No. 278.
General Schenck to Mr. Fish.

No. 398.]

Sir: I have been thinking for some time of writing to you in relation to the charges made on telegrams sent to the United States by the Anglo-American Telegraph Company. That company have an arrangement with the Western Union Telegraph Company in our country, through which a systematic imposition is practiced, which ought to be exposed. I bring it to your attention because communications transmitted by ocean cable on Government business are subjected to the same overcharges as are the messages of individuals; and the public and private persons are equally concerned in having what is done known, with a view to some correction of the wrong.

I discovered something of what I am about to explain three or four months ago, and since then have been making inquiries which have elicited the following as, I believe, a true statement of the case:

These two companies have some contract between them by which it is agreed and arranged that messages sent from England by the Anglo-American to all points in the United States shall be received and transmitted by the Western Union to their destinations. Thus the interior and land lines of the latter company are made continuations of the cable on the American side of the Atlantic.

This is proper enough; and a convenience to every one, as well as to the contracting parties. It gives to the Western Union a monopoly of the business coming through the cable to America; and naturally for that monopoly they agree to pay something. Accordingly the contract binds the Western Union to allow the Anglo-American to retain a certain proportion, being, I believe, one-third of what is charged for transmission over the wires within the United States.

The Anglo-American Company have a tariff of prices. The charge for a message from London to New York, or points east of New York, is four shillings per word. After this month, it is understood, they have promised a reduction to three shillings a word.

The Western Union Company have also a tariff of prices. The charge now is, from New York to Washington for the first 10 words 40 cents, and 3 cents for each succeeding word; from New York to Chicago for the first 10 words, $1, and 7 cents for each word beyond 10; from New York to San Francisco, $2.50 for 10 words, and 17 cents for each word beyond 10; and so in proportion to other points.

Every word sent by the cable is charged for, including date, address, and signature.

On the land lines of the Western Union within the United States there is no charge made for date, address, and signature.

But now observe the practice under the contract before referred to between the British and American companies.

A message is sent by the cable from London to Washington, Chicago, or San Francisco. The office here demands and collects for each word four shillings, which pays for transmission to New York; and also three [Page 466] pence more for each word to Washington; nine pence more for each word to Chicago 5 and fifteen pence more for each word to San Francisco. This, with exchange, and the present difference between gold and the United States currency, is, for that part of the service which lies beyond New York, more than double the proper charge of the Western Union Company; and is so far an extortion or overcharge to be divided between the companies who are parties to it.

When the charges imposed for transmission over the wires west of New York are double the regular tariff prices, the American company can well afford to allow the cable company one-third of the receipts for that portion of the service performed by their lines. If the charge were only double, then the account would stand thus: the Western Union being credited $2, when the proper amount to be collected for them was but $1, they would leave 66⅔ cents with the British company and yet receive $1.33⅓ for their share, being 33⅓ cents in excess of their regular and legitimate charge at home.

But the case is in some particulars much worse than this.

Let me illustrate by supposing a message of one hundred words sent from London to Washington. Ten of those words may be supposed to constitute the date, address, and names. The cable company would require to be paid here for the transmission over the land-lines between New York and Washington threepence on each of the whole hundred words. This would amount to £15s., which is equal to $6.96. But the regular published charge for such a message by the Western Union would be, for the date, address, and names, 10 words, nothing; for the first ten words, 40 cents; for the remaining 80 words, at 3 cents, $2.40; one hundred words, $2.80.

Thus there would be extorted for the service in the United States an overcharge equivalent in currency to $4.16. And the $6.96 being divided would give the British company the equivalent of $2.32, and leave to the American company for their share $4.64, which is still $1.84 beyond their legitimate charge at home.

In the case of shorter messages, where the address, date, and names bear a larger proportion to the text, the proportional overcharge would be greater. For a message, for instance, of twenty words, there would be collected here, for the line from New York to Washington, five shillings, equal to $1.39 in United States currency, instead of forty cents, which would be the charge at home. In such a case the Western Union pocket for their share, for service performed by them, 93 cents, being much more than twice their whole proper charge. And it must be remembered that a large proportion of telegrams sent across the ocean have a text of but ten words or less.

This may seem dealing with an inconsiderable matter; but considered in the aggregate and computing the percentage of unjustifiable charges, it is no small thing as affecting the cost of sending intelligence between the two countries. So far as the Government of the United States is concerned, it must have made a large difference during the past year.

I have no means of knowing whether messages coming from Washington, or other points in the United States, to be transmitted by the cable to England, are subjected to the same or similar overcharges or not.

My calculations are based on $1.09 for exchange and $1.15 for gold, which has been for some time a fair average.

I submit this exposure to you for such use as you may deem it proper to make of the information.

I have, &c.,