|Telegraph: "Era of Wasteful Competition"|
The Telegraph Bubble
Morse, an artist who had visited Europe, assumed that the United States would follow the model of European ownership of telegraph. Morse and his partners had not planned nor were they prepared to build a commercial telegraph service.
Unable to persuade the USG to purchase his patent rights and operate the telegraph networks, Morse and his financial backers established the Magnetic Telegraph Company as a holding company for the patent rights. [Wells at 12 ("Thus formally and decisively neglected by the Government, at a time when help and supervision, if ever to be given, was most needed, the enterprise of telegraphic communication in the United States, with all its risks and then unforeseen contingencies, was taken up by individuals, and, through the personal energy and private capital of comparatively few men, has been expanded to dimensions which find no parallel in the experience of any other one nation, and are surpassed only by the aggregate constructions of all the States of Europe.")] Access to commercial capital was limited. [Reid at 115 ("It was a very modest sum to ask of the great city of New York. But the men of capital looked over their immaculate collars at the ticking machinery, and into the faces of the hungry exhibitors, and up at the wire straggling among the chimney - pots, and then down at the meagre furniture, and said " No. " Each man feared to be the first fool.")] The Magnetic Telegraph Company sold patent licenses to anyone willing and able to invest; generally this meant small companies set up to establish single lines between cities. The Magnetic Telegraph Company also "obtained private funds to extend their line to Philadelphia and New York."
This ushered in the "Era of Wasteful Competition." A plethora of small companies arose building lines from city to city, sometimes overbuilding networks on the same routes. Investment poured in during a telegraph bubble. Many networks were built. Many networks failed. Many investors lost their investment. James Reid wrote that many of these networks "passed out of existence like smoke." [Reid at 222] [WU Report 1869 at 5 ("As the Government declined to assume the ownership and control of so doubtful an undertaking, the inventor had no recourse but to appeal to the enterprise of the people for the means required for its development. Capitalists, however, were slow to invest in a scheme so novel and precarious, and, as a natural consequence, there was great difficulty in obtaining funds wherewith to build lines.")] [WU Statement 1869 at 200 ("During the first few years after the introduction of the electric telegraph its progress was very slow. Capitalists were afraid to invest in an undertaking so novel and precarious, and as a natural consequence there was great difficulty in raising funds for properly building the lines, and they were constructed in a very unreliable manner, breaks and interruptions being rather the normal condition of the wires than the exception.")] [Lindley 1974 at 256 ("The combined hopes of an extensive telegraph system and quick profits proved to be an elusive will-o-the-wisp. The industry experienced unbridled, reckless construction programs in the late forties and early fifties. Competing companies constructed duplicate lines where business for one line barely existed. Numerous companies struggled bitterly for survival. Questionable construction techniques minimized costs but produced inoperable lines which required rebuilding. And instead of the projected dividends companies promised their investors, the outcome of these feverish construction programs, as often as not, was bankruptcy.")] [Lindley 1971 at 4] [Smithsonian Guide 1986 ("This corporate cornucopia developed because the owners of the telegraph patents had been unsuccessful in convincing the United States and other governments of the invention's potential usefulness. In the private sector, the owners had difficulty convincing capitalists of the commercial value of the invention. This led to the owners' willingness to sell licenses to many purchasers who organized separate companies and then built independent telegraph lines in various sections of the country.")] [Field 247 ("The next two decades were a period of rapid, and at times chaotic, growth of the telegraph industry under private ownership.")] [Hochfelder] [Beauchamp at 57 ("An Era of Methodless Enthusiasm in which a veritable plethora of new companies joined the stampede for profits" R.L. Thompson.)] [DuBoff 1984 at 54 ("The early years of the telegraph were fiercely competitive. Hasty rigging-up of lines to outdo competitors and predatory rate cutting were rampant. Three-cornered warfare soon broke out among Morse, F. 0. J. Smith, and the irrepressible Henry O’Rielly, an Irish immigrant from upstate New York, who was pressing plans for one great system stretching from the Atlantic to the Mississippi and from the Ohio River to the Great Lakes.")]
The Magnetic Telegraph Company was new to the game of corporate structure and licensing its technology out to francises. The contracts were poorly written. with vague terms and scopes. The most notorious contract was the earliest, with O'Reilly, for the construction of telegraph lines west of Philadelphia. But was it a contract for construction, or operation. And what was the geographic reach of the contract. The Magnetic Telegraph Company's contracts were negotiated by Kendall, but had to get the buy in of all the patent holders. O.J. Smith proved cantankerous, and got into arguments with contractees. When Kendall and O'Reilly modified the terms of the contract for a line from Baltimore to Philadelphia, Smith argued that O'Reilly had failed to meet the deadline and should not be paid. Smith further argued that O'Reilly's operation of lines west of Philadelphia were not authorized by the contract. O'Reilly, comprehending the ambiguity, adopted the strategy of building lines as fast as possible, solving ambiguity by establishing actual operating lines. In time, the Magnetic Telegraph Company leadership would be setting up companies to compete directly with O'Reilly companies. Thus, during the patent era, when the Magnetic Telegraph Company should have had monopoly control over its invention, it had competition, squabbling, and disorganized growth. This failure of corporate structure by the Magnetic Telegraph Company meant that another, Western Union, would rise to be the dominant telegraph company. Bell Telephone would not repeat this mistake. One of the best books on the creation of corporate structure and the telegraph market is by Joshua D. Wolff, Western Union and the Creation of the American Corporate Order, 1845 - 1893 (2013). [Thompson at 68 ("Scarcely had the new line been put into operation before one of those bitter quarrels which were to characterize the relations between the Morse patentees and their licensees broke out".)]
Also during this time came challenges to the Morse Patents and Morse licensed companies, by way of the Bain Telegraph and the House Telegraph. The Morse patentees would sue the Bain and the Morse patentees for patent infringement in 1849, with the courts ruling in favor of the Morse patent - and the Bain and House companies ultimately being acquired by the Morse patent companies.
Excess competition disciplining prices is not a favored market condition for providers. Network economics, however, are characterized by high barriers to entry, high fixed costs, and low incremental costs. It's expensive to enter the market, and the provider in the market that captures the greatest market share will be able to spread its costs among the most customers. The market is also characterized by network effect; the value of the network increase with the increase number of people that can be reached on that network. The larger the network, the greater the value, the more people want to be on that network. Finally, network economics is characterized by scale; the per mile / node cost of building and operating the network goes down as the quantity of line and equipment purchased and installed goes up. Install a few switches and the cost is X; install a lot of switches, and, to put it simple, the network operator gets a volume discount.
Industry leaders at the time thought competition was inefficient and wasteful. Their incentive was to drive towards consolidation. In a time before the Progressive Era had given teeth to anti-trust law, policy was powerless to respond (other then to ponder government ownership of industry)>
Sen. James Rood Doolittle (WI), during the debates over the Post Roads Act, described this period as follows:"From 1844 down to about 1856 there were various competing lines of telegraph built up all over the United States, and as a general thing they were failures upon the hands of those who were operating them. Although they were a great convenience to the country the men who put their money into them and engaged in building them failed. O'Reilly had his great telegraph line; other persons had their telegraph lines; but from 1854 to 1856 the gentlemen who were interested in the lines came to an arrangement by which the lines were consolidated more or less throughout the country: and in 1860, after the lines had become consolidated, this act (trancontinental telegraph) was passed by Congress letting out this matter of telegraphing across the continent to the lowest bidder, and the contract was taken in behalf of this consolidated telegraph company, and the line was built." [Post Roads Act Leg. His. at 3486]
Western Union said of this period:
"The effect of the construction and operation of rival lines of telegraph between the same points is to augment the expenses without increasing the business. While, therefore, one line might have been worked successfully, the construction of a second, and sometimes a third, resulted in the operation of all of them at a loss. Practical men saw that there was but one remedy for these difficulties, and that was by a consolidation of all the rival interests into one organization." [WU Report 1869 at 6]
"The operation of these separate and irresponsible lines, during the brief period of their existence, retards the progress of legitimate telegraphy, and impairs the general unity of the system. Any assistance which is given to further such schemes has the direct effect of aiding a class of speculators to fleece a credulous public, by inducing them to invest their money in the construction of lines which never have paid, and never can pay, the expenses of operating them, and which are of no benefit to any persons but those who originate them, and profit by their construction." [WU Report 1869 at 36]
See also [Testimony of Norvin Green May 20, 1890 at 2 ("There is, however, nothing extraordinary in that. The railroads have to do that to keep from going into bankruptcy. Every manufacturing company in the country consults their competitors about maintaining rates and agrees upon them. All the rolling mills have agreed to maintain rates, and so have the carpet and other manufacturers. It is an absolute necessity to prevent destruction from wasteful competition.")] [Hearing to Amend Communications Act of 1934 (statement of Western Union Director of Contract Department Joseph Egan]. AT&T and the Post Office were in agreement that competition was inefficient. [Postmaster Report on Government Ownership of Telegraph 1914 (page 10: "The history of this business clearly establishes the futility of competition as a means of regulating its conduct in the interest of the people.") (page 11: "Competition applied to this public utility has clearly been shown to result in waste and inefficiency due to duplication.")] [Clarence Mackay at 266 (In the 1880s, "The "Mutual Union," the "American Rapid," the "Bankers & Merchants," the "Baltimore & Ohio," the "Southern," the "Board of Trade," the "Pacific Mutual," and the original "Postal" were formed, and all were competing with each other as well as with the Western Union in the most wasteful manner.")] [Thompson at 118 (commenting on the competition between the Lake Erie Line and the Erie & Michigan line, "As the volume of business increased, competition became more bitter. Tariffs were lowered, and as a result neither company coud make a reasonable profit.")].
Sen. James Nye (NV) observed that every one of these acquisitions by Western Union "increases the tax upon every one of us that has to use that telegraph, for this additional purchase is counted in as the cost of the line, and we have to support it with its additional cost." [Post Roads Act Leg. His. at 3486]
This initiated a market cycle demonstrating network economics for commercial providers that would be repeated for both telephone service and Internet service:
- Phase I: Invention and Disruption
- Phase II: Commercialization and hyper-competition
- At this point, telegraph and telephone saw patent monopolies expire. Internet was open source but had to be released from govt AUPs that restricted commercial traffic. USPS has seen market dominance curtailed through legislative action opening the fringe of the market.
- The value of innovative communications technology drives investment into the market.
- Competitors - with a winner-takes-all goal - pursue a strategy of market-share capture by undercutting price and operating at an initial loss.
- Phase III: Consolidation and market-power
- Within a competitive market, network effect gives greater value to networks that can communicate with more stations or end users. Scale drives down the cost of network service, which required high fixed cost investments. Markets eventually tip in favor of the network providers that captured larger market share (a.k.a theory of natural monopoly) - the dominant provider can operate more efficiently and undercut competition - with the winner taking all.
- Having established market dominance, the network provider extracts monopoly rents.
- Having captured a geographic market, a provider can increase revenue by (a) vertical integration (offering additional services) or (b) horizontal acquisition of neighbor markets. Having captured individual markets, corporations expand markets through acquisition of competitors in neighbor markets with which they do not directly compete.
The telegraph "Era of Wasteful Competition" can be compared to the telephone era of "Dual Service" when there were 1000s of independent telephone companies and the Internet era known as "the Internet Bubble" when there were 1000s of dial-up ISPs. Western Union's solution in a period of unregulated industrial growth was simply to acquire or eliminate all of its competitors. AT&T's solution, as articulated by AT&T President Theodore Vail in the early 1900s, was "One System; One Service" - if AT&T could become a government sanctioned monopoly, it could make multiple incompatible and wasteful telephone systems go away; there would be one telephone system in which all telephones could reach and talk to all other telephones. Broadband Internet Service Providers solution to 1000s of dial-up ISPs was the elimination of the underlying common carrier telephone network, setting up the broadband network as an unregulated service that broadband providers did not have to share with competitive internet service providers.
1840: June 20: USPTO grants Morse's Patent No. 1647 Improvement in the Mode of Communicating Information by Signals by the Application of Electro-Magnetism [Morse Timeline LOC] [Thomas at 5 (14 year patent)] [O'Reilly, 52 U.S. at 81]
- 1838: Morse files patent application. [O'Reilly, 52 U.S. at 81]
- 1846: Morse' patent is reissued, making corrections. [O'Reilly, 56 U.S. 82] [Thomas 1860 at 5]
- 1848: Morse patent reissued again with technical correction [Thomas 1860 at 5] [O'Reilly, 52 U.S. at 82 ("on the 13th June, 1848, on the supposition there were some defects in the specifications of each of these two patents then extant, they were both surrendered and cancelled, and new patents obtained in the stead of each respectively")]
- 1854: Morse patent rights extended for seven years. [Patent Commissioner's extension of Morse's telegraph patent, 19 June 1854, Bound volume---28 March-11 August 1854] [Morse Timeline LOC] [In the matter of Samuel F.B. Morse, for an Extension for Seven Years of Letters Patent Granted to Him June 20th, 1840, Reissued January 15th, 1846, and Again Reissued June 13th, 1848, for the Electro-Magnetic Recording Telegraph (1854) (copy available at Internet Archive)] [Reid at 137] [Thomas 1860 at 5]
- 1861: Patent Expires
- Reid at 577 (O'Reilly "had been assiduous in preventing the renewal of the patent").
1846: S.F.B. Morse, Improvement in electro-magnetic telegraphs, US 4453A (granted 1846 for a term of 14 year?)
- 1848: Technical correction to patent. Improvements in Electro-Magnetic Telegraphs, USRE117E (June 13, 1848) [O'Reilly, 52 U.S. at 82 ("on the 13th June, 1848, on the supposition there were some defects in the specifications of each of these two patents then extant, they were both surrendered and cancelled, and new patents obtained in the stead of each respectively")] [O'Reilly, 56 U.S. 83 (April 16th: Morse improves invention and revises patent. Patent is corrected June 13th.)]
- Samuel Morse, Petition for Extension of Patent: In re Application of Samuel F.B. Morse for an Extension of Letters Patent Granted to Him on the 11th of April 1846, and re-issued on the 13th of June 1848 for a New and Useful Improvement in Electromagnetic Telegraph (1860)
- Decision of Philip F. Thomas, Commissioner of Patents: On the Application of Samuel F.B. Morse, for an Extension of His Patent for a New and Useful Improvement in Electro-magnetic Telegraphs. Patented Apr. 11, 1846. Patent Extended for Seven Years Apr. 11, 1860 ("It is, thereupon, ordered that the said letters patent, be, and the same are hereby extended for the term of seven years, from and after the expiration thereof.") [“THE MORSE TELEGRAPH EXTENSION CASE.” Scientific American, vol. 2, no. 19, 1860, pp. 290–292. JSTOR ("An erroneous impression seems to prevail to some extent in relation to this matter. One of our contemporaries states that this patent had been previously extended twice. This is wholly incorrect. The patent was granted in 1846, and was never until now extended. In 1840, Morse obtained a patent for his first invention. That patent was extended for seven years in 1854, and will expire in June 1861")] [Bigler Report to the Senate Committee on Patents, in re the Petition of Samuel Morse to extend his 1840 patent (S. 575) (March 2, 1861) ("the second patent, which would have expired in 1860, was extended, in April 1860, for seven years... the petitioner now asks for a further extension of his patent of 1840... for the more limited term till the expiration of his second patent of 1846")]
The expiration of the Morse patent led to an influx of new companies during the early 1860s; these companies were not sued for patent infringement.
1837Postmaster General Amos Kendal appoints Henry O'Reilly to be the head of the Rochester post office. O'Reilly hires as an assistant James D. Reid. [Thompson at 71]
Magnetic Telegraph Company Morse, Alfred Vail, and L.D. Gale hired Amos Kendall, former Postmaster General and member of Andrew Jackson's "Kitchen Cabinet", to manage their new company. May 15th: Morse and his partners (including Ezra Cornell) form the Magnetic Telegraph Company. [Reid at 112] [Smithsonian] [Standage 53] [Beauchamp p. 58] [Smithsonian Guide 1986] [Thompson at 38 ("Kendall's experience as Postmaster General had given him a thorough familiarity with the main commercial routes of the country. He proposed, therefore, to interest private capital in the construction of telegraph lines along these routes")] Magnetic Telegraph Co. sold licenses to other telegraph companies, with the anticipation that it could all be bought by the USG. [Smithsonian Guide 1986] [USPS 2015 ("The first license agreements contained a provision that the rights to the telegraph were subject to purchase by the U.S. Government until March 3, 1847, after which time "the rights of all those who now engage in the enterprise, will become absolute, and not to be divested without their consent." ("Morse's Magnetic Telegraph," Vermont Family Visitor, August 1, 1845, 27, AAS Historical Periodicals Collection, http://search.ebscohost.com, accessed April 3, 2015.) ")] [Thompson at 40 ("While Kendall was working earnestly for the development of the telegraph by private enterprise, he strongly favored the sale of the patent rights to the government. Provisions had been made in every contract for the purchase of the lines at cost-plus premiums ranging from 20 to 100 percent, should Congress take steps to secure the invention prior to March 4, 1847")]
- April 1: Government line between Washington D.C. and Baltimore opens for business
- Magnetic Telegraph Company expands lines. Each line would be organized as a separate corporation in order to raise capital for that line. [Smithsonian] [Branch at 22] [Smithsonian Guide 1986] [Encyclopaedia Britannica 1889 at 650 ("became the great line of the North")] "The cost of construction, including wire, posts, labor, &c., is about one hundred and fifty dollars per mile." "The average performance of the Morse instruments is to transmit from eight thousand to nine thousand letters per hour. The usual charge of transmission is twenty-five cents for ten words, or less, sent one hundred miles." [Census 1852 107-09]
- Line Philly to New York [Reid at 114, 117, 119 ("Early in November, 1845, the line was first opened between Philadelphia and Norristown, Pa"; "The line was completed to Fort Lee January 20 , 1846")] [Thompson at 42 (a circuitous from Philly to Newark "was necessitated by Kendall's inability to make satisfactory arrangements with the railroads for use of their rights of way.")]
- New York, Albany and Buffalo Telegraph company (Morse Patent, Faxton contract) established May 30 (Butterfield). Opens for business July 3, 1846 "The opening of the office here was eventful and exciting day in the city. When the machine was connected and the operator had adjusted his relay, Albany called him up and asked 'Do you hear me?' When Rochester answered 'To be sure I do,' Albany quickly rejoined, 'Ha ha! Dr. Tichnor, give me your hand!' These words communicated to the crowd, were caught up by the excited spectators and passed mouth to mouth, and the telegraph and the mysterious hand-shaking were on every lip." [Cheney, The Early Days of Telegraph, Telegraph Age Jan 1909] [Thompson at 62, 81] [Ezra Cornell Timeline ("Cornell erects portion of line between New York and Albany.")]
Long Distance Service: "Another source of difficulty was the constant conflict between 'way business' and 'through business' for the use of the line. The single wire connecting New York and Buffalo was needed most of the time for the transmission of messages between the two great terminal cities much to the annoyance of such 'way stations' as Albany, Utica, Syracuse, and Rochester. Because of the slowness and uncertainty of the 'way service' people became dissatisfied with it and the company lost much business." [Thompson at 68]
Interconnection: In perhaps one of the earliest interconnection disputes: The New York, Albany and Buffalo contract from Kendall provided that the line must interconnect with local branch lines, and that the local branch lines would pay the main line 50% of the revenue for the message (sending party pays). The main line found that this gave it only a small profit. The main line reinterpreted the contract with the Magnetic Telegraph Company, and declared that it would continue to interconnect with the branch lines, but on distance sensitive basis. This increased the price of telegraph service for many of the branch lines, threatening to put them out of business (and when out of business, easy acquisition targets for the NY, Albany, and Buffalo Company). Kendall of the Magnetic Telegraph company threatened to overbuild the New York, Albany and Buffalo line with a line dedicated to interconnecting with the branch lines. The dispute was settled with the Magnetic Telegraph Company agreeing to convey the patent rights of future branch lines to the NY, Albany, and Buffalo line for $40,000 in stock, and the NY, Albany, and Buffalo line agreeing to interconnect and carry the messages of all the branch lines. [Thompson at 68-69]
- Oct. 22: New York & Boston Magnetic Telegraph Co. established (Magnetic Telegraph Co., Smith). Opens for public service June 27, 1846 but struggled with technical difficulties [Thompson at 57] [Beauchamp 58]
- New York State passes law protecting telegraph company property. The glass insulators of the poles were attractive for target practice by hunters [Thompson at 67]
- Bored Network Operators would play checkers over telegraph lines, establishing the first electronic games over networks. [Standage 132] [Wheeler 22 ("During the first year of operation… Chess matches with the opponents 40 miles apart were staged to demonstration the potential of the technology." )]
O'Reilly Contract: "O'Reilly undertakes on his part, at his own expense, to use his best endeavors to raise capital for the construction of a line of More's Electro-Magnetic Telegraph, to connect the great Seaboard Line (Magnetic Telegraph Company) at Philadelphia, or at such other convenient point on said line as may approach nearer to Harrisburg in Pennsylvania, and from thence through Harrisburg and other immediate towns to Pittsburgh; and thence through Wheeling and Cincinnati, and such other towns and cities as the said O'Reilly and his associates may elect to St. Louis, and also the principal towns on the Lakes." [Thompson at 76]
Atlantic, Lake, & Mississippi Telegraph Regulations:
1st - The Telegraph is to be opened at all reasonable hours, to all persons according to the priority of their visits. No person, except a publisher [unreadable] on business of urgent public interest (such as the prevention of crime and the detection of [unreadable]), being allowed the use of the telegraph more than ten minutes at a time, when others are waiting.
2nd - All despataches to and from the state offices, concerning the public works of Pennsylvania, to be forwarded free of expense.
3rd - Despatches not exceeding fifteen words, including address and signature, sent for twelve and a-half cents. Newspaper editors half this rate, and a larger reduction when much intelligence is sent.
[Thompson at 111]
- June 13: O'Reilly receives a Magnetic Telegraph contract. [Branch at 22 ("Treating with inventor Morse and Postmaster-General Amos Kendall, he obtained the contract for a great telegraphic system from the seaboard to the young capitals of the Mississippi basin")] [O'Reilly, 56 U.S. at 65] [Thompson at 70 ("The signing of his contract with the patentees symbolized a literal giving of himself to the telegraph, and he eagerly prepared to undertake his great mission. Broad as were its terms, his charter was to prove too confining; vast as were its boundaries, he was chafe under its limitations. Family, fortune, friends - all were to be sacrificed to the cause which was to exact so much and leave so little to the man who might well be termed the telegraph's most untiring servant.")] [Reid at 186 (O'Reilly had license to Ohio, Indiana, Illinois, and Michigan.)] It is an early poorly written Magnetic Telegraph contract for construction - not organization. Litigation and negotiation concerning the scope of the O'Reilly contract ensued. [Thompson at 70 ("The O'Reilly contract with the patentees was a masterpiece of ambiguity. This famous document, under which the Atlantic, Lake & Mississippi Telegraph now prepared to operate, was to lead to more dissension and prove the source of more litigation than any other single agreement associated with the early lines.") [Branch at 22 ("Almost every phrase of the contract was a picnic-ground for litigation; and before the wires reached Pittsburgh, lawyers were at the feast.")]
O'Reilly forms the Atlantic, Lake & Mississippi Telegraph company as his parent company, with funding from the Rochester Group. Thompson describes O'Reilly's corporate strategy:"The Atlantic, Lake & Mississippi Telegraph was to divide the territory covered by the O'Reilly contract into section, and separate companies were to be organized within each. These companies would be independent in property and profits; their only connection with the other sections of the O'Reilly system would be through a representative in a general 'Telegraph Association' which O'Reilly and his associates planned to organize." [Thompson at 73]
Result is a series of smaller companies that would in time be easy to acquire for the company that would become Western Union. According to Reid,The appeal to the dignity of local control was agreeable to average human nature, and secured, no doubt, some of the subscriptions — perhaps many of them. And so it came to pass that the field of the O'Reilly contract was divided among six distinct companies, absolutely independent of each other. They were so independent that, in coming days, when Sibley and Wade, the great line gobblers, commenced their western campaign, they found these companies as Napoleon used to delight in finding his enemies, in detached armies, whom he fell upon and demolished in detail [Reid at 165]
- The O'Reilly companies, pursuant to the contract with the Magnetic Telegraph Company, were as follows: [Thompson at 73]
- Atlantic & Ohio Telegraph Company :: Philly to Pittsburgh (trunk line to West) (acquired by WU 1864)
- Pittsburgh, Cincinnati, & Louisville Telegraph Company :: Pittsburgh to Louisville (acquired by Western Union in 1856)
- Ohio & Mississippi Telegraph Company :: Louisville to St. Louis (acquired by Western Union in 1856)
- Ohio, Indiana & Illinois Telegraph Company :: Dayton to Toledo and Chicago (acquired by Ezra Cornell in 1853)
- Lake Erie Telegraph Company :: Buffalo, Detroit, Cleveland, Pittsburgh (trunk line to West) (acquired by Western Union in 1854)
- Illinois & Mississippi Telegraph Company :: St Louis to Chicago (acquired by Western Union in 1866, the last O'Reilly company to be acquired by Western Union)
O'Reilly also built the
- People's Telegraph (acquired by the New Orleans & Ohio Telegraph Company (Magnetic) in 1853)
- Pittsburgh becomes a central switching office for O'Reilly and becomes strategic in the business tactics as the companies negotiated with each other
- O'Reilly will also build lines using the Bain into New England and House patent including the People's Telegraph to New Orleans
- Atlantic & Ohio Telegraph Company (O'Reilly Contract; Morse Patent; Rochester funding) line Philly to Pittsburgh Line Route: Philadelphia - Harrisburg - Chambersburg - Pittsburgh - Wheeling - Cincinnati - St Louis. Line Lancaster - Harrisburg was completed January 8th, 1846 and opened to the public the next day. [Thompson at 79] Line was completed to Pittsburgh in 1846 and was opened to the public Jan. 1, 1847. [Thompson at 81, 98] [Branch at 22, 23 (construction line from Lancaster starts Sept 1845)] Branch recounts of the opening of the Pittsburgh office:One hopes that the visitors to the Pittsburgh Telegraphery on that first afternoon observed O'Rielly's handbill: "GENTLEMEN visiting the room merely as spectators are assigned ample space, and respectfully requested to OBSERVE THE RULES, as the most Perfect Order is desired for the convenience of the Public, as well as for the Telegraphers." For they were witnesses to the dedication of a highway of thought and information. The channelled lightning was to talk to Pittsburghers, and talk for them, of many things: the arrivals of ships, the quotations on sealing-wax; the results of elections, and "all is forgiven" to distant prodigals; orders made and countermanded as prices shifted in distant markets; "joy speeding on the track of sorrow"; assurances of undying love, and the price of calves in Cincinnati.
[Branch at 24-25] [Thompson at 98 ("The commercial interests of Pittsburgh were too closely linked with the Atlantic seaboard to overlook any reasonable means for facilitating discourse.")] Aaron Stager was the first clerk of the Pittsburgh office. In 1850, Andrew Carnegie working as a messenger for Ohio Telegraph Company in the Pittsburgh office; takes a telegraph job at the Pennsylvania Railroad Company. Pittsburgh office becomes major switching office, interconnecting traffic from the South (New Orleans), the West (Louisville and St Louis) and Chicago - to the East and North. In time Southwestern Telegraph will avoid sending its traffic through American Telegraph (its rival) instead sending it through Pittsburgh [Branch at 26] [Reid at 177]`
Canst thou send lightnings, that they may go, and say unto thee, Here we are? - Job 38:35.
Quoted on the cover of the Erie & Michigan Telegraph Company Articles of Incorporation 1846
“In 1848 the above (Magnetic Telegraph Company NYC to Boston) had a monopoly of the business between (New York City and Boston), but in 1849 two rival companies constructed lines over this route and divided the business with it.
"In 1848 the tariff between New York and Boston was fifty cents for the first ten words, and three cents for each added word; and to intermediate points twenty-five cents for the first ten words, and two cents for each added word.
"In 1849 the rate was reduced between New York and Boston to thirty cents, in 1850 to twenty cents, and in 1852 to ten cents. None of the lines, however, paid their working expenses from the time of their construction up to 1853. Even in 1848, when there was no opposition, the expenses exceeded the receipts by $1,199.00. One of the three lines was sold at public auction twice within three years after its construction, to pay the debts incurred in operating it. In 1853 two of the lines were united under one control, and an amicable arrangement entered into between the two remaining companies, by which the rates were advanced approximately to those of 1848, and they remained unchanged for the next ten years."
[Statement of Western Union 1869 at 41]
"The Magnetic Telegraph from Baltimore to Harpers Ferry has been completed, and the first flash from this lightning line, was emitted on Tuesday last. An efficient operator has been procured, and communications are now hourly sent to and from Harpers Ferry. This wonder of the age (the Magnetic Telegraph) is annihilating space, as distance but give enchantment to the [charmed]. In a few months more, and the most remote borders of our Union will be linked together by a chord of iron, and intelligence transmitted so speedily, that the time will scarce enter into the account." - [The Telegraph, Spirit of Jefferson, page 2, Col. 2, Aug. 15, 1848 (part of the Baltimore & Ohio line)]
"The following table exhibits the annual receipts of the 'Magnetic Telegraph Company,' extending from Washington to New York, which was the first organized in this country:
From Jan. 27, 1846
to July 1, 1846:
$4228.77 to July 1, 1847: $32,810.28 to July 1, 1848: $52,252.81 to July 1, 1849: $63,367.62 to July 1, 1850: $61,383.98 to July 1, 1851: $67,737.12 to July 1, 1852: $103,860.84
Total amount received up to July 1852: $385,641.42. In 1852, the telegraph charges from Washington to various cities were as follows: Baltimore, 20 cents; Boston, 75 cents; Buffalo, 90 cents; Chicago, $1.25; Cincinnati, 70 cents; Louisville, 90 cents; Milwaukee, $1.35; Nashville, $1.35; New Orleans, $2.20; New York, 50 cents; Philadelphia, 30 cents; Pittsburgh, 45 cents; Portland, Me., 95 cents; St. Louis, $1.20." [Encyclopaedia Britannica 1889 at 650]"
January 22, 1848 New York Herald - map of existing Telegraph lines
Source: Alexander Bain's chemical telegraph, England, 1850. The Science Museum.
1846: Mexican American War
- 40 miles of U.S. telegraph line. [Wheeler 24]
- Magnetic Telegraph Company
- Jan. 20: Line completed Philly to Newark. "But NYC, the ultimate goal, could not be reached until some practical method could be found for spanning the Hudson River." [Thompson at 43, 81]
- Contract is given to O'Reilly (outbidding FO Smith) to construct line to Baltimore and DC. June. June 5: Philly to Baltimore line opens; connections were made to the government line to D.C. completed June 5. [Reid at 122] [Electrical World 1903 at 115] [Thompson at 48, 50, 81 (O'Reilly invests $4000 in the line, the largest investor. Early delay in construction came because of "the refusal of railroads to grant rights of way on satisfactory terms." O'Rielly believed that he and Kendall had modified the terms of the contract, permitting extension of the line and the time in which to build it. Based on the original terms, the Magnetic Board and particularly Smith argued that O'Reilly had failed to timely fulfill the terms of the contract - and significantly reduced his pay. "O'Rielly was badly used by the Magnetic Board") 80 ("Before the expiration of a month (O'Reilly) had arranged with the Philadelphia, Wilmington & Baltimore Railroad for passage of the line along its right of way. Kenall was pleased by the arrangement, since it gave the Magnetic the direct and most desirable right of way into the South.")] [Branch at 23] [Beauchamp 58]
- November: Washington & New Orleans Telegraph Company (Morse Patent, Magnetic Telegraph Company license, financing from John Haley of NYC) established. Line DC- Wilmington - Charleston - Montgomery - Mobile - New Orleans. In DC the line would interconnect with the Magnetic Telegraph Company. [Reid at 144] [Thompson at 51 (a bill appropriating money for this purpose was introduced into the Senate. Meeting with stiff opposition lead by southerner John Calhoun, the proposition was withdrawn.")] [Beauchamp 58] It struggles and is leased to the Magnetic Telegraph Company in 1856. In 1859, through American Telegraph's acquisition of Magnetic Telegraph, it becomes part of American Telegraph.
- Revenue at office as of July 7: Philly: $223.50 (three months revenue); NYC: $293.17 (Jan 1 to June 6). Total cash receipts 1846: $4228.77 [Reid at 125]
- Erie & Michigan Telegraph Company (Magnetic Telegraph Company Smith, Morse Patent, Smith organize) established. Speed hired to construct lines; Speed hires Wade in 1847. Competing directly with O'Reilly's Lake line, has trouble raising capital. As a result, Cornel become involved in company. 1855 becomes Western Union). Route: Detroit - Chicago - Milwaukee - South Bend - Kalamazoo - Battle Creek - Jackson - Ann Arbor - Toldedo - Sandusky - Cleveland - Erie - Buffalo. Compete's with O'Reilly's Lake line. Line from Cleveland to Cincinnati completed 1850 [Erie and Michigan Telegraph Company Articles of Incorporation 1946] [Reid at 268] [Thompson at 89, 111, 114 (recounting Wade negotiating with Native Americans "who feared the telegraph would burn their buildings, kill their cattle, and blight their crops." Wade negotiated that his line was okay, but the opposition line "give 'em hell.")] [Telegraphs & Telephones, Encyclopedia of Cleveland History, Case Western Reserve Uni ("There was too little business, however, to support all the rival companies. Speed, Wade, and Cornell were among the first to see the need for consolidation.")] [Case Western Reserve ("By summer 1848, the Lake Erie Line faced competition from the Erie & Michigan Telegraph Line extending from Buffalo to Milwaukee through Cleveland, Detroit, and Chicago.")]
- Magnetic Telegraph Company hires James Reid to be superintendent of the line. [Thompson at 54]
- The war creates demand for news from the conflict, resulting in the creation of Associated Press. Initially AP funded a Pony Express route. [AP History] "The great extent of the telegraph business, and its importance to the community, is shown by a statement of the amount paid for despatches by the associated press of New York, composed of seven principal morning papers – the Courier and Enquirer, Tribune, Herald, Journal of Commerce, Sun, Times, and Express. During the year ending November 1, 1852, these papers paid nearly fifty thousand dollars for despatches, and about fourteen thousand dollars for special and exclusive messages not included in expenses of the association." [Census 1852 110] [New York Natives]
- "The telegraph companies had an anti-monopoly regulation, that one party could not use the wires for more than ten minutes at a time. " [Branch at 27]
House Printing Telegraph
- Royal E House patented his printing telegraph, creating one of several rival telegraph technologies. [Royal E. House, Improvement in Magnetic Printing Telegraphs, Patent No. 4,464. Patented April 18; 1846 ("Be it known that I, ROYAL. E. HousE, of the city of New York, in the United States of America, have invented new and useful machinery for transmitting intelligence between distant places and permanently recording the same in letters or other signs by an application of the power of electricity or galvanism, which I do denominate and call. The Magnetic Letter-Printing. Telegraph,” of which the following is a full and accurate description. ")] [Image of House Telegraph] [Thompson at 54] The House Telegraph rights were held by Judge Samuel Selden (Western Union, Rochester Group) - who aligned with O'Reilly against the Morse Patentees (Smith). [Thompson at 89] [Smithsonian] [Smithsonian Guide 1986] [EHA] [Census 1852 111]
- 1848: New York to Washington Printing Telegraph Company established. [Reid at 140 ("The opposition of the House Printing Telegraph Company between New York and Philadelphia was, however, never seriously felt")]
- 1849: House lines were built from Philadelphia to New York. The New York & Boston Telegraph Company built built a line. NYC to Buffalo line was built, as well as St. Louis and Chicago. Morse Patentees sue New York & Boston Telegraph Company, using the House System, for patent infringement; Supreme Court rules in favor of Morse 1850. House Telegraph is acquired by American Telegraph Company. [WU Statement 1869 at 141]
- 1849: Samuel Selden establishes the New York Printing Telegraph Company, and then in 1851, the New York & Mississippi Printing Telegraph Company
- 1853: Morse v. O'Reilly, Supreme Court Case
- 1854: House and Wade consolidated their lines
- Ithaca Telegraph Company established [(20 July 1846). Telegraph from Ithaca to Auburn, New York Herald]
- Electric Telegraph Company of England incorporated. [Statement of Western Union 1869 at 97]
1847: "Era of Methodless Enthusiasm"
"Era of Methodless Enthusiasm" [Thompson at 95, 109 ("The contest for the Great Lakes area might well serve as an epitome of the era of methodless enthusiasm. Along with four hundred mile front with business for no more than one company, two rival telegraph concerns stretched their eager but impoverished lines. Endless litigation and inefficient operationn, coupled with the ills of competition, sapped the vitality of both lines from the beginning, and brought telegraphy generally into disfavor.")]
- Magnetic Telegraph company
- Magnetic Telegraph Company takes over the original government Washington to Baltimore line
- New Orleans & Ohio Telegraph Co. (Magnetic Telegraph, Kendal) established to oppose the O'Reilly People's Telegraph line (Morse Patent; 1850 interconnects with Atlantic & Ohio Telegraph in Cleveland; merges with People's Telegraph in 1853
- Ezra Cornell and Speed becomes sole agents for Morse Patent for the Magnetic Telegraph Company, pursuant to an agreement with FO Smith, for the five Western states. [Ezra Cornell Timeline]
- New York & Erie Telegraph Co. established (Magnetic Telegraph, Smith). Smith want to build this as a trunk line, running along the southern border of the state of New York, to interconnect with and carry the traffic of the Erie & Michigan Telegraph Company. Speed hires Ezra Cornell and John Speed. [Thompson at 107] [Beauchamp 58] Line fails in 1952; Cornell buys it and renames it the New York & Western Union Telegraph Company. [Reid at 280-81 ("The name Western Union Telegraph Company was given at the instance of Mr. Cornell who had already affixed it as part of the title of the New York & Erie Telegraph Company, east of Dunkirk." "The Morse patents acquired under the act of consolidation were not to be used to the injury, direct or indirect, of the lines of the "Illinois and Mississippi,” “Wisconsin State," and “Ohio, Indiana and Illinois” Telegraph Companies.")] [Ezra Cornell Timeline] [Reid at 293][Cornell Uni ("Cornell had bought back one of his bankrupt companies and renamed it the New York & Western Union Telegraph Company.")] [WU Report 1869 at 6 ("but during the autumn of that year (1851) a few of the more important companies were united under one management, and with beneficial results to the system and to public convenience. The consolidation of these companies was a step in the right direction, as it increased their facilities while it lessened their expenses.") New York & Western Union Telegraph Company leases lines to the New York, Albany, & Buffalo Telegraph company for two years. The lease was not successful and at the end of two years the New York & Western Union Telegraph Company "gradually vanished away." [Reid at 293]
- Maine Telegraph Co. [Beauchamp 58]
- New York & Boston Telegraph Association votes to refuse interconnection with any non Morse Patent telegraph system. [Thompson at 121 ("New York & Boston Telegraph Association ruled that in the future it would not receive messages 'from or for any line of Telegraph not established under the Titles Patent of Samuel F.B. Morse.'"")]
- O'Reilly Contract
- Lake Erie Telegraph Co. established (O'Reilly Contract, Morse Patent). Route: Buffalo - Pittsburgh - Cleveland - Detroit. AKA "The Lake Line." Cleveland-Pittsburgh line opens 1847. Incorporated and Full line opens 1848. James Reid Superintendent. Smith established the Erie & Michigan Line to compete against this line. Acquired in 1854. [Reid at 256] [Busch] [Beauchamp 58] [Telegraphs & Telephones, Encyclopedia of Cleveland History, Case Western Reserve Uni ("Like most early telegraph lines, the Lake Erie and Erie & Michigan lines were built hastily, using cheap materials and poor insulators. The telegraph columns of the newspapers frequently contained apologies instead of the latest news.")] [Thompson at 121 (August Pittsburgh to Cleveland branch line opens)] [Case Western Reserve ("was in full operation by spring 1848")]
- Pittsburgh, Cincinnati & Louisville Co (Morse Patent; O'Reilly) established, opens [Reid at 179 (Route: North shore Ohio - Steubenville - Wheeling - Zanesville - Cincinnati - Columbus - Dayton - Lawrenceburg - Madison - Jeffersonville - Louisville; completed Dec. 29, 1847 "There was not much difficulty in obtaining right of way through cities for the poles and wires")] [Branch at 25, 26 (completed to Louisville Dec. 1847, "In 1848 some three hundred messages a day-when the flimsy state of the westward lines permitted-were being exchanged between Pittsburgh and Cincinnati")] [Beauchamp 58] [Dayton Telegraphery Cash Book, 1847-1856] [Thompson at 121 (August line opens in Cincinnati, September line completed to Louisville)] James Reid hires Anson Stager for the Louisville office. [Reid at 187]
- O'Reilly builds lines to Chicago. [Branch at 25]
- With the passing of the Fall and the completion of these lines, O'Reilly's strategy changes. From this point, he determines to expand his network further, based on the alternative House and Bain patent, achieving wide geographic reach. [Thompson at 122]
- Ohio & Mississippi Printing Telegraph Co. (O'Reilly Contract, House Patent) established. Line west New Albany, Ind. through Vincennes to St. Louis. [Reid at 220 (line completed December 1847, the Ohio & Mississippi Telegraph Company was organized March 21, 1848)] [Beauchamp 58] [Encyclopaedia Britannica 1889 at 651 ("In 1855 the rival lines (Some of the O'Reilly lines) in the West had all be consolidated into one company, which was named the Ohio & Mississippi Printing Telegraph Company. The word 'printing' was added on account of the company's using the House instrument. This company was incorporated in 1851 by the State of New York, with a capital of $360,000, of which about $75,000 was paid. At that time this company was only one of some twenty or thirty that were struggling for existence")] [Thompson at 422 (opened for business December 1847; commenting that O'Reilly was in such a rush to build his network he was over extending himself financially)] [Rules for the government of the offices of the Ohio & Mississippi Telegraph Company 1848] [Thompson at 122 (noting this as O'Reilly expanding outside the Magnetic Telegraph Co contract)]
- 2000 miles of U.S. telegraph line [Wheeler 24]
- Western Telegraph Co. (Morse Patent, Smith) established (Morse Patent, Smith backing, Case).[Thompson at 89 (organized in 1847)]
- New Brunswick Electric Telegraph Co. [Beauchamp 58]
- O'Reilly Contract - Going Beyond the Magnetic Telegraph Co. Contract
- Atlantic & Ohio Telegraph Co. established. Takes over Philly to Pittsburgh service from O'Reilly contract, resulting in conflict with the original O'Reilly contract licensees. Acquires Harrisburg to Baltimore line from American Telegraph Company. 1851: Leases line from Magnetic Telegraph Co from Philly to NYC. [Reid at 149, 163, 165: ("One of the first acts of the company after its organization under a charter granted by the State of Pennsylvania, was to offer to the patentees their stock and all accrued profits, whenever they were willing to transfer the patent papers to the company. All attempts to settle, however, were fruitless.")] [Branch at 26 ("O'Rielly and the Morse-Kendall group of patentees and promoters had long since severed relations; the Morse group was building competitive lines with the same frenetic haste which characterized the Atlantic and Ohio extensions. In January, 1850, the rival line reached Pittsburgh.")] [Beauchamp 58]
- Interconnection: "Up to 1851, the O'Reilly lines had no outlet to the seaboard except at Philadelphia. The large telegraphic intercourse of St. Louis, and all the cities of the Ohio, with New York, Boston, Baltimore, Washington, etc., had to be given over to the Magnetic Telegraph Company, at Philadelphia, for transmission. The value of the act of the Atlantic and Ohio Company in leasing, in 1851, a wire to New York, was at once felt at St. Louis and rejoiced in." [Reid at 227]
- Ohio, Indiana & Illinois Telegraph established (O'Reilly Contract; Morse Contract) [Reid at 249 ("from Dayton , O . , to Toledo and Chicago , via Indianapolis")] [Thompson at 122, 126 (suggesting that this might have been House Patent, Lafayette office opened 1849; Chicago and Toledo opened 1850; short on capital, Henry O'Reilly put up $37K of the $80K needed for construction)]
- People's Telegraph Co. (O'Reilly Contract; House Patent) established. Office opens in Nashville March 7th. (Louisville - Nashville - Memphis - New Orleans). [Villanova University Library, Lane Exhibit, Telegraph (with copy of organization of People's Telegraph Co.)] [Branch at 26 (construction begins 1847)] [Reid at 202] [Reid at 198 (Route: Nashville - Tuscumbia, Ala., Columbus and Jackson, Miss., and thence through Clinton and Baton Rouge, La., to New Orleans - full line was completed in 1849. The line was not necessarily authorized by the Magnetic Telegraph License; litigation ensued; O'Reilly lost and switched over to the Bain system for the New Orleans line)] [Reid at 149, 155 (build original line from Lancaster to Harrisburg PA.), 171 ("In the midst of my work (Reid for Atlantic & Ohio Telegraph) in 1850, I encountered at Louisville the builders of the O'Reilly  line to New Orleans.... They had not a hundred dollars among them all. The line was not working. New Orleans was cut off by an immense crevasse at Bonnet Carre. Debts were due along the whole route. The operators were all unpaid. Knowing the value of a New Orleans connection to the companies I served, I first banteringly and then formally offered to take the line as it was, if given to my sole control, at a rent of $13,500 a year. It was accepted.")] [Reid at 202 ("The route from Nashville was via Waynesboro , Pontotoc , Grenada , Natchez , Vicksburg and Baton Rouge .")] [Lindley 1974 at 256] [Beauchamp 58]
- Alexander Bain, Improvement in Copying Surfaces by Electricity, US5957A (granted December 5, 1848); Alexander Bain, Improvements in Electric Telegraphs, US6328A (granted April 17, 1849); Alexander Bain, Improvement in Electro-Chemical Telegraphs, US6837A (October 30, 1849)
- 1848: North American Telegraph Company established. [Reid at 140] Sets up 2000 miles of line in New England. [Census 1852 111] [John I. Reilly (advertising the construction of 4000 miles of telegraph line by Henry O'Reilly from Atlantic to Mississippi using Bain patent)] [Thompson at 130 (Henry O'Reilly worked with Bain to patent his electro-chemical telegraph)]
- 1849: Morse patentees sue Bain telegraph for patent infringement. [Reid at 109 ("Bain's system was stopped because it was a part of Morse's, and patented by him. He used Morse's alphabet; he used Morse's paper; he used Morse's clock.")]
- 1852: Magnetic Company acquires Bain systems [Reid at 140 ("the result of which was that the Morse claims were thoroughly established, and on January 1, 1852, the property of the Bain line was surrendered to the Magnetic Company for an issue of $83,000 of Magnetic stock, all damages by reason of alleged violation of the pat ent to be waived.")] [Encyclopaedia Britannica 1889 at ("In 1849 the owners of the Morse patent sued the Bain operators, and a compromise was concluded by which the Morse patents were used over the wires of both companies. ")] [EHA ("In 1852 the Supreme Court declared the Bain telegraph an infringement on Morse’s patent, and Bain lines merged with Morse lines across the country")]
- The Bain system was designed to send more messages over a wire by preparing the messages ahead of time on paper tape, and then feeding the tape into an automatic telegraph machine. [Western Union Annual Report 1869 at 37 ("In 1844 Mr. Bain, of Edinburgh, devised a plan of perforating the despatches for transmission through a strip of paper, in the characters of the Morse alphabet. The prepared paper was then passed between a metallic comb and roller, which were in connection with the line wire, the circuit being completed when the teeth of the comb passed through the holes in the paper. At the receiving station he used chemically prepared paper, upon which the messages were recorded in colored dots and lines.")] [John I. Reilly ("It may be remarked, in passing, that the great object of Bain's quickest mode of Telegraphing, is to make a single line of wire transmit as much as could be done by many lines worked by hand with the ordinary instruments.")]
- Bain Telegraph again becomes of interest in the dispute over the Automatic Telegraph System.
- [Smithsonian Guide 1986] [WU Statement 1869 at 141] [Report of the Executive Committee of the National Telegraph Company, To Subscribers of its Capital Stock, on Little's Automatic System of Fast Telegraphy, Letter from D.H, Craig, p. 8 (1869) ("These two inventors were succeeded by Bain, to whom, in 1846, may be accorded the credit of first conceiving and putting into execution a practical idea in the direction of automatic telegraphy; but, though several fortunes were expended in various attempts, in Europe and America, to reduce his ideas to practical value, his system had to be abandoned as useless, though his plan for recording at the receiving stations upon chemically prepared paper, by the decomposition of an iron stylus, has been extensively used in Europe and America, but is now generally discarded.")] ["Bain, the Inventor of the Chemical Telegraph" in Scientific American 8, 33, 258 (April 1853) doi:10.1038/scientificamerican04301853-258 ("Alexander Bain, so well known in this country as the inventor of the Chemical Telegraph, has recently failed in England, and has applied for a discharge in the Court of Bankruptcy.").]
1849 :: The Rochester Group
- Samuel Lee Selden, Hiram Sibley, Isaac Butts, and Freeman Clarke (Rochester Group; Western Union; House Patent) established the New York State Printing Telegraph Company, which competed against the New York, Albany, & Buffalo Telegraph Company. [Smithsonian] [Smithsonian Guide 1986] [Samuel Lee Selden, Historical Society of the New York Courts] [DuBoff 1984 at 55 (Rochester Group approaches O'Reilly in 1848 - Selden as Pres of Atlantic, Lake, & Mississippi Telegraph Company proposes merger with O'Reilly's networks. “As long as the rival systems are in different hands there will be continual strife and controversy. Can they not now all be combined?”)]
- April 11: Illinois & Mississippi Telegraph Co. established. (O'Reilly Contract. Morse Patent) Will become part of the Six Nation Treaty. Route: St Louis - Alton , Jackson , Springfield , Peoria , Peru , and Ottawa to Chicago. James Gamble who in the future will lead the California Telegraph Company is hired as a manager. [Reid at 233] [Beauchamp 58] [Telegraph brought profound changes to Bloomington, Mclean County Museum of History] [Thompson at 127 (construction started in 1848, completion Spring 1849. Having started operation, the polls were washed away with Spring floods. The company struggled with poor leadership. "The Illinois & Mississippi was generally conceded to be a dying concern. Its officers were apathetic, and its stockholders had little hope of recovering anything on their investments. For two years the line was left to drift from bad to worse. By the time of the annual meeting in April 1852, matters were desperate. Poles were falling from rot. Transmission was difficult, even in dry weather, due to numerous imperfectly formed joints in the wire and the great resistance of the inferior magnets with which the line was equipped. ")] In 1852, in disrepair, Judge John Dean Canton took control of the company, converting it into a profitable and important company. [Thompson at 134] [The Telegraph Instrument Factory of John Dean Caton, Telegraph History (Caton started two additional telegraph companies that were merged into the Illinois & Mississippi in 1856.)] [John Dean Caton papers, Library of Congress] In 1853, Caton established a workshop in Ottawa to build telegraph devices. The workshop was sold to Western Union in 1867. In 1872 it became part of Western Electric. [The Telegraph Instrument Factory of John Dean Caton]
- New York & New England Telegraph Co. established [Beauchamp 58]
- Southern Michigan Telegraph. (aka Michigan Southern Telegraph Company) [A twentieth century history and biographical record of Branch County, Michigan Henry P. Collin. Collin, Henry Park, 1843- (earliest reference to Southern Michigan Telegraph)] [Detroit Free Press from Detroit, Michigan · Page 3] [Hillsdale Whig standard. (Hillsdale, Mich.), 11 Sept. 1849. Chronicling America: Historic American Newspapers. Lib. of Congress. (reporting on July 1 meeting of board of directors)]
- Cleveland & Cincinnati Telegraph Company established, Opens 1850 (Jeptha Wade Engineer with Speed and Cornell, Morse License under F.O. Smith) Opens [Case Western Reserve] [A.A. Graham, History of Richland County, Ohio, 1880, Archive.org]
- First telegraph treaty linking Prussia and Austria. [ITU2015 p. 15]
- Cincinatti & Sandusky Telegraph Co. established (contractor unknown, patent unknown). Company was acquired by Western Union in 1859. [Acts of the State of Ohio, Volume 47, p. 353] [The Sandusky Register, Sandusky, Ohio 11 Jan 1851, Sat • Page 2 (reporting on the selection of the board of directors for the company)] [Reid at 193 (1854 interconnects with the Pittsburgh, Cincinatti, & Louisville Telegraph Company)] [Laurence Turnbull, The Electro Magnetic Telegraph: With an Historical Account of Its Rise, Progress, and Present Condition, p. 157 1853 (noting that the company had 218 miles of line) ] [History: Family: Part IV - Swope's 1905 McKINNEY-BRADY-QUIGLEY families, PA (Jane Quigley Ward "was connected with the development of telegraphy, elected President of the Cincinnati and Sandusky Telegraph Company in 1852, and so continued until 1859, when the company was absorbed by the Western Union Telegraph Company.")]
1850 :: California
- California admitted into the Union - increasing demand for communications with The West
- Early 1850: Thomas Eckert learns the telegraph and builds the first telegraph line on the Fort Wayne railroad. [Bates at 113] In 1852, becomes head of the Chicago Branch of the Union Telegraph Line. [California Digital Library]
- 12,000 miles of U.S. telegraph line [Morse Timeline LOC] [Wheeler 24]
- Pittsburgh, Cincinnati & Louisville Co (Morse Patent; O'Reilly; Reid superintendent) leases line of People's Telegraph (Bain Telegraph; O'Reilly) to New Orleans. The People's Telegraph line is in disrepair, and due to floods, is offline for over three months starting in May. [Reid at 203, 205, 228 (Reid uses money from the Ohio & Mississippi Telegraph, but fails to negotiate a merger of the Pittsburgh company with the Ohio & Mississippi company)]
- Advertisement O'Reilly lines, Reid Superintendent, New York Tribune Dec. 3, 1850
- "As New York newspapers had combined (in the first Associated Press) to receive European news from ships some hours before the vessels reached harbor, so the Pittsburgh press quickly learned cooperation in the use of the telegraph. An agent in Philadelphia gathered the eastern news and despatched it to one office (the Commercial Journal), where it became the common property of the associated papers. This arrangement served until the "big" story of 1850 was "scooped" by one paper. Professor John W. Webster of the Medical College at Cambridge had been in debt to Dr. George Parkman of the preparatory school; and it seemed that, most unacademically, Professor Webster had dissected his colleague and disposed of some of the pieces in the college furnace. Was Webster the victim of a diabolical conspiracy? Or what was Harvard, the Unitarian heresy, the younger generation, coming to? Interest was nationally intense; and the Pittsburgh newspapers printed full accounts (received by mail) of each day's testimony at the trial. At the unexpectedly speedy conviction, the eastern agent despatched a full column to the Pittsburgh papers by telegraph. (There was another newsworthy event the same day; Senator John C. Calhoun died. That news was despatched in seventeen words.) The Commercial Journal published an extra edition while the other papers were yet uninformed of the story. The league of Pittsburgh papers split up; and the O'Rielly telegraph lines entered the breach as a news-gathering agency. This arrangement was maintained until the Associated Press expanded from its seaboard origins into a national agency." [Branch at 27]
- At the beginning of 1851, there were over 50 telegraph companies in business. [WU Report 1869 at 5 ("the great number of separate lines in operation prevented that unity and despatch in conducting business so essential to its success, and the public failed to secure everywhere the benefits of direct and reliable communication.")] [Smithsonian] [Smithsonian Guide 1986] [Alven] [EHA ("75 companies with 21,147 miles of wire")]
- Cleveland, Columbus & Cincinatti Telegraph line established (Wade contractor) opened for business 1852
- Magnetic Telegraph Company: Pres. Swain order: "March 19, 1851. Order issued refusing right to operators to be gatherers of news." [Reid at 136]
- April 1: New York & Mississippi Valley Printing Telegraph Company (NY&MI) (aka Western Union) established by Judge Samuel Selden and Hiram Sibley (Rochester Group; Western Union; House) with the goal of acquiring and uniting otherwise non-interconnected rival telegraph companies. Sibley proceeded to acquire companies westard. The company started by utilizing patent licenses of the House telegraph system. 1851: lines reach Cleveland. [WU Report 1869 at 6] [WU History] [Smithsonian] [Smithsonian Guide 1986 (After struggling to compete against New York, Albany, and Buffalo Telegraph Company, "Selden suggested that instead of creating a new line, the two should try to acquire all the companies west of Buffalo and unite them into a single unified system.")] [Lindley 1974 at 255] It had capital stock valued at $360,000. [WU Report 1869at 18] What would become Western Union gained access to railroad ROW by, in part, agreeing to give priority service to railroad messages. [Beauchamp at 65]
- Dispatching trains by telegraph started [FCC 1959 Silver Anniversary Report at 168] [Branch at 28 (New York and Erie railroad adopts telegraph system] [Reid at 243 ("It is difficult to say exactly to whom is due the credit of earliest proving to railroad companies the adaptation of the telegraph to important railroad uses. Railroad men are a very clear - headed, though a very conservative race. It is not unlikely that to some of their own number may that credit be largely due. Charles Minot, of the Erie railroad, so determined on acquiring its use for running his trains as to induce him to build, in advance of any patent right, a line of his own, is a noted example. And yet it is certainly true, that even to the alert western mind, it was a work of some difficulty to prove the value of the telegraph in moving and directing trains. It seemed like devolving on mechanism the gravest responsibilities connected with the safety of human lives. The hitherto unreliable character of that mechanism had not inspired confidence in such a service. But this was the very point of the appeal now made. The telegraph, practically, now said to the railroad: “My character is in danger because I am unprotected; if you will protect me, I will run your trains." The permanence of the one was to be life and vigor to the other.")] [Telegraphs & Telephones, Encyclopedia of Cleveland History, Case Western Reserve Uni ("During the 1850s and 1860s, Stager and Wade negotiated contracts between Western Union and the railroads. Telegraphic train dispatching, attempted first in 1851, gradually came into general use during the next 10 years. The railroads came to rely on the telegraph for speed and safety. The telegraph companies, in turn, gained rights-of-way and other benefits through contracts with the railroads. ")]
- Paul Julius Reuter establishes the Reuter's Telegram Company in London, providing the innovative wire news service over telegraph [Encyclopedia Britannica] [ITU2015 p. 11]
- St. Louis & Missouri River Telegraph Company established (Morse patent). [Share of stock sold in 1852] [Open Corporates] [Kansas History Website] [National Register of Historic Places, US Dept. of the Interior, Application for the Kansas City, Missouri Western Union Telegraph Building, p. 17 ("The Western Union Company purchased the St. Louis and Missouri River Telegraph Company and opened its first telegraph office in Kansas City, Missouri on October 12, 1865." NOTE this date seems far too late)] [Smithsonian Western Union Records, Box 122] [Orison Swett Marden, Little Visits with Great Americans, Colonel Robert C. Clowry, From Messenger Boy to Head of the World's Greatest Telegraph System (discussing being a superintendent in the company in 1858)] [National Register of Historic Places Registration Form, Western Union Building p. 9 ("By December 1858, the Western Union Company completed a line to Kansas City. The company purchased the St. Louis and Missouri River Telegraph Company and opened its first telegraph office in Kansas City, Missouri on October 12, 1865.")] [Kansas Bogus Legislature ("In 1859 Western Union bought out Stebbins" "owner of the St. Louis & Missouri River Telegraph Company")] [The Extension to the Pacific, Telegraph Age, No. 6, Vol. XXIV, p. 128, March 16, 1906 ("When the bids were opened, the Western Union Company, represented by Hiram Sibley, was found to be the only bidder and to Sibley the contract was therefore awarded. As a preliminary to its work the Western Union acquired from C. M. Stebbins and others a majority of the stock of the Missouri and Western Telegraph Company, and the St. Louis and Missouri River Telegraph Company")]
- Telegraph lines cover 16,735 miles. With some routes having multiple lines, there are 23,281 miles of line in service. [Census 1852 113] [Wheeler 24 (24,000 miles telegraph line)]
- Associated Press pays $15,000 for dispatches. [Encyclopaedia Britannica 1889 at 560]
- Magnetic Telegraph cash receipts 1852: $103,641.42 [Reid at 126]
- Atlantic & Ohio Telegraph Company (O'Reilly) extends lines to St Louis. [Reid at 167]
- Henry O'Reilly proposes building the Atlantic & Pacific Telegraph Company.
- New Orleans, Red River & Texas Telegraph established. [Reid at 211]
1853 :: The Fall of the O'Reilly System
- March 5: National Telegraph Convention, Washington, D.C. [Reid at 133]
- Resolution restraining employment of telegraph operators: "Resolved, That no operator ought to be employed on any line after having been qualified or employed previously on any other line , unless he shall produce a satisfactory written recommendation for capacity , integrity and industry , from the President or Superintendent of such other line . And that , whenever an operator or employee shall wish to leave the service of one company , it shall be the duty of the proper officer of such company to give him a just statement of his qualifica tions , unless he shall be deemed unworthy of further employment." [Reid at 134]
- June 27: President Franklin Pierce approved plans for the new House Chamber, including the first House telegraph office, to be located near the House Post Office [House History]
- Telegraph line erected between Nevada and Auburn, CA, connecting mining camps.[Bates, Telegraph in California]
- Ezra Cornell acquires Ohio, Indiana & Illinois Telegraph Company, on behalf of the Erie & Michigan Telegraph Company, outbidding the Pittsburgh, Cincinnati and Louisville Telegraph Company. [Reid at 252] [Thompson at 137 ("In the opening months of 1853, it was leased to Ezra Cornell on behalf of the Erie & Michigan Telegraph Company at a yearly rate of approximately one-half of 1 percent on its capital stock of $240,000, which in itself suggests the worthless character of the line. That transaction marked the beginning of the formal disruption of the O'Reilly system in the West.")]
- People's Telegraph (O'Reilly) and New Orleans & Ohio Telegraph Company (Magnetic) merge
- 1852: New Orleans & Ohio Telegraph (Morse Patent; Kendal License, Magnetic Telegraph Co) proposes consolidation.
- O'Reilly v. Morse, 56 U.S. 15 How. 62 (1853) (release day of order cannot be confirmed) [O'Reilly, 56 U.S. at __] Morse Patent Holders brought suit claiming that O'Reilly had exceeded the terms of the contract. Specifically, they argue'd that O'Reilly's line from Louisville - Nashville - Memphis - New Orleans, which operated under the House Patent, infringed the Morse patent. The Court held: Morse's "two patents of 1848, being good with the exception of the eighth claim, are substantially infringed upon by O'Reilly's telegraph, which uses the same means both upon the main line, and upon the local circuits." The eighth claim involved "marking or printing intelligible characters, signs, or letters at a distance" . [Reid at 198 (The line was not necessarily authorized by the Magnetic Telegraph License; litigation ensued; O'Reilly lost and switched over to the Bain system for the New Orleans line)] [Mossoff, Adam, O'Reilly v. Morse (August 18, 2014). George Mason Law & Economics Research Paper No. 14-22.] [Henry R. Selden, When, if Ever, Can Principles be Patented, statement referred to by Henry OReilly, Morse v. O'Reilly, U.S. Circuit Court Kentucky]
- May 13th, 1853: People's Telegraph Company merges with the New Orleans and Ohio Company - becomes New Orleans & Ohio Telegraph [Reid at 150 ("The control of the lines south of Louisville, Ky., having changed hands, an agreement was entered into between Mr. Kendall and James D. Reid, Superintendent of the People's line to New Orleans, and who was also the superintendent of the lines east, first to unite the New Orleans and Ohio line south of Louisville, with the People's line, under Reid's superintendence, and secondly, a division of business for the east between the Western Company and the O'Reilly lines. This was the bow of promise. It meant peace.")] [Reid at 206 ("William Tanner was made President, George L. Doug lass Secretary and Treasurer, James D. Reid, Superintendent")]
- 1859 Reorganized as Southwestern Telegraph. Norvin Green joins leadership.
- Baltimore & Ohio Railroad contracts with the Western Telegraph Company for service along the B&O
It was believed that run-away slaves would use the telegraph wires as a guide for the way north to Tennessee.
During the drought of 1854, a local preacher in Russellville (Arkansas?) preached that the cause of the drought was the telegraph stealing lightning from the air. ""See there, my friends, out along the road thar a set of men have dared to interfere with the Almighty's lightning, and what, my friends, is the consequence? They have robbed the atmosphere of its electricity, the rains are checked, and there has not been a good crop since the wires were put up, and what's more, I believe we never will have any until they are gone.” Curiously enough, a great many intelligent people encouraged and not a few believed the preacher's philosophy. Immediately, a wild excitement spread. It was difficult, to be sure, to connect a thread of iron running through the air with the parched soil and the famished land. But the very mystery made the belief take root. The wire was the devil's turnpike, sure. And so down went the poles by the dozen, and away went the wire by the mile, dragged by an angry and excited mob through Russellville, in triumphant avengement of their wrongs."' [Reid at 214]
"But the oft-quoted remark of Mr. Stephenson, that where consolidation is possible there competition is impossible, was never more truly illustrated than by the telegraph. Again and again competing lines have been constructed, only to be bought by the Western Union. Between 1872 and 1879, the rates between Washington and Boston were reduced by competition four times and raised three times. [Hubbard 1883 p. 526] "Another serious evil which the system had to contend with was the existence of competing lines upon the more important routes. The effect of the construction and operation of rival lines of telegraph be tween the same points is to augment the expenses without increasing the business. While, therefore, one line might have been worked successfully, the construction of a second, and sometimes a third, resulted in the operation of all of them at a loss. Practical men saw that there was but one remedy for these difficulties, and that was by a consolidation of all the rival in terests into one organization." [WU Report 1869 at 6] "Superficial, sudden, unsifted, too fast for the truth, must be all telegraphic intelligence. Does it not render the popular mind too fast for the truth? Ten days bring us the mails from Europe. What need is there for the scraps of news in ten minutes? How trivial and paltry is the telegraphic column?" - New York Times, Aug. 19, 1858 [LaFrance]
1854 Era of Consolidation
- March 30: NY&MI acquired the Lake Erie Telegraph Company (O'Reilly Contract), along with the rights to use the Morse patent. Also acquired control of the Cleveland & Cincinnati line (Erie & Michigan Company, Smith, Cornell), Cincinnati & St. Louis line, and the Ohio Telegraph Company. James Reid reflected that the lack of interconnection had placed the Lake Erie Telegraph Company at a disadvantage.This seemed a beggarly result of lofty expectations; yet, with a doubtful connection at Buffalo; — with no important feeders west except a single wild - cat line from Munroe, Mich., to South Bend, built by Josiah Snow, an amateur line - builder, and which, like the snow, soon vanished away; - with a new and strong company in the field, bent on conquest; and with a somewhat slender hold on public business; — the lease was one of those imperative acts which follow defeat or prevent extermination.[Reid at 259-60] See also [WU Report 1869 at 6][Smithsonian] [Smithsonian Guide 1986]
- Atlantic & Pacific Telegraph Company incorporated in Maine. This does not appear to be the Atlantic & Pacific that O'Reilly intended to incorporate and that was acquired by Gould. [Reid at 577] [NYT Mach 31, 1954 NYT Timemachine ]
- "Jan. 1, 1854. Police in London England telegraph to the next train station in Paddington information about a suspected murder who had boarded a train – at the time it was one of the few train lines with a telegraph running station to station. Suspect was apprehended at the next station." [McMullan]
- French and British governments build telegraph lines in order to communicate with military forces engaged in the Crimean War. [Morse Timeline LOC]
- Merger of House, Morse Wade, and Speed Lines? ""lines were 'short, disconnected and poorly-built;' companies acted without concert, 'and without responsibility beyond their respective limits,' stockholders were poorly paid. The company expressed hope that consolidation would end 'confusion heretofore prevailing in telegraph business….' And create harmony." [Lindley 1971 at 16 (quoting Jeptha Homer Wade papers)]
1855: Western Union
- Western Union
- NY&MI Printing Telegraph (Sibley) acquired Erie & Michigan Telegraph Company (Magnetic Telegraph Smith, Morse Patent) from Cornell "thus assuring dominance by the NYMVPTC in the Midwest" in 1856, NY&MI is renamed Western Union at the insistence of Cornell "indicating the union of the Western lines into one compact system.". [WU Report 1869 at 7] [Smithsonian Guide 1986] [Cornell Uni ("The merged company was named The Western Union Telegraph Company at Cornell's insistence.")] [Ezra Cornell Pocket Diary, 1856. Autograph manuscript.] [Smithsonian Guide 1986] [Smithsonian] [Brooks at 62] [Branch at 28] [WU History] [Telegraphs & Telephones, Encyclopedia of Cleveland History, Case Western Reserve Uni ("A month later (1854) they (NY&MI) bought out Speed and Wade's interests in the Cornell-Speed-Wade system. Ezra Cornell held out until Nov. 1855, when the Erie & Michigan merged with the New York & Mississippi Valley. ")] Anson Stager is named General Superintendent.
"In addition to these interests, schedules of apparently valuable assets were exhibited by the bride and bridegroom in an amiable effort to show how much each was to gain by falling into the other's arms. The diamonds, it is true, had a look of glass, and some of the pearls were paste. This, however, did not hinder the wedding. The bells were duly rung, the marriage celebrated, and the Western Union Telegraph Company soon after registered its name among the record of American enterprises." [Reid at 280-81]
- Western Union acquires Ohio and Mississippi Company (Morse Patent, O'Reilly Contract) [Reid at 173, 230 ("I (Reid) did not know at that time the power behind the Rochester movement, or of the scope of the designs of the men who were in the field for dominion, and who, eventually, by carefully planned processes, broke up all my arrangements, and finally drove me from a field where no one else seemed willing to fight.")] Western Union gains control of St. Louis, from which the transcontinental telegraph line will be built west. St. Louis becomes a center of the network.
- "St. Louis is now the center of a vast district of telegraphic territory, of which Col. R.C. Clowry, the Superintendent of the Western Union Telegraph Company, is the active spirit and Manager. It embraces the lines in Arkansas, Kansas, Texas, Colorado and portions of Nebraska and Missouri. St. Louis commands direct wires to almost every important point. Practically, Denver, Galveston, New Orleans, New York, Buffalo, Chicago, are as near to her as her own suburbs. Every route leading from St. Louis proves the vigor and care with which the efficiency of her lines of communication is maintained." [Reid at 231]
- Pennsylvania Railroad builds lines, from Pittsburgh reaching Philadelphia in 1856. Pennsylvania railroad leases lines to Western Union, resulting in competition with Atlantic & Ohio Telegraph. Western Union will use the Pennsylvania Railroad lines to take over the Atlantic & Ohio telegraph in 1864 [Branch at 29]
- American Telegraph Company, established in 1855 (with backing from Cyrus Field, with the goal of leveraging a coastal trunk line from New Orleans up the coast and across the Pond to England), reorganized in 1959. Acquired multiple southern lines:
- Magnetic Telegraph Company (acquired 1859)
- Washington & New Orleans Telegraph Company (Morse Patent, Had been acquired by Magnetic Telegraph Co) (acquired 1859)
- Washington & Memphis Telegraph Company
- Lynchburg & Abingdon Telegraph Company (founded in 1851 [An Act to Incorporate Lynchburg & Abingdon Telegraph Company, Passed March 15, 1851, Acts and Joint Resolutions of the General Assembly of the Commonwealth of Virginia p. 125 1851 ("12. That it shall and may be lawful for the corporators hereby incorporated or others to construct lines of telegraph along the common roads and streets of this state, and with the permission of the owners thereof along all turnpikes, railroads, and canals" )] [Francis Browne Deane, Library of Virginia])]
- East Tennessee Telegraph Company
- Chattanooga and Atlanta Telegraph Line
- Richmond, Charlottesville, and Staunton Telegraph Company
- South Side Telegraph Line
[Andrews at 319-20 ("Organized under the laws of New York in 1855, the American Telegraph Company had been reorganized under a special act of the New Jersey legislature in 1859")] [WU Statement 1869 at 142] [Wolff 320]
- Prof. William Thomson, FRS, On the Theory of Electric Telegraph, Proceedings of the Royal Society of London, Vol. 7 (1854 - 1855), pp. 382-399
- Southwestern Telegraph extends into Texas:
- Note: The company is reorganized as "Southwestern Telegraph" in 1859
- 1854: Texas & Red River Telegraph Company established: Connecting Marshal - Shreveport - New Orleans. Line extended to Henderson, Rusk, Crockett, Montgomery, Houston, and Galveston [Reid at 211 ("The men who built these lines were after the subscriptions")] [Bishop] [Burns]
- 1856: Texas & New Orleans Telegraph Company established: Galveston to San Antonio and Austin. Will merge with Texas and Red River Telegraph. [Bishop (Southwestern Telegraph acquired the Texas lines. )] [Burns] Reid's history suggests that these lines "passed out of existence like smoke." Indicating that it was a line built by Chute from Galveston to the Louisiana State Line that was acquired by Southwestern and extended to New Orleans. [Reid at 212 ("All these routes , including a line built by Lara Baker, from Little Rock to Hot Springs, Ark., and a line from Houston, via Austin, to San Antonio, were finally bought or built and occupied by the South - western Company, substantial structures erected thereon, and formed part of the property")]
- Northern California Telegraph Company established, providing service from Marysville to Eureka. [Bates, Telegraph in California]
- Magnetic Telegraph Company leases the lines of the Washington to New Orleans Telegraph Company. Leases a line from Philly to NYC to the Atlantic & Ohio Company. [Reid at 138] [Ohio 1889 at 1094]
- Western Union
- Feb. 13: Acquires Ohio & Mississippi Telegraph Company [Thompson at 422]
- May 24: Western Union acquires Pittsburgh, Cincinnati & Louisville Company (Morse Patent, O'Reilly Contract) [Reid at 174 ("The contract was simply a measure of self - preservation on the part of the Pittsburg , Cincinnati & Louisville Company against a competition ruin ous to itself and its rival in business, and beneficial to nobody" Pres. Chase, Pittsburgh, Cincinnati and Louisville Co. page 196: "Thus, another independent company went down and out.")]
- Ezra Cornell goes to Republican National Convention as New York State Delegate. In 1861, attends Lincoln's inauguration. [Ezra Cornell Timeline]
- Interconnection During the period of the regional operating companies, long distance service was achieved through interconnecting services. This was a sending-party-pays system (See also Terminating Monopoly). Interconnection agreements could therefore be an important source of revenue for the receiving (terminating) network. In order to deliver messages to the East (also known as NYC and Washington D.C), Southwestern Telegraph avoided sending the messages across rival American Telegraph, and instead sent the messages north through Pittsburgh, Cincinnati and Louisville Telegraph (Reid) and through the O'Reilly contract lines. As an incentive, Pittsburgh, Cincinnati and Louisville Telegraph gave Southwestern Telegraph a 10 cent rebate for each message. Western Union wanted this traffic. Western Union sent an agent into Southwestern Telegraph's territory with instructions to send messages back, over the Southwestern lines, as if the agent were investigating constructing new competing Western Union lines in the market (pole prices, best routes). Western Union then offered to Southwestern Telegraph the opportunity to negotiate better rates for interconnection - but in order to have something to negotiate over, Southwestern Telegraph contractually had to send a 30 day termination notice to Pittsburgh, Cincinnati and Louisville Telegraph. Western Union then told Pittsburgh, Cincinnati and Louisville Telegraph that it had just lost its southern traffic; Pittsburgh, Cincinnati and Louisville conceded and leased its lines to Western Union. Western Union then told Southwestern Telegraph that it had just lost its Pittsburg interconnection - now it had to go through Western Union - and no more rebate. [Reid at 210] See also [WU Report 1869 at 7]
- Samuel L. Selden, Henry O'Reilly, To the public: we feel called upon, by respect for public opinion and just regard for our own reputations, to reply to the attack made upon us through the Pennsylvanian, on the 12th inst. by the proprietors of Morse's Magnetic telegraph. 
1857: Western Union and the members of the North American Telegraph Association agree to divide the market along regional markets; agree only WU should bid on trancontinental telegraph line. By 1867, Western Union had acquired all the members of the agreement.
1873: Western Union and European telegraph companies agree to Atlantic Cable Cartel, fixing transatlantic rates
1879: Western Union and Bell Telephone agree to divide the market along service markets. At the time, Bell Telephone is the only commercial telecommunications provider that WU is legally restrained from acquiring. in 1909, AT&T acquires WU.
1889: Western Union and Postal Telegraph agree to devide the market and set telegraph rates. Postal Telegraph struggles and is ultimately acquired by WU
1857 Treaty of Six Nations and the North American Telegraph Association
1853: North American Telegraph Association formed [Lindley 1974 at 258 (association formed to address "harmonize methods of doing telegraph business" particularly network reliability and outage issues and notifications)]
"In 1857 the six largest telegraph companies entered into a cartel called the "Treaty of Six Nations." ... This set of principles evolved during negotiations, so that by the time the agreement was completed, the signatories divided the country into six sections and assigned monopoly control of each section to one form. Some of the smaller competitors objected and began to undertake the construction of competitive lines. Negotiations to satisfy these firms were concluded in 1859 (under the auspices of the North American Telegraph Association), which essentially resulted in their buyout by or merger with the six major firms. Thus, only 15 years after the first telegraph line had entered service, the consolidation of the industry from lively competition to a cartel of a few small firms was complete." [Nonnenmacher] See also [Thompson, Wiring the Continent, at 361 ("In short, the new alliance aimed at nothing less than a monopoly of the nation's telegraph business by the signatures of the six-party contract")] [Nairn at Chap. 3 ("The financial pressures these produced brought about a 'pooling' arrangement, designed to exclude new competition, and a price-setting and volume-allocation cartel involving the six largest telegraph companies.")] Treaty of Six Nations was between:
- American Telegraph Company (covering the Atlantic and some Gulf states) (acquired by WU 1866)
- New York, Albany and Buffalo Telegraph Company (New York) (acquired by WU 1864)
- Atlantic & Ohio Telegraph Company (Pennsylvania) (acquired by WU 1864)
- Western Union Telegraph Company (covering states North of the Ohio River and parts of Iowa, Kansas, Missouri, and Minnesota)
- New Orleans & Ohio Telegraph Lessees (covering the southern Mississippi Valley and the Southwest)
- Illinois & Mississippi Telegraph Company (covering sections of Missouri, Iowa, and Illinois) (acquired by WU 1867)
[Beauchamp p. 64] [Smithsonian Guide 1986] [History Pacific Telegraph ("Eastward of the Mississippi the land is gridironed with telegraphs, they are all in the hands and under the control of only eight companies. These companies are mammoth concerns that lay large dividends, serve the public well, and make the public pay roundly for being served. A league binds all the companies into one grand confederation, known as the 'North American Telegraph Association,' of which Amos Kendall is President, which determines the tariff of rates, legislates on all questions of conflicting interests, and - so said Mr. Burnett of Kentucky over and over again in Congress - arranges to crush out lines that may be built to compete with any of those already in existence.")] [Nonnenmacher (Map of Treaty of Six Nations)]
The members of the North American Telegraph Association would collude in 1860 to ensure that Western Union was the sole bidder for the USG's Transcontinental Telegraph contract, and that it could bid for the maximum allowed rate. Another 'Nation', the Pacific telegraph companies, would in effect join the association.
- Charles A. Tinker, telegraph-operator in Perkin, Illinois (who would be a cipher operator in the War Department during the civil war) explains how the telegraph works to Abraham Lincoln. [Bates 4]
- Ezra Cornell acquires 488 shares of Michigan Southern Telegraph Company (O'Reilly?), which he sells to Western Union for stock. [Reid at 470] [WU Report 1869 at 7] [Thompson at 422]
1859: Magnetic Telegraph merges with American Telegraph
- Pensacola Telegraph Company established. 1862 lines destroyed by retreating Confederates. 1865 company reconstituted. Involved in an unsuccessful lawsuit to exclude WU from Florida. [Pensacola Telegraph, 96 US 1] [From Pensacola to Fort Pickens, NYTimes July 11, 1961 p. 2 ("The Pensacola Telegraph Company have put up the posts between Farnesworth and the State line, and in few a days the wires will be stretched -- making a direct line to Montgomery -- and having a line from Barrancas to Pensacola, news will travel with the lightning's speed between the army and Richmond.")] By 1888, Pensacola Telegraph will have 81 wire miles in service compared to Western Union's 812. [Statement Showing the Assessment of Railroad and Telegraph Property for the Year 1888, Florida Senate Archive]
- New Orleans & Ohio Telegraph reorganized. SouthWestern Telegraph Company emerged with Green as president. James Reid recounts the troubles of the New Orleans Lessees:The next year, however, was one of terror. The yellow fever swept the south. Men died like sheep. Almost every northern operator fell. The line was kept up with great difficulty. I was unacclimated and had sometimes to sleep where the smell of the dead had not yet departed, sometimes out of doors. Business was almost stopped. Ninety dead bodies lay one day in New Orleans unburied. Four young men who landed with me at Baton Rouge were buried before I left, six days after. After this had passed away and the winter set in, a storm came and masses of sleet formed on the wires as far south as Jackson, Miss. The most widespread desolation followed. Miles of the line lay in absolute ruin. Hundreds of poles broke and business was long suspended. Creditors meantime became again abusive and urgent. Finally some drafts of the treasurer were dishonored. It became essential to obtain money to get rid of creditors, and to place the line in condition for steady work. The result of all these disasters was, that, as a matter of imperious necessity, it was determined to lease the united lines, and Amos Kendall, James D. Reid and William Tanner were made commissioners for that purpose. A lease was finally effected to George L. Douglass, Norvin Green, W.D. Reed, Thomas L. Carter, George H. Montsarat, George M. Bright, D.S. Crockett and S. F. B. Morse, for $ 90,000, $31,500 of which was to be cash. The lessees were incorporated under the name and style of the “New Orleans and Ohio Telegraph Lessees," by act of the legislature of Kentucky, approved March 6th, 1856. I became afterward one of the lessees by purchase. By the pressure of a claim not known at the time of the lease, and after the payments contemplated had been all made, the line was permitted to be sold at sheriff's sale, was bought by Richard Woolfalk of Louisville, and was finally organized under an act of the Legislature of Kentucky, passed December 22, 1859, and by vote of the stockholders January 6, 1860, into the “ South - western Telegraph Company," of which Dr. Norvin Green became the President, George L. Douglass, Treasurer, Thomas L. Carter, Secretary, and A. E. Trabue, General Superintendent.[Reid at 207] [Reid at 210 ("These men did not want opposition just then" in other words, SW telegraph avoiding competition from American Telegraph to the east)] [Civil War Governors of Kentucky] [Andrews at 321 ("The Southwestern Telegraph Company... was created in January 1860 by consolidating a number of telegraph lines between Louisville and New Orleans. President of the company was Dr. Norvin Green, a physician and politician")] Will be acquired by southern rival American Telegraph Company and then acquired by Western Union. Its President Norvin Green will become President of Western Union in 1878. [Supplemental Statement of Norvin Green, June 9, 1890 at 3 ("Amongst its largest stockholders were Professor Morse, Amos Kendall, and the Hon. James Guthrie")] Southwestern acquires "The line of the “Nashville and Memphis Telegraph Company, "the Montgomery lines," the lines of the "Miss., Tenn. and Kentucky Telegraph Company." [Reid at 209] Southwestern Telegraph hires Edward Rosewater as a telegraph operator.
- American Telegraph Company acquires Magnetic Telegraph Company. [Reid at 141 ("the American Telegraph Company, then under the full prestige of a wealthy and influential executive and backing, had incorporated all the chief lines on the eastern seaboard, had obtained possession of the House Printing Telegraph Company's line south of New York, and was projecting other important lines under the Hughes patent")]
- 50,000 miles of U.S. telegraph line [Wheeler 24]
1861: Civil War
- June: Morse's 1840 patent expires
- New York, Albany and Buffalo Telegraph Company moves into 145 Broadway along with the American Telegraph Company. [Reid at 318]