Papers Relating to the Foreign Relations of the United States, Transmitted to Congress, With the Annual Message of the President, December 7, 1874

No. 279.
Mr. Fish to General Schenck.

Department of State,
Washington, June 27, 1873.

No. 412.]

Sir: I inclose herewith, for your information, a copy of a communication addressed to this Department by William Orton, esq., president of the Western Union Telegraph Company, under date of the 21st instant, relating to the statement contained in your No. 398, so far as concerns the management of the company above mentioned.

I am, &c.,

HAMILTON FISH.

[Inclosure.]

Mr. Orton to Mr. Fish.

Executive Office Western Union Telegraph Company,
New York, June 21, 1873.

Sir: I have had the honor to receive your communication of 11th instant, replying to mine of the 10th, concerning the letter of Gen. Robert C. Schenck, United States minister to England, published in the New York Herald of Sunday, June 8, instant, and which you inform me is substantially a correct copy.

It appears, therefore, that the minister of the United States in London has addressed an official letter to the Department of State, in which grave charges are made affecting the reputation for honorable dealing of certain citizens of the United States. A copy of these charges was, as you informed me, transmitted to the Post-Office Department, and by the latter was given to the press for publication. It does not appear that any effort was made, either by the State or Post-Office Department, to ascertain if the charges were true; and, therefore, it may be fairly inferred that they were assumed to be true by the officials of both Departments, who appear to have also assumed that the correction of the abuses alleged would be secured by making them public.

The charges made by General Schenck, which concern the managers of the Western Union Telegraph Company, are these:

1. That the Anglo-American Telegraph Company, which controls the submarine cables in operation between Europe and America, “have an arrangement with the Western Union Telegraph Company through which a systematic imposition is practiced, which ought to be exposed,” which arrangement “binds the Western Union” to allow the cable companies to return “one-third of what is charged “for the transmission of cable messages over the land lines in the United States.

2. That under this arrangement the charges for the transmission of cable messages over the wires beyond New York are double the regular tariff prices charged on domestic messages, “an overcharge to be divided between the companies who are parties to it;” and that the Western Union pocket for their share much more than twice their whole proper charge.”

3. That “communications transmitted by ocean cable on Government business are subject to the same overcharges as are the messages of individuals.”

To these charges I respectfully submit the following reply:

1. It is true that the Western Union Company have made an arrangement with the companies controlling the Atlantic cables for connection and for the mutual exchange of business, which, as General Schenck says, “is proper enough, and a convenience to every one, as well as to the contracting parties.”

2. But it is not true that this arrangement “binds the Western Union Company” to allow the cable companies to retain one-third or any other share of what is charged for the transmission of cable messages over the land lines in the United States, nor that the charges for such transmission are in excess of the average charges for other telegraphic messages.

The facts are these: The cable business is controlled by the cable companies, who fix the rates to be charged, and make and modify the rules governing its conduct. The Western Union Company have agreed to apply these rates and rules to cable messages in the United States, whether received from or transmitted to the cables, and to accept certain fixed rates per word as their compensation for all services connected with the transmission of such messages, including the keeping proper accounts and collecting and paying over the moneys accruing therefrom.

There are more than 6,000 telegraph stations in the United States, and, it being impracticable to supply European offices with a tariff to each of such stations, this country is divided into four districts, for each of which a uniform rate is established. The cable-rate of $1 per word between England and New York includes 8 cents a word, payable to the Western Union Company for their part of the service. The rates beyond New York are: To all stations in New Jersey, Pennsylvania, Delaware, Maryland, and District of Columbia, 3 cents a word; for all other territory east of the Mississippi River, including the city of Saint Louis, 15 cents a word; for all other stations in the United States west of the Mississippi River, 20 cents a word. The rates to points on the Pacific coast have been slightly reduced since the date of General Schenck’s letter.

Under the rules of the Western Union Company the message rate in the United States is for a minimum of ten words, with a rate per word for additional words above ten; but the rules of the cable companies permit any number of words to be sent at the word-rate, and the result is that a majority of cable messages contain less than ted words; those of three, four, and live words being common, and occasionally a message is offered containing only two words. The Western Union Company charges $1 for ten words or less between Chicago and New York. The majority of cable messages from Chicago contain less than ten words, the average for an entire month having been as low as six words.

In the case of Saint Louis and Saint Paul, the rate on domestic messages to New York is $1.50 for ten words or less, while the cable-rate is 15 cents a word. But between New York, New Orleans, and Mobile the local rate is $2 for ten words or—never less and sometimes more than—20 cents a word, while the rate on cable messages is only 15 cents a word. The result is that on cable messages the Western Union Company actually receive only the average of their local rates, while they are obliged to transmit cable messages of three words from New Orleans and Saint Louis to New York for 45 cents, or from San Francisco and Oregon for 60 cents. Such messages are handled at considerable loss, and if charged by Western Union rules, would be treated as containing ten words. Concerning the rates collected in England or other portions of Europe, for messages to stations in the United States, the Western Union Company have no choice, and in respect to many of them have had no knowledge, until prompted to inquire by the published charges made by General Schenck.

The Western Union Company agree to perform specific services for a fixed compensation, all of which they receive, and no part of which is, in any manner, divided, refunded, or otherwise paid as a consideration for having the cable business given exclusively to them. They are no more responsible for the tolls charged on cable messages in Europe than a railway company in the United States would be for the freight charged at Liverpool on merchandise destined for Chicago or San Francisco which should include the charges payable to the railway company.

3. It is also untrue that “communications transmitted by ocean cable on Government business are subjected to the same overcharges as are the messages of individuals,” or to any overcharges whatever, as will clearly appear by the following statement, which can be verified by a reference to the vouchers in the State Department.

The tariff on cable messages from London to Washington, paid in London, is 4s. 3d a word. When paid in Washington, the charge is Si.03 a word. But although there is no obligation on the part of the cable companies to transmit messages “on Government business “at less rates than for individuals, such messages are transmitted at half rates between London and New York. Instead, therefore, of the rate of 4s. 3d. a word, London to Washington, the State Department pays only 2s. 3d, and from Washington to London 53 cents a word instead of $1.03.

General Schenck’s zeal and efficiency in exposing “systematic imposition” upon the public, as sometimes practiced by the promoters and managers of swindling corporations, are widely known and fully appreciated, especially in England. But he could not have been aware, when he attached his official signature to erroneous charges, which probably he did not prepare nor even carefully examine, that his reputation and office were being used by the active and unscrupulous agents of an opposition cable scheme. Yet such is evidently the fact. I submit, however, whether it is a part of the official duty of the American minister at London either to seek to relieve the people of England from what he is pleased to style the “systematic imposition “of an English corporation, whose conduct is satisfactory to the British public and government, or to arraign citizens of the United States before our Government and people, upon charges concerning the conduct of their private business, which, although absolutely groundless, are certain to prove injurious.

To the success of the great enterprises in which the cable companies and the Western Union Company are engaged the United States Government has not contributed one dollar. More than this, it has refused in at least one instance to pay for official messages exchanged with a foreign government, until its obligation to do so was affirmed by the decision of a Federal court. It would seem not unreasonable, then, that these companies, whose capital and enterprise have connected the United States with the telegraphic systems which are rapidly encircling the globe, if not entitled to receive special favors from our Government; should at least be exempt from the open hostility of its officials.

It seems unfair for a representative of the United States at a foreign government to lend a willing ear and the influence of his office to the schemes of those who have no other interest in the business than the hope that something may be made out of it. But it seems still more unfair that the official charges reported by this representative to his Government, should be by the latter given to the public, with an implied indorsement of their accuracy, without notice to the party charged, and without inquiry as to the truth of the allegations.

I have the honor to be, very respectfully, your obedient servant,

WILLIAM ORTON, President.