The Telegraph and the Post-Office
AT the present moment the PostOffice Department, ably administered by Sir Frank J. Scudamore, is the most successful and progressive branch of the British government. Its chief stations are postal banks and annuity offices. It pays out a million sterling yearly in subsidies to steamers. It has set in motion at least four hundred steamships, established a system of money-orders extending through the British Isles and pervading both continents ; it has effected a purchase of the whole telegraphic system of the United Kingdom ; it has paid for it more than thirty millions of dollars, and now controls the wires and cables which connect the central office of London with more than five thousand offices in all the important municipalities of the British Isles, After doing all this it exhibits a net income of more than seven millions of dollars.
Before this purchase the British telegraphs were controlled by separate companies; one of which, the International, like our Western Union, had been eminently successful, and, like it, strongly opposed a purchase by government both before the committees of the legislature and in the public journals. It had obtained a monopoly of the lines in a large part of England. If a new company started in an English district it reduced its rates to all competing points until it broke down its rival. It then advanced them. When called upon by the public to lower them permanently, it insisted that its rates were not remunerative ; but when the act for the purchase of the telegraphs, upon the basis of their previous net income, had passed Parliament, it changed its tone and exhibited profits it had previously studied to conceal. The chief cities of Great Britain, especially the city of Edinburgh, gave important aid to government in effecting the change ; and on the 5th of February, 1870, the purchase was consummated, and the wires ot the British Isles, with several ocean cables, came under the control of government. The average charge for the transmission of a message was then thirty-eight cents, and the programme of the deparment was, —
First. To reduce the rates for telegrams to one uniform charge of a shilling per message of twenty words, besides the address, and to accompany this with a liberal reduction to the press.
Second. To extend the system to many important towns and villages not reached by the existing lines.
Third. To discontinue the duplicate offices of rival companies in the same towns and cities.
Fourth. To bring the lines under one administration, and to connect them as far as possible with the post-offices.
Fifth. To educate new corps of electricians.
Sixth. To pave the way for an early reduction of the charge for telegrams to sixpence, in place of a shilling.
The opponents of the purchase confidently predicted a failure in each of these essays. The department was environed with difficulties and watched intently by its foes, but moved boldly and steadily onward.
Its first step was to discontinue useless offices, and transfer the wires and instruments from stations often in the suburbs to more central post-offices, while it retained the ablest clerks and electricians of the companies it superseded.
Its second step was the reduction of its charges to the uniform rate of a shilling. Its third was the extension of its lines into the rural districts.
At first its foes were elated. There was much friction incident to the change, and its foes insisted that their predictions were verified.
The messages received for transmission were greatly increased, and the Irish cables and many of the wires proved insufficient ; time was consumed in providing new wires and implements ; messages were for a few weeks delayed by changes of officers and offices ; time was required to teach new electricians and new bands of messengers, and to lay down new cables and extensions. The public were impatient and ready to give credence to the reports of failure industriously circulated. But the triumph of those who opposed the movement was of short duration. By the 1st of April, 1870, business was organized, and new and efficient cables were laid across the Irish Channel. A corps of females was educated in public schools ; the wives and daughters of the village postmasters, encouraged by premiums, acquired the language of the wires; the extensions were utilized and new offices came into play. And Mr. Scudamore, now Sir Frank J. Scudamore, in his first report has announced the success of the department in its great undertaking, and exhibited the fruits of that success for the year ending April 1, 1871, as follows, namely : —
An increase of messages of sixtythree per cent. An increase of telegraph-wires from 51,311 miles to 63,319 miles; an increase of instruments from 1,869 to 4,104 ; an increase of offices from 2,159 to 3,997; an increase of messengers from 1,471 to 3,110 ; and of clerks and operators including postmasters, from 2,638 to 4,913.
The press, too, is supplied more liberally and cheaply with news now than it was before the change. In place of 6,090 words before the change, from 15,000 to 20,000 were sent for the press over the wires daily at the close of the first year.
The telegraph companies supplied with news but one hundred and seventy-six journals; the post-office has supplied four hundred and sixty-seven journals. The charge for separate wires has been lowered forty per cent.
The rents of offices have come down from $ 118,500 to $ 58,430.
The chief instruments used are those of Morse and Hughes, American electricians.
The department took possession of the telegraph-wires and cables in February, 1870, and dates its first year from the 1st of April following. The telegrams it sent during the first year have been as follows : —
First quarter, April 1 to July I . . 2,306,350
Second “ July 1 “ Oct. I . . 2,610,237
Third “ Oct. 1 “ Jan. I . . 2,646,438
Fourth “ Jan. x “ April I, estd. . 2,700,000
10,263,015
The department realized from its business during the above twelve months a revenue of £798,580, and incurred an expenditure of £ 470,000, and received a net revenue of £ 328,580 which already exceeds the interest upon the outlay, and supplies means for new extensions.
Since April 1, 1871, the telegrams sent by the British post-office have increased at the rate of twenty-five to thirty per cent annually, and are estimated this year at more than sixteen millions, or more than twice the number sent in 1870 by the Western Union. Many extensions are now progressing in England, and will reach rural districts which were neglected as unprofitable by the telegraph companies. Their wires reached but one hundred and sixty-five towns ; the wires of the department at the close of 1871 reached three hundred and sixty-five towns. The Post-Office Department has found it politic to train a large number of ladies as electricians ; they are drawn by the same wages that are paid to males from a more highly educated class of society. As the space in the present post-office of London would not suffice for the clerks and instruments, the department has thus far occupied the large rooms of the International Telegraph Company, and London messages are delivered in the average time of ten minutes from their receipt. To facilitate their delivery, messages are stamped and received through the pillar-boxes of the streets. Corps of boys are trained for the delivery, are furnished with caps, shoes, and uniforms, and paid a small fee for each message.
The government is now erecting a large edifice near St. Martin le Grand in London, a central-station, to which the wires, tubes, and electricians will soon be removed. Upon the completion of this edifice, the department is expected to take another step in advance, and to reduce its charges between any points in the two islands to the uniform rate of sixpence per message. The present charge of a shilling is in striking contrast with the average rate of that great monopoly the Western Union Telegraph Company, whose average charge was seventy cents last year, and ninety cents in the year preceding.
Our Post-Office Department has been able to carry letters through our States for three cents each, in paper long equivalent in specie value to the English penny ; and the question naturally arises, is it absolutely necessary to pay a successful monopoly seven times, or even three times, the telegraph rate in Great Britain for the transmission of our telegrams ?
In Switzerland the Alps prevent the construction of many railways ; but few trains are run and but few mails despatched, the telegram is often substituted for the letter. In 1867, there were two hundred and eighty telegraph stations in Switzerland, and seven hundred and nine thousand messages were in that year sent by telegraph. In the preceding year one message was sent for every sixty-six letters mailed, — a larger proportion than is found in other European states.
The customary charge in Switzerland is twenty cents per message of twenty words, and this meets the interest on the investment and the cost of transmission. It covers also the cost of delivery at any point within three fourths of a mile of the telegraph office. Money orders are often sent by telegram. The lines are owned by the Republic, and ably managed.
The Belgian telegraph lines are connected with the post-offices. For ten years messages were sent to any part of Belgium for twenty cents per twenty words, with somewhat higher charges for foreign messages crossing the country ; but some seven years since all inland messages were reduced to ten cents, while former rates for foreign messages were continued. After the reduction, the number of foreign messages remained nearly stationary, but the number of inland telegrams rose more than an hundred per cent; the whole system proved to be self-sustaining and beneficial to the country.
Switzerland and Belgium have set the pattern which England so zealously follows. France, too, copies the example of the states upon her borders in adopting telegraphy as a national enterprise. She will doubtless erelong follow their example by lowering her charges. In England, as on the continent of Europe, the average annual cost of conducting a telegraph line is not far from twenty-five dollars per mile of wire ; and as timber for poles is cheaper here than in Europe, we may infer that the cost of maintenance and management of our lines is nearly as low as it is in Europe. Assuming this to be the case, the cost of maintenance and management of a system of a hundred and twenty thousand miles of wire, which is the length of the wires of the Western Union in 1871, would fall below four millions of dollars. Mr. Dennison, our late Postmaster-General, in his report to the Senate of June 6, 1866, stated the cost of constructing a three-wire line as $ 300, and rated the cost of maintenance, including salaries, etc., at eighteen per cent, or $ 18 per mile of wire.
When ocean telegraphs were first introduced, the charge was so high that none would use them except upon some momentous question ; but as charges have declined from $ 100 to $ 15 or less per message, the business which formerly sustained but one line now supports three and demands more.
The able Secretary of the Post-Office Department, while introducing the Swiss and Belgian systems into England, had an eye to future extension. He has already laid down several cables connecting England with Ireland, and now has four cables crossing the Irish Channel, and seven connecting England with the Isles of Wight and Man, Jersey and Guernsey, and other adjacent isles ; he expects also soon to have the control of the cables leading to the Orkney, Shetland, and Sicily Isles, which are worked by companies. He has either bought or erected large shops for constructing and repairing instruments. He has in hand many extensions. His department has in London nineteen pneumatic tubes of 2¼ to 1½ inches in diameter, measuring in length in the aggregate more than nine miles. These radiate from the central office to important points around it. Through some of these fifty messages are often sent or received in one “carrier,” but a few seconds on the way. Eleven such tubes have also been placed in the commercial cities of Liverpool, Birmingham, Manchester, and Glasgow. How successfully might not such tubes be laid down in New York from a central office to stations half a mile apart from one end of Broadway to the other, or in Boston between the new Post-Office and Charlestown, Cambridge, and the Highlands !
The Secretary of the Post-Office Department has conferred a great boon upon London by giving to that city fifty new offices, and connecting it with nearly all its environs and suburban villages. He has conferred a further boon upon the public by establishing several free schools to teach telegraphy to both males and females, whence they are transferred in two or three months to clerkships ; he has thus trained more than five hundred women for his offices, and opened to their use an important branch of business. In one of his messages, after stating that complaints are diminishing and that the average is but one for six hundred messages, he alludes with some humor to those which were rife a few months since, during the transition from corporate to national management. He observes “ that it is probable and not remarkable that the complaints against us in the newspapers were more numerous than those against the companies, for it was useless and even dangerous to complain against bodies that are proof against any attack. A government department is more open to assault, and therefore more often assailed ; although the assailants have not always more reason, they have at least gained one privilege by the change, the privilege so dear to an Englishman, the privilege of complaining.
Although telegraphy is an American invention, our telegraphs lag far behind those of Europe. In 1859 we sent over our American lines 5,000,000 telegrams : and the British Isles sent in the same year 1,575,000 telegrams : the excess in the United States was 3,425,000 telegrams.
We sent then three messages for one English message. But under the new system the number of telegrams in the United Kingdom increased in 1871 to ten millions and a quarter, an amount twenty-five per cent more than the messages in the United States under the administration of the Western Union Telegraph Company.
In 1859, the average charge per telegram was in Great Britain eighty-five cents against forty cents in the United States. In 1870, if we include extra words, it has been twenty-seven cents in England against ninety-three cents in the United States. The position of the two nations has been thus reversed, and the change is adverse to the commerce of our Republic.
According to the reports of 1871, the lines of electric telegraph in the United States were as follows : —
Length Length
of lines of wires
in miles, in miles.
Lines of the Western Union Com-
pany and its Tributaries . . 62,996 127,182
Other Lines .... 10,275 27,701
Aggregate..... 73,271 154,883
We had then in 1871, 73,271 miles of telegraph, and 154,883 miles of wire, more than five sixths of which were controlled by a single company. Against such a company there can be no successful opposition by any organization except the nation. It can fix its own rates. If opposed in one State it can reduce its charges there until it has beaten its adversary, and then dictate its terms and buy up its discomfited foe. There is no account of the cost of the lines of the Western Union to which we have access, except that given by its officers in their annual reports or published letters, from copies of which we learn that this remarkable company, which now seems to overshadow the land, was originally organized twenty years since, in April, 1851, with a capital of $360,000. The length of its lines was then 1,140 miles. For nearly seven years it paid no dividends ; all its earnings were used for the acquisition of new lines. In 1857, when it its capital had reached the sum of $500,000, it began to pay large dividends, so that in thirteen years, from its birth in 1851 to 1864, it divided upon the average seventy-one per cent, — of which thirteen and a half per cent were in money and fifty-seven and a half per cent in stock, — a yearly average of seventy-one per cent on a capital averaging $758,461. In 1863, the annual receipts of the company rose to $ 1,274,214.84. It went on expanding and purchasing the stock of other companies until the spring of 1864, when its stock issued rose to $ 10,053,200, and it was then reputed to be entirely free from debt, with surplus assets after payment of its dividends.
Down to this period, its issues of stock were apparently based upon the idea that each mile of telegraph line should be represented in stock by a sum equal to the original cost of the first mile ; since that period, the capital has been increased still more rapidly, for, in 1867, the capital and debt of this company were reported as high as $45,827,000. Nearly two years since, the length of line held by this gigantic company was stated to be 62,996 miles ; and if we apply this to its nominal capital and bonds, we deduce from it, as a result, a cost of $ 700 per mile of line, averaging about two wires to the mile.
The report of 1871, as published in our journals, furnished other facts ; it states that the Western Union Telegraph Company realized for the year ending July 1, 1871, a revenue of $7,321,000 drawn from 8,000,000 of messages and business for the press, and with its income had reduced its bonded debt from five millions to four millions, and its capital stock from $41,000,000 to $35,000,000, thus bringing its capital and debt to $ 39,000,000. It then held 120,000 miles of wire and 7,000 miles of tributary wire, and its average charge on each telegram was ninety-three cents, or ten cents less than its charge in 1867. Since 1867 it had increased its wires 23,000 miles, and added 1,139 offices to the 3,061 offices which it previously held. That it had effected this at a cost in 1867 of $415,000; in 1868, of $355,000 ; in 1869, of $678,000 ; in 1870, of $ 400,000, — an aggregate of $ 1,878,000.
These, certainly, are important disclosures, for they give us some data for determining the cost of such a system at the present hour. Were we to deduce it from its nominal capital and debt by the obvious method of dividing the dollars by the number of miles of wire, namely, 120,000, we should arrive at the result, that each mile of wire, with the offices, cables, and instruments that appertain to it, had cost $ 325 per mile. But if we take the new miles of wire erected since 1867, or 23,000 miles, and divide by them the cost of $ 1,878,000 reported by the company, we shall arrive at a very different result, namely, a result of but $82 per mile ; and this result includes a due proportion of new offices and new wires in place of those deteriorated by use.
This standard is thus furnished by the company itself; and, tested by this, the cost of replacing its hundred and twenty thousand miles of wire at eighty-two dollars a mile with new wires, accompanied by new offices and instruments, would be but $ 9,640,000, or little more than this company and its rivals now extract from this country annually, and, if we add to it $ 360,000 more for river cables and other expenditures incident to a new line, we might apparently replace with ten millions of dollars the thirty-nine millions of dollars which constituted the capital and debt of this colossal Company. This result of $82 per mile of wire strongly confirms the report of Mr. Dennison, the Postmaster-General of June 2, 1866, Executive Document of the Senate No. 49, based on the computations of a telegraphic engineer. In this he sets the cost of a single-wire line at $ 150, and the cost of a six-wire line at $ 5S0 per mile, making an average cost of $ 105 per mile ; this, under a decline in gold of more than than twenty per cent, would now probably not exceed eightyfour dollars per mile of wire. The ninety-three cents per message, which the company admit was the average charge for each message, is three and a half times the sum now charged by the Post-Office Department of England for a telegram, and in a few months more it will be nearly eight times the uniform charge of sixpence which England will make for a telegram. The report of the company in 1871 gave its net income as $ 2,352,750 ; and we might infer from this income that its annual cost was close upon five millions of dollars, as its revenue for the year was stated in the report to amount to $7,320,000; but it has reduced its debt, extended its lines, and increased its offices during the year, and does not state what part of the sum invested in stocks and improvements is included in the expenditures it reports, and we are left to look to other sources for information ; and we find it in the report of Sir Frank J. Scudamore for April, 1871. In the place of eight millions of telegrams sent by the Western Union Telegraph line, he despatched more than ten millions and a quarter, and has sent them at a cost of £ 470,000, in our currency $ 2,350,000, in place of $ 5,000,000. It is true that he had not as many wires to sustain, but he had about as many offices and operatives ; and the great expense of telegraphy is not in the maintenance of the wires, it is incurred at the stations. In England and on the Continent, before the late increase of messages, five pounds or twenty-five dollars per mile have been the ordinary standard of expense for the maintenance of telegraphic lines and conducting their business. Mr. Dennison in his report sets it at eighteen per cent upon the cost of construction, which, upon our computation, would give a still lower annual charge upon each mile of wire. In Great Britain, in 1871, where so many messages were sent, the cost of maintaining and managing each mile of wire, had risen to thirty-seven dollars per mile of wire; and were we to apply this cost to the wires of the Western Union Telegraph Company, we should materially reduce its reported cost of maintenance, and might make further deductions for less messages per mile. We have shown that the British PostOffice Department conducts 63,319 miles of wire and cable, or one half the miles of the Western Union Telegraph Company, and sent over them in an expensive year more than ten millions of telegrams, and yet maintains and conducts its wires at a cost of $ 37 per mile.
Let us picture the results to the United States, should it adopt the policy of the Swiss, Belgian, and British nations, and invest ten millions of dollars in the construction of the telegraphic system, and manage it by commissioners under the Post-Office Department, as our lighthouse system is now conducted. The nation might issue, for this outlay, ten millions in five per cent bonds, either to the freedman’s or postal banks, or the Treasury Department. The interest on this would not exceed half a million, and the annual expense, at $ 37 per mile of wire, would not reach four millions and a half of dollars. The new system would become a candidate for a business exceeding nine millions of dollars ; for the receipts of the Western Union Telegraph Company last year rose, according to its report, to $ 8,457,095.77, drawn from 12,444,499 messages, and have been progressive.
If England, with sixty-three thousand three hundred and nineteen miles of wire, can send sixteen millions of telegrams yearly, this nation, with one hundred and twenty thousand miles of wire, could easily send thirty millions of telegrams at a cost of less than six millions of dollars, or twenty cents per message, and with a profit of one or two millions yearly.
Should the nation, guided by the experience of Europe, pursue this course, no American company would have a right to complain. It would be the policy as well as the duty of the PostOffice Department to tender to existing companies the cost of replacing their lines in payment for those they have erected. The nation would also undoubtedly sanction a moderate payment for the good-will of their business : they can reasonably ask no more. The interests of commerce and society imperatively demand a reduction of telegraph rates in conformity to the policy of the most liberal and enlightened nations of the globe. We must have, and that soon, in connection with the general post-office, not only the postal card, but the double letter, the sample package, and the twenty-five cent telegram.
Our President and the PostmasterGeneral have recommended the assumption of the telegraph by the state. The report of Mr. Cresswell, presented since this article was written, is a well-reasoned document, and we sincerely hope it may receive the sanction of Congress. This able report apprises us that the revenue of our Post-Office Department has risen to $21,915,426, or nearly to the standard of England, and is gaining more than nine per cent a year, that our foreign letters last year numbered 24,362,500, and are increasing at the rate of twenty per cent a year, yielding an annual revenue of $ 1,871,257. But the great measure recommended by Mr. Cresswell is the adoption of telegraphy in connection with the post-office. His estimate of the outlay required, namely, $11,880,000, is a little in excess of ours, while his estimate of the telegrams to be carried, namely, thirty millions, is the same. He shows, by very liberal estimates of cost, that the net revenue to be drawn from a uniform rate of thirty cents for any distance, will cover expenses, return ten per cent upon the investment, and thus soon extinguish the cost by the excess of income over interest.
He also informs us that the new Dominion of Canada has already taken the lead on this continent in telegraphy, and increased its revenue from messages by a uniform rate of twentyfive cents per message, and that last year the average charge for messages of any length was, in Great Britain but twenty-nine cents, in Germany but twenty-two cents, and in Belgium and Bavaria but sixteen.
In a brief essay like this, our space will not permit us to do justice to this able message, in which Mr. Cresswell demonstrates that it will be best both for the people and the press to have the telegraphs assumed by the nation ; in which he instances the refusal of the Western Union Telegraph Company to transmit the storm signals, so useful to the country, at reasonable rates ; and illustrates the importance of a control of the system in time of war, and the insufficiency of any company to do the work of the nation. He contrasts also in a striking manner the low rates of Europe with the average charges of the Western Union Telegraph Company, — ninety-three cents two years since, and seventy cents the present year. We cordially unite with him in his conclusion, that the hour has come for the nation to connect the telegraphs with the post-office, and reduce the rates to one uniform standard.
E. H. Derby.