Back Reflection Images courtesy of Atlantic-Cable.com
The Atlantic Price War As explained in our last edition, by the time the Commercial Cable Company (CCC) was incorporated, in 1883, telegraphy across the Atlantic was in the hands of four companies. These were the Anglo-American Cable Company, the Direct United States Cable Company, the P-Q Company and Western Union, operating over the cables owned by the American Telegraph and Cable Company. However, due to the commercial arrangements between these companies, pricing was effectively under the control of Anglo and Western Union.
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Anglo-American were the owners of the original 1865 and 1866 cables. Both had been repaired several times before the 1865 cable was abandoned in 1877. The 1866 cable had ceased to function in 1872 but in 1880, the major part of it was replaced by the Telegraph Construction and Maintenance Company (Telcon) and
by Stewart Ash
put back into service. So, at this time, Anglo operated four cables; the 1869, 73 & 74 cables inherited from the France Atlantic Telegraph Company and the refurbished 1866 cable. The Direct and P-Q Companies each operated a single cable and Western Union ran the two American Telegraph owned cables. Due to the initial success of the CCC, in attracting customers away from the other cable operators, three of these companies, Anglo, Direct and Western Union approached the President of the CCC, John W Mackay (1831-1902), with an offer. The proposal was that the CCC should join the revenue pooling arrangement that they enjoyed. Mackay declined and chose to maintain a competitive relationship with these pooling companies. As a result, in May 1886, Anglo, Direct and Western Union dropped their Atlantic cable rate from 40 cents to 12 cents a word, in attempt
to put the CCC out of business. The CCC responded by reducing its Atlantic cable rate to 25 cents a word, a position it held until 15th September 1887. It then, reluctantly, reduced its rates to the loss making level of 12 cents a word. At this rate all four companies were unable to make a profit and they were all losing considerable amounts of money. This position could not be sustained for any period of time so, on 30th July 1888, the four companies met and agreed a fixed rate arrangement. The agreement allowed for messages between New York City, New England, the Canadian Provinces of New Brunswick, Newfoundland, Nova Scotia, Ontario and Quebec on the one side and France, Germany, Great Britain and Ireland on the other to be 25 cents, 1 shilling or 1.25 Francs per word for ordinary traffic, with effect from 1st September 1888,. In parallel with these negotiations, on