PREVAILING ERROR OF ALL THEORIZERS ON THE BUSINESS OF TELEGRAPHING.
All theorizers upon the subject of the telegraph fall into the error that the amount of business which may be done at any point (the rates being low enough) is in the ratio of population. An investigation of the subject will show this to be entirely erroneous. Three years ago, when the subject of telegraphic communication between the Eastern and Western continents was discussed by those most intimately connected with the enterprise, no one estimated the number of messages which would pass between the two continents, daily, at a rate of $50 gold for ten words, below 500. But few placed the figures so low. Most of them estimated the number at two or three times this minimum.
In 1863 Mr. Cyrus W. Field made the following remarks before the Chamber of Commerce of New York, in relation to the probable amount of business that would be done between Europe and America when communication by telegraph should be established: “To express my own opinion, from pretty large experience on the subject, I do not believe that ten cables would begin to do the work which would, in a short time, be given to it.”
At the banquet given in London, in 1864, to inaugurate the renewed attempt by the Atlantic Telegraph Company to unite Europe and America by means of the Atlantic cable, Mr. Cromwell F. Varley made the following remarks touching the amount of business that would be offered for transmission over the cable: “I feel great confidence that, when once a cable is successfully laid across the Atlantic, the demands upon it will be so great that you will have to lay one or two per annum for the next twenty years, or even more.”
Their disappointment was, therefore, very great when, after the Atlantic Cable was in operation, it was found that the daily average at the $100 tariff was but 29 messages, and at the $50 tariff, which was in operation thirteen months, it was but 64. At the $25 rate the average advanced to 131; and although the rate has been still further reduced to $16.85, the average is but 201. This illustration is sufficient to prove the fallacy of all reasoning concerning telegraph business based merely upon population. We venture the prediction that, at the rate of $5 between Europe and America, the number of messages which would pass per day would never equal the number exchanged daily between New York on one hand, and Philadelphia and Boston on the other. The reason is simply this: The number of messages which will pass within a given time between two points depends, first, upon a reasonable charge for transmission,—a charge conveniently within the means of those having occasion to communicate; and secondly and mainly, upon the number of people at either extreme having intimate business relations with those at the other. The vast commerce of the Old World and the New is not exchanged in detail, but in bulk. A few banking houses on each side make all the exchanges for both continents, and the agricultural products and the manufactures of both are also exchanged in substantially the same manner.
We have shown how fallacious is the claim that the increase of business is dependent upon the tariff, by the statistics of our own and foreign countries, by which it appears that business has sometimes largely increased at an advanced rate. We do not desire to be understood, however, as saying that low tariffs, under similar circumstances, will not bring more business than high ones. But we do say that it is susceptible of proof, that the minimum rate is undoubtedly much higher than most of those who theorize upon this subject are willing to believe. Take the case of the Atlantic Cable as an illustration. During the three months at which the tariff was $100, and the daily average of messages 29, the receipts per day were £505. During the thirteen months, at the average of 64 messages daily, the receipts were £579. During the nine months, at the average of 131 messages per day, the receipts were £635. And for the two months since the rates were reduced to $16, the daily average has been 201 messages, and the average receipts £596.
Now it happens, fortunately for the Cable Company, that the present volume of business is considerably less than the capacity of their cables; so that the increase of that business has been attended with but a very slight additional expense, the cost to operate being the same at offices open day and night, whether operators are occupied all or only a part of the time. But suppose, for illustration, that the limit of the capacities of the cables will be reached when the average number of messages per day is 250. To undertake to transmit any number beyond this without further facilities would result in crowding and confusing the business to an extent which would inevitably produce dissatisfaction. On the other hand, to provide an additional cable would cost a sum of money which it might be exceedingly difficult to raise. It seems proper, therefore, that the profits from this business should always be considerably more than enough to yield a proper return for the capital invested, so that greater facilities may be provided out of surplus profits; and, as facilities are increased, rates may be gradually reduced, until, by judiciously pursuing this course, the charges for telegraphing may be materially diminished, without endangering the revenues to which owners of telegraph property are justly entitled.
| Statistics of Traffic through the Atlantic Cables from July 28, 1866, to November 1, 1868. | |||||
|---|---|---|---|---|---|
| Number of Messages per Month. | Daily Average No. of Messages. | Gross Amount of Receipts accruing to the Two Atlantic Cables, between Valentia and Heart’s Content. | Average Amount per Day. | ||
| 1,104 } | 29 | From July 28th to 31st Aug., | 1866, under £20 Tariff | [[25]]£500 } | £505 |
| 837 } | From Sept. 1st to 30th | 1866, under £20 Tariff | 456 } | ||
| 831 } | From Oct. 1st to 31st | 1866, under £20 Tariff | 491 } | ||
| 1,530 } | 64 | From Nov. 1st to 30th | 1866, under £10 Tariff | [[26]]502 } | £579 |
| 1,582 } | From Dec. 1st to 31st | 1866, under £10 Tariff | 493 } | ||
| 1,686 } | From Jan. 1st to 31st | 1867, under £10 Tariff | 466 } | ||
| 1,764 } | From Feb. 1st to 28th | 1867, under £10 Tariff | 549 } | ||
| 2,147 } | From March 1st to 31st | 1867, under £10 Tariff | 666 } | ||
| 2,624 } | From April 1st to 30th | 1867, under £10 Tariff | 722 } | ||
| 2,262 } | From May 1st to 31st | 1867, under £10 Tariff | 705 } | ||
| 1,843 } | From June 1st to 30th | 1867, under £10 Tariff | 597 } | ||
| 1,432 } | From July 1st to 27th | 1867, under £10 Tariff | 542 } | ||
| 1,693 } | From July 18th to 31st Aug., | 1867, under £10 Tariff | 401 } | ||
| 1,860 } | From Sept. 1st to 30th | 1867, under £10 Tariff | 515 } | ||
| 2,505 } | From Oct. 1st to 31st | 1867, under £10 Tariff | [[27]]715 } | ||
| 2,292 } | From Nov. 1st to 30th | 1867, under £10 Tariff | [[27]]661 } | ||
| 3,901 } | 131 | From Dec. 1st to 31st | 1867, under £5.5 Tariff | [[27]]732 } | £635 |
| 4,739 } | From Jan. 1st to 31st | 1868, under £5.5 Tariff | [[27]]756 } | ||
| 5,128 } | From Feb. 1st to 29th | 1868, under £5.5 Tariff | [[27]]860 } | ||
| 4,507 } | From March 1st to 31st | 1868, under £5.5 Tariff | [[27]]707 } | ||
| 4,320 } | From April 1st to 30th | 1868, under £5.5 Tariff | [[27]]718 } | ||
| 3,538 } | From May 1st to 31st | 1868, under £5.5 Tariff | 550 } | ||
| 2,884 } | From June 1st to 30th | 1868, under £5.5 Tariff | 447 } | ||
| 3,217 } | From July 1st to 31st | 1868, under £5.5 Tariff | 490 } | ||
| 3,740 } | From Aug. 1st to 31st | 1868, under £5.5 Tariff | 558 } | ||
| 5,053 } | 201 | From Sept. 1st to 30th | 1868, under £3.7.6. Tariff | 501 } | £596 |
| 6,341 } | From Oct. 1st to 31st | 1868, under £3.7.6. Tariff | 615 } | ||
| 6,877 } | From Nov. 1st to 30th | 1868, under £3.7.6. Tariff | 670 } | ||
[25]. During this month over £100 per day were paid by the New York Herald for news reports, and many persons sent messages as a novelty.
[26]. During this month the despatches sent by the United States government averaged over £100 per day.
[27]. During these months there was extraordinary excitement in cotton.
A single wire between New York and Plaister Cove, Cape Breton, the eastern terminus of the Western Union Telegraph Company’s lines, not only promptly transmits all the telegraphic business that is done between Europe and America, but every message is telegraphed back for comparison with the original, to insure correctness.