests not their own during their formative period than has been the case of Mr. Chandler and Mr. Ward in their respective positions, and to Mr. Mackay’s implicit confidence in them may be attributed much of the success that has been attained by the Commercial Cable and Postal Telegraph Companies, which are now practically one property.

Most of the principal officers of these companies have been brought to their present positions by these gentlemen, and the business is conducted with singular harmony and efficiency.