By the time American Union was incorporated in 1879, Western Union held a monopolistic position in the nation’s telegraph system. Looking back, one has to wonder why an upstart would attempt to establish a new national network in the face of such dominance. A new system would certainly require enormous capitalization in addition to obtaining thousands of miles of rights-of-way on which to place their lines. Long-term success of such a venture would require rate wars with Western Union to induce new business. Western Union’s vast wars, essentially waiting out the competition until either driving them out of business or absorbing them if it suited Western Union. The business dynamics of the telegraph industry in this age were incredibly complex and contentious, with personal enrichment through stock speculations commonplace. The story of American Union begins with another
Jay Gould’s First Telegraph War:
By 1874 Western Union verged on a complete monopoly of the telegraph industry. Over the prior two decades countless telegraph companies came and went, with many being The term “rate war” typically referred to slashing the rates charged per unit (word) for telegrams in an attempt to increase market share. Substantial rate reductions could be absorbed by smaller companies through increased telegram volume to a certain point, and were often temporary. Public outcry against monopolies fell on deaf ears at Western Union, while competitors often attempted to champion their own telegraph companies by fomenting anti-monopoly sentiment against Western Union. Jay Gould was particularly adept at utilizing the press, including the Associated Press, to turn public sentiment against Western Union’s dominance.
another colorful character, Henry O’Rielly, envisioned creating a transcontinental range of
planned to build 3,000 miles of telegraph from New York to Chicago via Albany and Cleveland, and eventually on to California. Initially building its lines along highways, the miles of wire.
Western Union’s historic 1861 transcontinental telegraph line had been routed through the wilderness, as no transcontinental railway existed at the time of the line’s construction. In 1862, the act that launched the Transcontinental Railroad required railroads to install telegraph lines along their routes unless Western Union moved their telegraph to the railroad. Western Union’s 1861 telegraph line had become dangerous to maintain, and hostile Indians killed or wounded nearly a dozen operators a year along the original line. Although Western Union moved their transcontinental route to the new railroad, both the to extend its New York and Chicago line to Omaha to connect to their railroad telegraph lines (the railroads were authorized to build their own telegraph lines for railroad and commercial business). The alliance with the A&P meant that Western Union would soon
38 Crown Jewels
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