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Telegraph :: Baltimore & Ohio Dont be a FOOL; The Law is Not DIY


Map of the Baltimore and Ohio Rail Road with its branches and connections. 1878. LOC.

"During the civil war the railroad, in connection with the American Telegraph Company, made additions to its telegraph lines in order to transmit commercial messages. When the consolidation of the Western Union and the American lines took place the Baltimore and Ohio refused to surrender the independence of its telegraph system. On Jan. 1, 1877, the Baltimore and Ohio Telegraph broke away from the Western Union and gave assistance to the Atlantic and Pacific Telegraph Company. When, in the fall of 1877, the Western Union absorbed that company the Baltimore and Ohio sought other telegraph connections, which were secured in May 1879, through the American Union Company. When the consolidation of the latter with the Western Union took place in 1881, the Baltimore and Ohio determined to establish telegraph system on a thoroughly independent basis, and the Baltimore and Ohio Telegraph Company was formed, and it soon determined to extend its lines to all important points east of the Rocky Mountains. But in 1887 the Western Union gained complete control of the Baltimore and Ohio Company, and since that time has had practically no opposition." [Encyclopaedia Britannica 1889 at 652] See also [Telegraph Tattle. Daily evening bulletin. (Maysville [Ky.]), 30 July 1885. Chronicling America: Historic American Newspapers. Lib. of Congress. ("'Form many years,' continued Mr. Bates, 'the Baltimore & Ohio telegraph lines were under the control of the Western Union company. Since the Western Union contracts expired in 1877 the Baltimore & Ohio lines have been operated independently, first in connection with the Atlantic & Pacific and next with the American Union, and for the past four years entirely independent of all companies.")]

The Baltimore & Ohio was the original telegraph line. B&O was the right of way along which Morse constructed his original experimental line. Thereafter, many of the original expansion lines were built along the B&O. These lines were built through agreement between the original telegraph companies and the B&O. The telegraph companies were permitted to build the lines along the right of way, in exchange for providing service to the railroad. The lines might be the railroads and operated by the telegraph company; or the lines by be the telegraph companies, but at the end of the contract if they did not remove the lines, they were surrendered to the railroad. The railroad controlled the most important thing for the networks - control of the right of ways. And the B&O controlled access to these right of ways in the mid-atlantic, the most valuable market for the initial communications network.

For most of its history, the B&O line will be operated by telegraph companies - until history converged - and the B&O got swept up in Jay Gould's take over of Western Union. B&O's contract with Western Union expired in the middle of the Gould hostile takeover. B&O broke with Western Union and took Gould's side as a competitive alternative. But then Gould took over Western Union in 1881. B&O attempted to go it alone as a rival in the market. But this was Jay Gould that B&O was competing against - and railroads were his playground. Another hostile takeover war was unleashed - and in 1887 Gould successfully manipulated the markets and executed a take over of the Baltimore & Ohio without B&O leadership realizing that they had lost.

But this cost Jay Gould.... another rival had entered the market, the Postal Telegraph, and having expended his financial strength on one front, he would not be able to keep the Postal Telegraph out of the market

1844: Morse's original telegraph line runs along B&O right of way

1847: Western Telegraph Company incorporated in Maryland [WU v B&0, p. 572 DMD May 26, 1884]

1848, August 8: Telegraph line completed between Baltimore and Harper's Ferry.

1853: "The Baltimore & Ohio Railroad Company, being desirous of having the free use of a line of telegraph between the termini of its road, on the eighteenth of June, 1853, entered into a contract with the Western Telegraph Company for that purpose." Contract included the important provision "In the event of a dissolution of the said telegraph company, or a suspension of operation on their part, either voluntary or in consequence of legal process of any kind, then the said railroad company shall be at liberty and are authorized to take charge of the said telegraph line for their own purposes, with the appurtenances, until the said telegraph company shall resume active operation" Contract also said that the telegraph company could not assign the line to another company. Line was constructed by B&O and operated by Western Telegraph. [WU v B&0, p. 572 DMD May 26, 1884][Reid at 151]

1859: Western Telegraph Company of Maryland leased its lines to the American Telegraph Company. [WU v B&O, p. 573 May 26, 1884]

1861: During Civil War, American Telegraph assists with Northern War Effort, expanded lines along the B&O.

1866: Western Union acquires American Telegraph Company. American Telegraph Co. assigned its lease to the Western Telegraph Co. to Western Union. [WU v B&O, p. 573 May 26, 1884]

1876: B&O Railroad gave notice that the Great Western Telegraph's license to use the road of the B&O Railroad, leased to Western Union, was expiring and that the wires should be removed. This helped pave the way for B&O to set up its own telegraph service. Federal District Court affirms that the license had expired and that Western Union did not own the wires. [WU v B&O, p. 573 May 26, 1884]

1877: The Charter of the Western Telegraph Company expired, as did its contract with B&O - and thus Western Union's right to use the B&O ROW. Baltimore & Ohio Telegraph Company founded. B&O leases lines to Gould's Atlantic & Pacific Telegraph. [WU v B&O, p. 574 May 26, 1884] [The indebtedness of the Baltimore & Ohio Telegraph Company, The Electrician & Electrical Engineer, New York, NY, United States, December 1885, vol. 4, p. 479, col. 2 ("The indebtedness of the Baltimore and Ohio Telegraph Co. from April 1, 1877, to date, connected with the acquisition and extension of the commercial system, amounts to $3,872,693")] [Reid at 151 (a new company by the same name was formed to carry on service. "On the expiration of the Charter of the Western Telegraph Company the Baltimore and Ohio Railroad Company, claiming its extinction, seized its property. The Western Union Telegraph Company, who inherited the lease, stopped payment of the rent.")] [Interstate Tel. Co. v. Baltimore & O. Tel. Co., 51 F. 49, 49 (1892) ("about 1877 the Baltimore & Ohio Railroad Company, having a system of telegraph poles and wires located along its railroads and maintained for use in its railroad business, began extending its telegraph system for general commercial telegraphing")]

1879: B&O files acceptance of the Post Roads Act

1880 March 1: Atlantic and Pacific Telegraph Company's (now owned by Western Union) contract with the Baltimore & Ohio Railroad for exclusive use of the B&O's telegraph lines expired; B&O gave notice that it would retake control of the lines; it negotiated a 10 year exclusive contract with the American Union Company (Jay Gould).[NYT March 1, 1880]

1881: American Union Telegraph acquired by Western Union, B&O becomes an independent telegraph company. [Express. The Canton advocate. (Canton, D.T. [S.D.]), 10 Nov. 1881. Chronicling America: Historic American Newspapers. Lib. of Congress. ("The B&O telegraph business in this city is soon to be taken from the American Union office and transacted in the office of the railroad company.")]

1882: "by act of the Maryland legislature, (Act 1882, c. 231,) (B&O) obtained authority to do a general telegraph business" [Interstate Tel. Co. v. Baltimore & O. Tel. Co., 51 F. 49 (1892)]

National Telegraph Line (1883): A new "National Telegraph Company" appeared in 1883 (See National Telegraph Company (1866). The two companies were not connected). The National Telegraph Company (1883) was formed by acquiring the Nickel Plate telegraph line and the West Shore Line along railroad tracks from Buffalo to Chicago. A group called the Seney Syndicate apparently sold the rights to the railroad to Vanderbilt and kept the rights to the telegraph line. [Encyclopaedia Britannica 1889 at 652 ("The National Telegraph Company was the result of a consolidation between the two telegraph lines running from Buffalo to Chicago along the 'Nickel-Plate' Railroad, and from New York city to Buffalo along the West Short Railroad. This made a continuous line from New York to Chicago.")] [The National tribune. [volume] (Washington, D.C.), 23 Aug. 1883. Chronicling America: Historic American Newspapers. Lib. of Congress. ("The National Telegraph Company was incorporated at Albany, N.Y. on Monday. The capital stock is fixed at $25,000, with a provision that it may be increased to $10,000,000. The stockholders are Calvin S Brice, Lima, Ohio, Frank E. Worcester, Brooklyn, and Jno. Simnplson, Hebert L. Ferrell, Walter Kottie, and James E. Childs, New York.")] [Evening star. [volume] (Washington, D.C.), 21 Aug. 1883. Chronicling America: Historic American Newspapers. Lib. of Congress. ("The National Telegraph Company was incorporated at Albany, N.Y. yesterday. The capital stock is fixed at $25,000 with the provision that it may be increased to $10,000,000")] [New Telegraph Company, The semi-weekly miner., p. 1 August 22, 1883 (Albany - The NTC "was incorporated today.")] [National Telegraph Company, The Railway Age, p. 54 August 30, 1883 ("This company has filed articles of incorporation with the secretary of state of Albany NY. This will open up a new means of telegraphic communication between New York and Chicago. The company has a nominal capital of $25,000 with power to increase to $10,000,000... The National Telegraph Company has obtained possession of both of these companies and will have four lines ready for business between the produce exchange in New York and the board of trade in Chicago by October 1")] [The National Telegraph Co., New York Times, Jan. 28, 1884, p. 1 ("G.T. Williams, of this city, Telegraph Superintendent of the Nickel Plate Railroad Company, has been appointed General Manager of the National Telegraph Company, which will operate the lines of the Nickel Plate, West Shore, and some lateral branches.")] [Seney Syndicate, Wikipedia ("During 1879 and 1880, the Seney Syndicate linked together several short railroads in Ohio, Indiana, and Illinois to form the Lake Erie and Western Railroad.")] [Guide to the Western Union Telegraph Company Records, Box 62, Smithsonian National Museum of American History (2015) (noting National Telegraph records from 1883 to 1914, noting 1914 dissolution) (NB that these records appear to be associated with this version of the National Telegraph Company, and not the PRA version)] [Proceedings of the Ulster County Legislature, p. 174 1885 (noting NTC as company incorporated in jurisdiction)]

1883: Western Union acquires Mutual Union Telegraph, turns Mutual Union Telegraph against Baltimore & Ohio Telegraph in a rate war. Western Union will reduce Mutual Union's rates while maintaining its own rates. Norvin Green testified about the rate war in 1890 as follows:

Mr. ANDERSON. ... you established a competing line with the Baltimore and Ohio

Mr. GREEN. Yes, sir.

Mr. ANDERSON. Under a different name.

Mr. GREEN. It was under the name of a company which we had just bought out (Mutual Union).

Mr. ANDERSON. So that this company which you organized to compete with the Baltimore and Ohio charged the same rates that the Baltimore and Ohio charged?

Mr. GREEN. Yes, sir.

Mr. ANDERSON. During the time this competition was going on in this way the Western Union Company kept up its business at the old rates?

Mr. GREEN. Yes, sir.

Mr. ANDERSON. Was there any considerable falling off of the business of the West ern Union during the period that this competition was going on

Mr. GREEN. No considerable falling off. In some places there was a falling off; but in the aggregate the falling off was not considerable. It was sufficient, however, to stop our dividends for eighteen months.

Mr. ANDERSON. During what period did this competition with the Baltimore and Ohio go on and between that company and this other company which you organized as a competing company?

Mr. GREEN. I should say that it was from January 1, 1886, to October 5, 1887.

Mr . ANDERSON. And during eighteen months you paid no dividends?

Mr. GREEN. We paid no dividends.

Mr. ANDERSON. But there was no considerable falling off in tho business of your company.

Mr. GREEN. Well, that sort of competition is an expensive luxury. It involves largely increased expenses. For instance, we had to pay high prices to get into the exchanges with that sharp competition. We had to pay a high rental in every hotel, which without such competition, would have been too glad to have a telegraph office there for nothing. So it cuts both ways.

[Testimony of Norvin Green March 1, 1890 at 24]

1884: National Telegraph Co sold its Nickel Plate and West Shore Lines to B&O Telegraph. Western Union tried to block the sale, claiming ownership of the line under Vanderbilt's mortgage, but ultimately lost the litigation). [The Telegraph, Indianapolis News,Indianapolis, Marion County, 29 January 1884 ("C.S. Bryce, president of the National Telegraph company, has transferred the capital stock of that company to the Baltimore & Ohio company. Its capital stock was $1,000,000. The price paid was $800,000. David H. Bates was elected vice president. George T Williams will remain general manager. The National lines cover the West Shore and Nickel Plate railroad system.")] [B & O Telegraph purchases National Telegraph Company, Electrical Review, New York, NY, United States, Thursday, January 31, 1884 vol. 3, no. 22, p. 10, col. 3 ("Negotiations were completed the 28th, by which the Baltimore and Ohio Telegraph Company became the owner of the property of the National Telegraph Company. The National Telegraph Company was organized about three months ago by some of the directors of the New York, West Shore and Buffalo and the Nickel Plate Railroad Companies, to purchase and capitalize the telegraph lines along the two roads from this city to Chicago. ")] [The National tribune. [volume] (Washington, D.C.), 31 Jan. 1884. Chronicling America: Historic American Newspapers. Lib. of Congress. ("On Monday the announcement was made that the Baltimore and Ohio Telegraph had bought the lines of the National Telegraph Company, which extend along the route of the West Shore and New York, Chicago and St Louis Railroads. The price paid is said to have been $1,000,000.")] [Nickel Plate Telegraph Line.; The Report That Mr. Vanderbilt Had Laid Claim To It., New York Times Feb. 16, 1884 page 3 ("Vanderbilt had taken steps to prevent the consummation of the sale of the Nickel Plate Telegraph line to the Baltimore and Ohio Telegraph Company. This line forms part of the National Telegraph line, which was recently sold by the Seney syndicate to Mr. Garrett")] [Nickel Plate Telegraph Line, Railway World, Volume 28 Feb. 23, 1884 ("This is part of the National Telegraph Line recently purchased by Mr. Garrett from the Seney syndicate. It is said that Mr. Vanderbilt claims the property under the Nickel Plate mortgage")] [Telegraph Litigations, The Electric World, p. 62 Feb. 23, 1884 ("If Mr. Vanderbilt's alleged claim that the telegraph line is included in the Nickel Plate mortgage should prove to be good, the Western Union Company would own very little property.")] [A Telegraph Decision, The Evening Gazette, Volume 2, Number 59, 29 March 1884 ("The attempt of the Western Union to prevent the Baltimore Ohio telegraph from taking possession of lines recently purchased by the latter from the National Telegraph Company, has failed.")] [Virginia free press., April 03, 1884 ("A Syracuse court decision permits the National Telegraph Co. to transfer to the B&O its Nickel Plate and West Shore Lines")] [Joseph S. Rich, Some Notes on the Telegraph Company of the United States; their Stamps and Franks. 1900 (NTC had capital of $1m, 949 miles of poles, 10k miles of line in New York, controlled by B&O Railroad. Issued stamps in 1885.)] [The Western Union Telegraph Company Against the Baltimore and Ohio Telegraph Company Et Al: In Equity, Issue SDNY 1885 (B&O Art. of Incorporation)]

B&O "owned 6,886 miles of poles, and 47,417 miles of wire" [Interstate Tel. Co. v. Baltimore & O. Tel. Co., 51 F. 49, 50 (1892)]

1884: Maryland Circuit Court affirmed B&O's rights to reclaim the telegraph line from the Western Telegraph Company, and thus from Western Union. [WU v B&0, p. 572 DMD May 26, 1884]

1885: B&O contracts with the Interstate Telegraph Company "to build, equip, operate, and maintain certain lines of telegraph in Michigan and Ohio" (when B&O sells out to WU, Interstate Telegraph Co. is "left without assets" and goes bankrupt) [Interstate Tel. Co. v. Baltimore & O. Tel. Co., 51 F. 49, 49 (1892)]

1886 Western Union leveraging Mutual Union Telegraph launches a rate war against B&O, causing losses and a reduction in the value of B&O stock, which Gould then acquired.

1887: WU acquires Baltimore and Ohio Telegraph Company [Nairn at Chap. 3] [Additional Telegraph. Denied and Affirmed. Wichita eagle. (Wichita, Kan.), 09 Oct. 1887. Chronicling America: Historic American Newspapers. Lib. of Congress. ("President Garrett most strenuously denies that Gould will ever own; While Geo. Gould also strenuously affirms that his father already owns.")] [[Interstate Tel. Co. v. Baltimore & O. Tel. Co., 51 F. 49, 50 (1892) ("on October 15,1887, the Baltimore & Ohio Railroad Company entered into an agreement with the Western Union Telegraph Company to transfer to it all said telegraph property, rights, and franchises for $5,000,000 of the stock of the Western Union Telegraph Company, and the payment by it to the Baltimore & Ohio Railroad Company of the sum of $60,000 a year for 50 years")]

WU Pres. Norvin Green will later testify before Congress that it was B&O's price war that destroyed American Rapid, Bankers & Merchant's Telegraph (acquired by Postal Telegraph), and Mutual Union Telegraph: "The Baltimore and Ohio succeeded in wrecking these three companies and was wrecked itself. It nearly wrecked the Baltimore and Ohio Railroad Company, and they had to sell out tho telegraph and to sell out their sleeping cars and their express system along with it. That is the last period with these low rates." [Testimony of Norvin Green March 1, 1890 at 24] With the take-over of Baltimore & Ohio, in the words of Norvin Green in 1890, Western Union had eliminated its "last formidable competitor" (which was perhaps a freudian slip on how Western Union regarded Postal Telegraph) [Testimony of Norvin Green March 1, 1890 at 24]

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