832.73/177: Telegram

The Ambassador in Great Britain ( Davis ) to the Secretary of State

2783. Your cipher telegram number 5684, July 18, 5 p.m. At the Embassy’s suggestion the Foreign Office to-day invited Sir John Pender, President of the Western Telegraph Company, to make a verbal statement of his case in respect to the report[ed] unfair methods of his Company’s agents in South America.

In the presence of a member of the Embassy Staff Sir John declared that by the employment of the same methods with which he is charged the Central and South American Cable Company had established themselves as a competing concern on the West Coast of South America and had so far been in control of the traffic on that coast as to make British competition highly unprofitable if not impossible; that according to his information his American competitors now planned by means of their proposed east coast cable to divert traffic to the west coast and thence to New York and Europe; that to meet this emergency he had taken two steps: (1) to undertake to lay in conjunction with the Western Union Company of America a cable from Brazil to Miami, Florida, touching at Barbados, which he hopes to complete within six months, and (2) to invite the Central and South American Company, through Mr. Carlton of the Western Union, to consolidate with the concerns interested in the operation of east coast cables. He added that in the event of his proposal being accepted he would request permission of his Government to transfer to Central and South American Company all British cable interest on the west coast, but that in case of refusal he would continue to employ every means within his power to prevent the laying of competing cables. When asked whether he did not consider some of his company’s business methods unfair and unfriendly Sir John replied that his American competitors had been forced to come to England for the purpose of their cable in the laying of which they expected to use a ship which is now engaged in [the] work of extending his own lines and that, [Page 203] had he so desired, he would easily have prevented the use of this vessel by the American firm; that as regards his company’s activities in Brazil in opposing the American concession, they had limited themselves to pointing out to the Brazilian authorities a clause in the concession which provides that the contract before being registered shall be referred to the Brazilian Department of Posts and Telegraphs for approval. Finally Sir John declared his determination to oppose the American company at this point by the use of all practical keen methods which he said should be distinguished from unfair methods.

Confidential. It appears that the concession granted to Western Company to lay its cable to Miami via Barbados was obtained about the same time as the South and Central American Company’s Cuba-Brazil concession. When this point was raised Sir John stated he was not aware which company had prior rights. If the Central and South American director[s] refuse to enter the combination, as seems likely from the tenor of Sir John’s remarks, and the Department support them in their attitude, it might prove advisable to refuse permission to the Western Company to land their cable at Miami in the event of the continuance by them of unduly aggressive and obstructive measures in Brazil and the Argentine.