“In the present position of the finances of the country, it would
hardly be wise to enter upon an extended experiment. It should be
tried at first on a limited scale, and at small cost. If it proves
successful, and becomes what the telegraph under other government
control has become in other countries,—a source of revenue, as well
as an inestimable boon to the community,—it ought to be, and
doubtless will be, extended. The amount necessary to construct a
suitable line from Washington to New York, and to sustain it until
it becomes self-sustaining, will not exceed $75,000, and it is the
belief of experienced telegraphers that, with a tariff of charges as
low as that of Belgium and Switzerland, and with an additional
charge of single postage upon each message, the line would be
self-sustaining from the beginning, and would probably repay its
entire cost long before the value of the structure was materially
impaired.”
The results of lowering tariffs for telegrams to a point approximating
the charge for letter postage has been tried so often in this country,
as not to require a new demonstration. The following statement will show
the result of a recent trial between the two important cities of Chicago
and Milwaukee.
On the 12th of August, 1867, a rival line was opened between those two
points, having no connection with any other at either end. The
competition, therefore, was for local business only. The tariff
previously had been sixty cents. The average number of messages
transmitted per day for the ten days preceding the beginning of business
by the new company was sixty-nine, and the daily receipts fifty-five
dollars. On the opening of the rival line the rate was reduced to forty
cents, and the average number of messages sent by both was eighty-seven,
the receipts forty-seven dollars. On the 16th September the rate was
further reduced to twenty cents, with the following results: Average
number of messages per day for both lines, one hundred and thirty-three.
Average receipts, thirty-seven dollars. On November 8th the rate was
reduced to ten cents, and remained so for the next fourteen days, during
which the number of telegrams transmitted daily by both lines was one
hundred and sixty-seven, and the average receipts twenty-six dollars.
About the 20th November the rates were advanced to forty cents, by
mutual agreement, and afterwards the lines and records of the new
company came into our possession.
No. 1.
_Statement showing number of Messages sent between Chicago and
Milwaukee for first twelve days in August, 1867, at a Tariff of sixty
cents, and same for 1868, at a Tariff of forty cents, together with
daily Receipts._
┌─────────╥─────────────────────────────╥─────────────────────────────┐
│ DATE. ║ August, 1867. ║ August, 1868. │
│ ║ Tariff 60 and 4. ║ Tariff 40 and 3. │
├─────────╫─────────┬─────────┬─────────╫─────────┬─────────┬─────────┤
│ ║ Sent. │Received.│Receipts.║ Sent. │Received.│Receipts.│
├─────────╫─────────┼─────────┼─────────╫─────────┼─────────┼─────────┤
│August 1║ 41│ 48│ $67.40║ 49│ 37│ $39.64│
│ „ 2║ 31│ 38│ 57.00║ 4│ 2│ 1.87│
│ „ 3║ 36│ 25│ 49.63║ 53│ 42│ 58.25│
│ „ 4║ 2│ 1│ 1.78║ 69│ 39│ 53.02│
│ „ 5║ 41│ 34│ 55.98║ 46│ 41│ 43.36│
│ „ 6║ 41│ 40│ 63.39║ 67│ 46│ 54.60│
│ „ 7║ 42│ 49│ 73.77║ 51│ 39│ 42.44│
│ „ 8║ 45│ 27│ 55.75║ 56│ 50│ 52.08│
│ „ 9║ 39│ 38│ 61.68║ │ │ │
│ „ 10║ 40│ 40│ 63.91║ 52│ 44│ 47.30│
│ „ 11║ │ │ ║ 62│ 42│ 51.70│
├─────────╫─────────┼─────────┼─────────╫─────────┼─────────┼─────────┤
│ Totals ║ 358│ 340│ $550.29║ 509│ 382│ $444.26│
├─────────╨─────────┴─────────┴─────────╨─────────┴─────────┼─────────┤
│1867, Average, 69 Messages │ $55.00│
│1868, Average, 89 Messages │ 44.42│
└───────────────────────────────────────────────────────────┴─────────┘
No. 2.
_Statement showing number of Messages transmitted between Chicago and
Milwaukee, over the Western Union Independent Telegraph Lines, from
August 12th to August 26th together with the daily Receipts._
┌─────────╥───────────────────────────────────────────────────────────┐
│ DATE. ║ Tariff 40 and 3. │
├─────────╫─────────────────────────────╥─────────────────────────────┤
│ ║ W. U. and Independent. ║ Western Union. │
│ ║ August, 1867. ║ August, 1868. │
├─────────╫─────────┬─────────┬─────────╫─────────┬─────────┬─────────┤
│ ║ Sent.│Received.│Receipts.║ Sent.│Received.│Receipts.│
├─────────╫─────────┼─────────┼─────────╫─────────┼─────────┼─────────┤
│August 12║ 33│ 47│ $52.96║ 44│ 42│ $47.82│
│ „ 13║ 35│ 52│ 66.35║ 49│ 38│ 50.11│
│ „ 14║ 35│ 50│ 59.00║ 54│ 42│ 53.35│
│ „ 15║ 44│ 46│ 55.27║ 52│ 41│ 48.28│
│ „ 16║ 34│ 45│ 53.61║ 1│ │ .52│
│ „ 17║ 38│ 45│ 62.38║ 58│ 52│ 63.21│
│ „ 18║ │ 2│ 2.02║ 45│ 33│ 45.69│
│ „ 19║ 45│ 51│ 70.45║ 40│ 45│ 52.39│
│ „ 20║ 41│ 50│ 68.51║ 47│ 44│ 64.77│
│ „ 21║ 39│ 46│ 62.67║ 54│ 40│ 50.22│
│ „ 22║ 37│ 39│ 49.42║ 48│ 38│ 46.77│
│ „ 23║ 39│ 41│ 52.97║ 3│ 2│ 2.21│
│ „ 24║ 30│ 33│ 56.15║ 43│ 45│ 59.57│
│ „ 25║ 2│ │ 2.10║ 54│ 66│ 73.26│
│ „ 26║ 63│ 41│ 55.31║ 48│ 57│ 62.89│
├─────────╫─────────┼─────────┼─────────╫─────────┼─────────┼─────────┤
│ Totals ║ 515│ 588│ $769.17║ 640│ 585│ $721.06│
├─────────╨─────────┴─────────┴─────────╨─────────┴─────────┼─────────┤
│1867, Average, 73 Messages │ $51.28│
│1868, Average, 81 Messages │ 48.07│
└───────────────────────────────────────────────────────────┴─────────┘
Statement No. 1 exhibits a comparison for the first ten days of August,
1867, before the opening of the rival line, and when the tariff was
sixty cents, with the same period in 1868 after the tariff had been
forty cents for nearly a year. Statement No. 2 makes a similar
comparison between the aggregate business of the Western Union and the
competing line for the first fifteen days after the latter opened in
1867, and the same period in 1868, when, although the rate was the same,
there was no competition. By Table No. 1 it appears that, at a tariff of
sixty cents, the number of messages per day last year was sixty-nine,
and the receipts therefor fifty-five dollars. That during the same
period this year, at a reduction of one third in the tariff, there was
an increase of about thirty-three and one third per cent in the number
of messages, but a loss in revenue of twenty per cent. In other words,
our work has been considerably increased, and our compensation therefor
sensibly diminished. Statement No. 2 shows that last year, under the
stimulus of active competition, and a reduction in rates of one third,
the average number of messages per day for fifteen days was but four
more than for the ten days next preceding. It also shows that, after the
reduced rate had been in operation a year, and, notwithstanding the fact
that the telegraph business in all sections of the country in the month
of August this year was somewhat larger than last, the average had been
increased but eight messages per day, and this increase was attended by
a loss of over three dollars per day in the revenue.
From September 1 to November 3, 1868, the number of messages transmitted
per day between these places was one hundred four and a quarter, and the
average daily receipts $56.41.
On the 4th of November another rival line was opened between Chicago and
Milwaukee, but no change in rates was introduced until the 24th of
November. The average number of messages transmitted per day by the
Western Union Telegraph Company between these places, from the 4th to
the 23d of November, inclusive, was seventy-eight, and the daily
receipts $43.27.
On the 24th of November the rates were reduced to twenty cents per
message, with the following results: Average number of messages
transmitted per day between Chicago and Milwaukee by the Western Union
Telegraph Company, sixty-eight; average daily receipts, $24.59.
It should be remembered that the business from which these exhibits are
derived is between two of the most important inland commercial cities in
the country. Both are largely interested in two important branches of
commerce,—grain and lumber; and probably no other points could be
selected from which more reliable results could be obtained.
The reason why the Chicago and Milwaukee table is the only one given to
show the results of competition is, that such comparisons are only
valuable when they exhibit the effect upon the business of both
competitors. This is impossible in other cases, because our opponents
will not furnish us with their figures. We have written to every
Telegraph Company in the United States for such statistics for
publication, but none of them has responded to our request.