811.73/560: Telegram
The Secretary of State to the Ambassador in Great Britain (Davis)
102. Communicate following to F. J. Brown, former Chief Delegate to Communications Conference, Washington, from Norman Davis:
As you know I viewed with concern both from our own and the British point of view the financial loss involved in the lying idle of the Western Telegraph and Western Union cables from Brazil to off the coast of Florida. Before I leave the Department I should like to arrange some plan which will permit use of the cables by the two companies mentioned consistently with American interests. I think your cooperation which you kindly offered while in Washington will be necessary.
I am informed that the Senate, after the recent hearings, believes of great importance the handling of messages between the United States and South America by American organizations. As you know, I believe the principle is not only legitimate but very important at the present time on account of the effect on British-American relations of the criticism which otherwise is liable to arise. I see no other way to satisfy all parties. In the circumstances, therefore, to justify a landing permit for the Western Union and to terminate the present situation disadvantageous to everybody, I believe it is necessary to arrange as a condition precedent for the sale of the Barbados-Para cable to the Western Union Company and sale or lease to it also of an interport cable down the coast of Brazil which will touch the most important cities or to agree to permits being granted to Western Union to lay such cables. This would have little practical effect on the monopolistic advantages now enjoyed by the Western Telegraph Company. As for traffic there [Page 825] are now two to three parallel cables owned by the Western Telegraph Company all along the coast of Brazil south of Para which carry mixed American and European traffic. Provided provision is made so that the financial return remains the same a lease of one of these coastal cables to the Western Union would amount merely to a separation of this mixed traffic and its allocation between the existing cables. The Western Telegraph Company is primarily interested in communications between South America and England, Europe and Africa, and it would be hardly justified in insisting as a matter of vital interest to it on the physical handling of the United States-South American traffic provided by the suggested arrangement the financial advantages of its monopolistic position were unprejudiced until the termination of its interport monopoly. In any event the monopoly only runs for a few years and if the loss on the say three million dollar investment continues for a material time through the cables lying idle, certainly the financial advantages of the monopoly with respect to communications with the United States will be destroyed. Before getting your reactions which I hope will be favorable and the reactions through you of the Western Telegraph Company, I hesitate to press the Western Union to make the suggestion direct to the Western Telegraph Company because it might be somewhat embarrassing for them. I am very hopeful, however, that a mutually advantageous settlement can be worked out on the above lines and hope that I may have your informal cooperation. I hope you can give me your answer within two or three days.