General Schenck to Mr. Fish.
London, July 26, 1873. (Received August 21.)
Sir: Your No. 412, inclosing a copy of a communication addressed to you by Mr. Orton, the president of the Western Union Telegraph Company, was duly received. I have also seen Mr. Orton’s letter widely published in the newspapers.
I propose now to make that somewhat remarkable paper the subject of comment, and I trust that the same publicity which has been given to it, and to my dispatch to you to which it purports to be a reply, will be given to this, my answer.
What was the information which I gave the Department for such use in the public interest as it might be deemed proper to make of it? I stated that an arrangement existed between the Anglo-American Cable Company and the Western Union Company, under which the former [Page 471] company charges and collects on all messages sent from England to points west and south of New York, for that part of the service which lies within the United States, double, or more than double the rates which are charged by the Western Union Company for the like service at home, and this Mr. Orton does not deny. He makes a show of denying it; but his answer is evasive and disingenuous, and furnishes only a striking example of the way in which a person, having no good defense, may seem to escape under cover of immaterial issues, while not in the slightest degree meeting the complaint which is really made. Let us see if I state this too strongly.
1. In my communication to you I said that I believed the contract between the two companies provided for a division between them of the receipts from this land-service in the proportion of one-third to the Anglo-American and two thirds to the Western Union, and I went on to illustrate how profitable would be to the Western Union such dividing of the overcharge, inasmuch as such receipt of two-thirds would quite exceed the whole proper charge made under the home tariff of that company. Mr. Orton denies fiercely and with much ostentation that the agreement between the companies provides for a division of the charges for the service of his company in that proportion. All I have to say on that point is, that I learned, from what I supposed to be a reliable and well-informed source, that such was the nature of the agreement.
Mr. Orton himself knows, better than any outsider can, what really are now, or have been heretofore, the exact terms of the contract, and can remove all doubt, if he thinks proper so to do, by publishing the actual documentary proof. This, however, is not the question. It is not the public complaint. This is merely asserting that a mistake has been made in stating the manner of division of the spoil. It is of little consequence to the public how the parties apportion the excessive rates between them. It is of far more interest to discover that they have been imposing and collecting such exorbitant rates.
2. Mr. Orton attempts to meet the exposure of these overcharges for the land service on his lines in the United States by asking attention to the reduced rates charged by the Anglo-American Company for messages sent on government account. This, again, is avoiding the issue. On careful examination of the quarterly bills which have been rendered and paid here for ocean-cable service, I find that the rates vary, being sometimes half the tariff charge, sometimes more than the full charge, depending apparently in part, but not entirely, upon the fact whether the messages were altogether or any portion of them in cipher. But what has this to do with the rates, doubled or more than doubled, over the wires of the Western Union Company? Nothing whatever; and Mr. Orton himself furnishes that answer in his own express language, when he says, “instead of the rate of four shillings and threepence a word, London to Washington, the State Department pays only two shillings and threepence.” Thus showing that even if a reduction is made to the Government, it is only on the cable-service from England to America, and does not apply to the excessive rates collected here for the use of the lines in the United States.
As to messages coming the other way, that is, “from Washington or other points in the United States, to be transmitted by the cable to England,” I have, in my former letter to you, distinctly stated that “I have no means of knowing whether they are subjected to the same or similar overcharges or not.” Any reference, therefore, in Mr. Orton’s letter to messages from the United States to England was uncalled for, [Page 472] and could have been introduced only for the purpose of withdrawing attention from the real issue.
So much for the plain, simple, substantive complaint embodied in my letter to you. It was a complaint first brought to my knowledge by respectable banking and commercial houses here, who had discovered that they were thus imposed on, in being compelled to pay, in addition to the heavy cost for the transmission of their telegrams across the ocean, a rate of charges for their passing over the wires in the United States so greatly in excess of the charges regularly made in America. I was asked if I could give an explanation. I could not. But I thought, as others concerned did, that anything thus injuriously and unfairly affecting easy, cheap, and rapid correspondence between countries having such necessary, intimate, and constant relations as Great Britain and the United States, was well worthy of investigation, and exposure if need be, with a view to correction of the wrong.
I am glad to find that my movement in this direction has been successful.
In replying to and denying not the essential charge, but matters entirely collateral to the main fact, the president of the Western Union Company has made admissions and furnished information showing most clearly the existence of the unfair and extortionate practice complained of.
Before proceeding to verify this, I furnish and refer to, and request to have appended and made a part of this communication, the tariffs of charges of the Anglo-American Company and of the Western Union Company, respectively, as officially published by them in this country and in the United States. I believe no change, or no material change, has been made in the rates set forth in these tables; and I have assumed them therefore as the basis of my computations. With these tariffs before you, you will be better able to follow and comprehend my comments and figures.
First, then, let us see what is actually exacted and collected in England for transmission of messages over the wires of the Western Union lines to points beyond New York. If the tariff of the Anglo-American Company be analyzed, it will be found that the whole of that service beyond New York is divided (not into three, as Mr. Orton says, but) into five rates or classes of charges. These rates are for every word, including the date, address, and names of the sender and receiver.
- Threepence (being equal to 6.951 cents) for each word for all stations within the District of Columbia, Delaware, Maryland, New Jersey, Pennsylvania, and all places in New York outside of the city.
- Ninepence (equal to 20.87 cents) for each word for all stations in Alabama, Georgia, Illinois, Indiana, Kentucky, Louisiana, Michigan, Mississippi, North Carolina, Ohio, South Carolina, Tennessee, Virginia, Wisconsin, Saint Louis in Missouri, and Lake City, Saint Mark’s, and Tallahassee, in Florida.
- One shilling (equal to 27.83 cents) for each word for Pensacola, in Florida.
- Fifteen pence (equal to 34.785 cents) for each word for all stations in Arizona, Arkansas, California, Colorado, Dakota, Idaho, Iowa, Kansas, Minnesota, Montana, Nebraska, Nevada, New Mexico, Texas, Utah, Wyoming, and all places in Missouri except Saint Louis.
- Two shillings (equal to 55.66 cents) for each word for all stations in Oregon, Washington Territory, and all places in Florida except Lake City, Saint Mark’s, Tallahassee, and Pensacola.
Now, comparing these charges with those which are given in the tariff [Page 473] of the Western Union Company for the same service, it will be seen that they are in the average, as I have averred, double, or more than double, what are paid for sending over the same lines and to the same points at home.
In considering these extortionate overcharges, it is to be borne in mind, too, as I have in my former letter explained, that the excess is made greater by the fact that names, dates, and addresses are charged for in the one case and not in the other.
But it may be claimed that these several charges per word—threepence, ninepence, one shilling, fifteen pence, two shillings—do not amount, at great distances from New York, to double the charges, or, in some instances, to even as much as the charge made by the Western Union Company at home; but, then, let it be especially noted, that the charge of threepence a word, which is very nearly seven cents, additional to the ocean charge, is imposed for all that territory which lies within the limits of the District of Columbia, Delaware, Maryland, New Jersey, Pennsylvania, and all places in New York outside of the city. Within this area are included the cities of Brooklyn, Jersey City, Albany, Buffalo, Newark, Philadelphia, Wilmington, Baltimore, and Washington. Within this area is transmitted and distributed, doubtless, a very large proportion of the whole business intelligence which passes by cable from England to the United States.
The regular charges of the Western Union at home for messages within this territory are generally 25, 30, or 40 cents for the first ten words, and only 2 to 3 cents per word for all over ten words.
Take for example Philadelphia. The difference is so much that I have been informed by a leading banking-house that, instead of sending telegrams through from hereto that city, they send only to New York, and have their agent there transmit them thence to Philadelphia. This in a large business is a great saving.
But these calculations can be readily made by any one having the aid of the accompanying two tables of charges. It is not necessary therefore to repeat instances by way of illustration. My computations in this, as in my former letter, are made on the basis of 109 for exchange, and 115 for gold.
The fact of such excessive charges demanded and received by the Anglo-American Company, for that portion of service performed by the Western Union Company, stands proved then beyond all question or denial.
Now, what is Mr. Orton’s defense? As I have before said, he does not controvert what is thus alleged. He undertakes to show that the Western Union is not implicated, or a sharer, in these excessive rates. He says “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 Telegraph Company for their part of the service. The rates beyond New York are, for 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.”
It is not clear to me what Mr. Orton wants to have understood by this statement. I suppose he means to aver that the proportion of the receipts allotted to the Western Union is an allowance of 3 cents, 15 [Page 474] cents, or 20 cents per word for three classes of stations at different distances west and south of New York, and 8 cents additional for each word for that company’s part of the service east of New York. This would make his classification of the allowances to the Western Union aggregate 11 cents, 23 cents, and 28 cents. And this raises the question how much, or what part, of the service is performed by the Western Union Company before New York is reached? It must add greatly to the value of the general bargain, if, without reference to New York, 8 cents per word is received for every cable message sent anywhere in New England from the point where it reaches the United States. In any view of the case it is most evident that these receipts of 11 cents, or 23 cents, or 28 cents for the share of the Western Union for every word transmitted by cable beyond New York, are quite above its own regular charges. And Mr. Orton cannot escape from this proposition by calculations relating to particular remote points, without reference to the general average of business.
Mr. Orton, in all his instances of the prevailing number of words in a telegram, and which in the case of transmission between Chicago and New York he says were during one month down to an average of six, evidently leaves out of the calculation the names and addresses of the sender and the receiver of the message, which can certainly, in hardly any case, be less than four; and this would make an average of ten words charged for under the cable system. It is true he speaks of cable messages of two words; but it would puzzle one to know what sort of a message that could possibly be when names and addresses are counted and charged for.
But this, after all, as I have already said, is quite aside from the controversy between us. I may have been mistaken as to the exact proportion of advantage received by the Western Union in the division of this overcharge for service by its lines. I am not mistaken as to the excessive and exorbitant charges, which I have helped to expose. And the whole public, I believe, will unite with me in calling on the Western Union Company, and in calling on Mr. Orton, to see to it that this imposition is no longer continued.
But Mr. Orton’s reply to this demand is that the Western Union Company is in no sense responsible for the charges made by the Anglo-American Company; that “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.” And yet in the same connection he admits that the Western Union Company has agreed to apply these rates and rules to cable messages in the United States, and to accept certain fixed rates for its compensation for all services on its own lines. This is, indeed, if we are to believe it, a sad condition of servitude. Are we to understand that the managers of the Western Union Company say to the foreign cable company, “Here are our lines spreading all over the United States; we are ready to receive and distribute all messages that you will send. We stipulate only for a certain share of your charges, which we will cheerfully and submissively accept as compensation satisfactory to us, and, that being paid, we care not what or how much you charge the citizens of the United States or of Great Britain for our work that we do for you. It may be a penny a word or a pound a word. That is nothing to us.”
Who can believe that the Western Union is so completely a neutral, or so entirely subject to the rule of a foreign corporation?
Two things, at least, are certain and beyond all dispute. (1.) There is an arrangement of some kind between the companies on the two sides [Page 475] of the Atlantic. (2.) And under that arrangement all persons who transmit messages from England beyond New York, pay at least twice as much for the use of the American lines as they would have to do for the same service in the United States.
Perhaps I owe it to myself not to close without referring to the fact that the reply made in behalf of the Western Union Company is garnished with flings and innuendoes against me. To this form of assault I have only to answer, that it is unworthy of Mr. Orton; and I should lack self-respect if I noticed such attempt to bolster up, by gross personality, the deficiency in a statement or an argument. I have character enough, I think, to be sufficient protection against falsehoods that are put forward only by cowardly insinuations; and I rest perfectly secure in the knowledge that if slander dares to take a bolder and more definite form, there are ample proofs to meet it.
But Mr. Orton goes out of his way also to intimate the existence of some influence exercised over me on the part of persons or associations whose interests are opposed to those of the corporations with which he is connected. This is another most mistaken conjecture. I have no interest, never have had, and do not expect to have, direct or indirect, in any cable telegraph company.
I do wish to see the day arise when the business will not be so much controlled by a monopolizing and absorbing combination, but reasonably cheapened to the public by the wholesome competition of rival lines. I look upon the continuance of such a monopoly as an obstruction now in the way of the great civilizing and peaceful influence to be hoped for from the cheapest possible transmission of intelligence between the remotest as well as the nearest parts of the earth.
I have, &c.,