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A Tower in Babel: A History of Broadcasting in the United States, Volume I – to 1933
Erick Barnouw
Oxford University Press, New York, 1966

GHOSTS

Pgs 253-255

Did it all make sense? Why did the Department of Justice, after years of off-again-on-again hearings by various agencies, launch this suit in depth of an economic slump? To many in the broadcasting industry, intent on other interests, the development was completely baffling. IN Washington reasons seemed clearer. To those with the memories or a taste for history, the answer was clear enough. In the annals of communication, monopoly had long been held as one of the most corrupting of influences.

In the decades after the Civil War the Western Union Company, by buying, swallowing, or crushing smaller companies, achieved a monopoly position. By 1873 its wires reached into thirty-seven states and nine territories and comprise the only nation-wide web. It was a key to wealth and power in many ways. Representative Charles A. Sumner of California charged in 1875 that sudden changes in market prices were repeatedly withheld from San Francisco until insiders made a killing. Control of the flow of information netted vaster fortunes than the profits from telegraph service; and this, monopoly-prices, made fortunes by itself.

To break the monopoly power by creating an alternative channel, bills for a government telegraph service linking the nations post offices were introduced in Congress in 1869, 1870, 1872, 1874, 1875, 1881, 1890. But Western Union could muster crushing opposition. It worked in close alliance with the old Associated Press, which used only Western Union. Newspapers aspiring to national or international coverage lived at the mercy of these allies. Newspapers, backing postal telegraph proposals found their rates raised or service ended. Publishers, editors, reporters knew this topic was out of bounds.

Press control was matched in importance by other persuasive pressures. Congressmen, as well as state legislators, receive franks – free telegraph privileges – in apparently unlimited quantity. A Western Union official wrote to a New York politician shortly before a convention:

Dear Mr. _______:

I enclose another book of franks, of which I have extended the limits to cover all Western Union lines.
I hope they may be able to help you make a good nomination. Please use them freely on political messages, and telegraph me when you want a fresh supply.

The company was equally generous with both major political parties: it took no undue risks. The company’s affairs and prosperity, President Orton of Western Union informed his board of directors in 1873, were subject to government action at all levels, and the franks had saved revenue “many times the money value of the free service.”

The power exercised by Western Union was used with increasing ruthlessness when it came under control of Jay Gould. In the 1880’s the fury aroused by Gould’s machinations – via his hold over railroads, telegraph, press, politicians – found vent in song:

We’ll hand Jay Gould on a sour apple tree
And bring to grief the plotters of a base monopoly!

After 1885, the growth of the AT&T web of wires ended Western Union’s monopoly position and even permitted the rise of Postal Telegraph, a private company choosing a name that had become a sort of freedom banner. And the rise of United Press began to limit the power of the Associated Press.

(The author cites the following reference: Old Wires and New Waves The History of the Telegraph, Telephone and Wireless - By Alvin F. Harlow, D. Appleton-Century Company, 1936)