The Story of the Atlantic Telegraph

by Henry M. Field

This confidence appeared at the first meeting of directors. The feeling was very different from that after the return of the first expedition of 1858. So animated were they with hope, and so sure of success the next time, that all felt that one cable was not enough, they must have two, and so it was decided to take measures not only to raise the broken end of the cable and to complete it to Newfoundland, but also to construct and lay an entirely new one, so as to have a double line in operation the following summer.

The contractors, partaking the general confidence, came forward promptly with a new offer even more liberal than that made before. They proposed to construct a new line, and to lay it across the Atlantic for half a million sterling, which was estimated to be the actual cost to them, reserving all compensation to themselves to depend on success. If successful, they were to receive twenty per cent. on the cost, or one hundred thousand pounds, to be paid in shares of the Company. They would engage, also, to go to sea fully prepared to raise the broken end of the cable now in mid-ocean, and with a sufficient length, including that on board the Great Eastern, to complete the line to Newfoundland. Thus the company would have two cables instead of one.

In this offer the contractors assumed a very large risk. They now went a step further, and in the contingency of the capital not being raised otherwise, they offered to take it all themselves—to lay the line at their own risk, and to be paid only in the stock of the Company, which, of course, must depend for its value on the success of the next expedition. It was finally resolved to raise six hundred thousand pounds of new capital by the issue of a hundred and twenty thousand shares of five pounds each, which should be preferential shares, entitled to a dividend of twelve per cent. before the eight per cent. dividend to be paid on the former preference shares, and the four per cent. on the ordinary stock. This was offering a substantial inducement to the public to take part in the enterprise, and it was thought with reason that this fresh issue of stock, though it increased the capital of the Company, yet as it was all to be employed in forwarding the great work, would not only create new property, but give value to the old. The proposal of the manufacturers was therefore at once accepted by the Directors, and the work was instantly begun. Thus hopeful was the state of affairs when Mr. Field returned to America in September.

But he was never easy to be long out of sight of his beloved cable, and so three months after he went back to England, reaching London on the twenty-fourth of December. He came at just the right moment, for the Atlantic Telegraph was once more in extremity. Only two days before the Attorney-General of England had given a written opinion that the Company had no legal right to issue new twelve per cent. preference shares, and that such issue could only be authorized by an express act of Parliament. This was a fatal decree to the Company. It was the more unexpected, as, before offering the twelve per cent. capital, they had been fortified by the opinions of several eminent lawyers and solicitors in favor of the legality of their proceedings. It invalidated not only what they were going to do, but what they had done already. Hence, as the effect of this decision, all the works were stopped, and the money which had been paid in was returned to the subscribers.

This was a new dilemma, out of which it was not easy to find a way of relief. Parliament was not in session, Lords and Commons being away in the country keeping the Christmas holidays. Even if it had been, the time for applying to it had passed, as a notice of any private bill to be introduced must be given before the thirtieth of November, which was gone a month ago. To wait for an act of Parliament, therefore, would inevitably postpone the laying of the cable for another year. So disheartening was the prospect at the close of 1865.

But they had seen dark days before, and were not to give it up without a new effort. Happily, the cause had strong friends to stand by it even in this crisis of suspended animation.

One of these to whom Mr. Field now went for counsel, was Mr. (afterward Sir) Daniel Gooch, M.P., a gentleman well known in London, as one of the class of engineers formed in the school of Stephenson and Brunel, who had risen to the position of great capitalists, and who, by their enterprise and wealth, had done so much to develop the resources of England. He was Chairman of the Great Western Railway, and had more faith in enterprises on the land than on the sea. It was a long time before he could believe in the possibility of an Atlantic Telegraph. Though a man of large fortune, and a personal friend of Mr. Field, the latter had never prevailed on him to subscribe a single pound. But he went out on the expedition of '65, as chairman of the company that owned the Great Eastern; and what he then saw convinced him. He came back fully satisfied; he knew it could be done, and was ready to prove his faith by his works. Consulting on the present difficulty, he suggested that the only relief was to organize a new Company, which should assume the work, and which could issue its own shares and raise its own capital. This opinion was confirmed by the eminent legal authority of Mr. John Horatio Lloyd. To such a Company Mr. Gooch said he would subscribe £20,000; Mr. Field put down £10,000.

Next, he betook himself to that prince of English capitalists, Mr. Thomas Brassey, who heard from his lips for the first time, that the affairs of the Atlantic Telegraph Company had suddenly come to a standstill. At this he was much surprised, but instantly cheered his informer by saying: "Don't be discouraged; go down to the Company, and tell them to go ahead, and whatever the cost, I will bear one tenth of the whole." Who could be discouraged with such a Richard the Lion-hearted to cheer him on?

Meetings were called of the Directors of both the Atlantic Company and the Telegraph Construction and Maintenance Company; and frequent conferences were held between them. The result was the formation of a new company called the Anglo-American Telegraph Company, with a capital of £600,000, which contracted with the Atlantic Company to manufacture and lay down a cable in the summer of 1866, for doing which it was to be entitled to what virtually amounted to a preference dividend of twenty-five per cent: as a first claim was secured to them by the latter company upon the revenue of the cable or cables (after the working expenses had been provided for) to the extent of £125,000 per annum; and the New-York, Newfoundland, and London Telegraph Company undertook to contribute from its revenue a further annual sum of £25,000, on condition that a cable should be at work during 1866; an agreement to this effect having been signed by Mr. Field, subject to ratification by the Company in New York, which was obtained as soon as the steamer could cross the ocean and bring back the reply.