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Abstract
This article analyses how journalists and businessmen used and perceived the Atlantic cable following the failure of New York banking house Jay Cooke & Co. in September 1873, an event which sparked stock markets panics in Vienna and Berlin. It is argued that while bankers successfully used telegraphic cables to communicate intelligence such as price information, letters proved superior as a medium for establishing personal trust, as the case of New York banker George Opdyke shows. Journalists, too, were critical of the telegraph’s performance, blaming the paucity of information available on the technology’s supposedly inherent deficiencies. This criticism, it is argued, was ultimately based on the ‘imagined reception’ of cables by their senders, as well as on the persistence of earlier imagined uses of telegraphy. These, I argue, continued to inform contemporary expectations of telegraphy’s performance.
Acknowledgments
I would like to thank the editors of this special issue, Simone M. Müller and Heidi J.S. Tworek, as well as the reviewer, David Hochfelder, for their incisive comments on earlier versions of this article.
Notes
1. Quoted in Du Boff, “Telegraph,” 572. Du Boff argues that while the telegraph did reduce regional price differentials, it promoted both competition and monopoly.
2. On the social exclusivity and prohibitive pricing of telegraphic communication see Müller-Pohl, “Weltcommunication,” 42–8.
3. Ferguson, World’s Banker, 249. ‘Throughout the 1850s, he [James Rothschild] repeatedly complained that “the telegraph is ruining our business”,’ Ibid., 573. On telegraphy’s effect on the Rothschilds’ business and their network of agents, see Liedtke, N M Rothschild & Sons, 84–90.
4. Schultz, New York in September, 10.
5. In this respect, the concept differed from earlier ‘speculative’ forms of financial and political news prominent in the late eighteenth century; see Slauter, “Forward-Looking Statements.”
6. Hamon, Stock Exchange Manual, 142.
7. See, for example, Hamilton & Co., Stock Speculation, 5.
8. McCusker, “Demise of Distance”; Forsyth, Business Press in America.
9. Geheimes Staatsarchiv Preußischer Kulturbesitz, I HA Rep. 77 Tit. 945 Nr. 51 vol. 1, 90. Again, the rhetoric of ‘equitable treatment’ here of course obscured the fact that it was equitable only with regard to those customers who could afford to send telegrams.
10. Blondheim, News over the Wires, 173; Starr, Creation of Media, 174f.
11. Hoag, “Atlantic Telegraph Cable”; Engel, “Buying Time,” 302; Wenzlhuemer, Connecting, 84–8, quotation on 86. On the interdependence of communication and capitalism more generally see Müller and Tworek, “Global Communications and Capitalism.”
12. Hochfelder, Telegraphy, 101–37.
13. This narrow definition explicitly excludes economic or commercial crises, i.e. periods of recession or depression which affect not only financial institutions but trade and industry more generally. These periods may last months or years.
14. Nickles, Under the Wire. On the nexus between political crises and telegraphy in the Americas, see also Britton, Cables. Britton argues that from the 1890s onwards in particular, the speed of telegraphic transmission coupled with an aggressive press acted as a destabilizing force on international relations.
15. See the article by Peter Cramton and Axel Ockenfels in Frankfurter Allgemeine Zeitung, 18 April 2016. For an early, tentatively optimistic assessment of the relationship between electronic trading and financial stability see Allen et al., “Electronic Trading.” For an ethnographic account of how the introduction of electronic trading transformed the visual appearance of the market to traders see Zaloom, Out of the Pits, 151–60.
16. Gömmel, “Entwicklung der Effektenbörsen,” 150; Du Boff, “Telegraph,” 578.
17. Winseck, “Double-Edged Swords.”
18. In this article, the term ‘Panic of 1873’ refers to the financial crisis in the United States while the term ‘panics of 1873’ comprises the numerous instances of panicked financial disruptions on both sides of the Atlantic.
19. Edgerton, “From innovation to use.”
20. Postal delivery by stagecoach was still the most common method by far in the 1830s. See Pred, Urban Growth, 85.
21. Lepler, The Many Panics, 110, 158.
22. Calomiris and Schweikart, “Panic of 1857.”
23. Rosenberg, Weltwirtschaftskrise, 120–4. Unlike in 1837, letters announcing the news crossed the Atlantic in steamships; the transmission time was thus considerably shorter. On improvements in the speed of information transmission during this period see Kaukiainen, “Shrinking the World,” 5, 15.
24. On Cooke see Oberholtzer, Jay Cooke; Larson, Jay Cooke; and Lubetkin, Jay Cooke’s Gamble.
25. Diary of George Templeton Strong, 494.
26. Sprague, History of Crises; Wicker, Banking Panics. The NYCHA thus effectively assumed the function of a national central bank, as Sprague first pointed out. More recently, Wicker has argued that the suspension of specie payments was probably not necessary and actually exacerbated the situation.
27. August Belmont to N. M. Rothschild and Sons, September 19, 1873, Rothschild Archive London XI/62/23C. On Rothschild’s network of agents, see Liedtke, N M Rothschild & Sons.
28. Michie, City of London.
29. This is described in detail by Sprague, History of Crises, 58–60.
30. This positive assessment was summarized and endorsed in The Nation, October 23, 1873. For a similarly, but less detailed, positive account of telegraphy’s role, see Commercial and Financial Chronicle, December 20, 1873.
31. Sprague, History of Crises, 58. Unlike the Economist, Sprague argued that the gold shipments during this time were relatively unimportant for the foreign exchange market as the United States were not on a specie basis in 1873. He attributed the improvement in exchange dealings to the loan certificates issued by the NYCHA which improved the banks’ liquidity and enabled them to make loans to foreign exchange dealers. But although we cannot establish a definite causal relationship, it seems plausible to assume, as the Economist did, that the gold shipments did have a psychological effect. Gold was, after all, essential to international trade.
32. Neuwirth, Spekulationskrisis, 84–105.
33. Matis, Österreichs Wirtschaft, 214.
34. For a critical discussion of such perceptions, see Müller, “Wiring the World”; Wenzlhuemer, “Less Than No Time.”
35. In a similar vein, Alexander Engel has recently argued that telegraphy allowed merchants and brokers to take advantage of a new ‘double time’ of commercial transactions, whereby futures trading commodified the difference in transportation time between goods and information. See Engel, “Buying Time.” For the Panic of 1873, Winseck notes that the cables created a new ‘liminal space’ between panicked and normal markets, thus making a related argument to mine, albeit it in terms of space rather than time. See Winseck, “Double-Edged Swords,” 71.
36. Sprague, History of Crises, 58.
37. Field, “Opdyke”; New York, Vol. 200, p. 400 SS, R. G. Dun & Co. Credit Report Volumes, Baker Library, Harvard Business School.
38. Ibid.
39. George Opdyke to A. M. Palmyra, 18 September 1873, letter book September–December 1873, George Opdyke & Company Records, New York Historical Society.
40. For reports on rumours of Opdyke’s impending failure see New York Commercial Advertiser, September 17, 1873; New York Journal of Commerce, September 25, 1873.
41. Opdyke to E. Peterson, 19 September 1873; Opdyke to Meldson & Co., 19 September 1873; Opdyke to J. H. Gould, 30 September 1873, letter book September–December 1873, George Opdyke & Company Records, New York Historical Society.
42. A similar point is made regarding political correspondence in the British Empire by Fletcher, “Uses and Limitations,” 100–5.
43. On the importance of trust in the nineteenth-century marketplace see, for example, Olegario, Culture of Credit; Berghoff, “Markterschließung und Risikomanagement.”
44. Luhmann, Vertrauen, 25–7.
45. Koselleck, “Krise.”
46. The peace treaty forced France to pay five billion Francs in reparations in several installments; according to Rainer Gömmel, by October 1873 about 2.5 to 3 billion Francs had had a direct impact on German capital markets. See Gömmel, “Entwicklung der Effektenbörsen,” 154. On French reparations, see also Baltzer, Berliner Kapitalmarkt, 5ff.
47. Ronge, Rendite deutscher Standardaktien, 212.
48. Wilkins, Foreign Investment, 121. Despite their predilection for American railway securities, Germans had largely shunned Cooke’s Northern Pacific bonds. See Larson, Jay Cooke, 295ff.
49. Ahrens, Krisenmanagement 1857, 41.
50. Read, Power of News, 55–8.
51. Quoted in Wirth, Geschichte der Handelskrisen, 610.
52. I thank Robert Radu for alerting me to this source.
53. Wirth, Geschichte der Handelskrisen, 658.
54. Redlich, Molding of American Banking, 158–61.
55. Letter Book March 1873–January 1874, Robert Mackie and Sons Collection, New York Historical Society.
56. Chandler, Henry V. Poor; Requate, Journalismus als Beruf, 339. While journalistic standards concerning the coverage of political news varied across countries and regions, these variations seem to have been less important in the coverage of financial news. For a comparative account of the history of modern journalistic standards and practices see Requate, Journalismus als Beruf, and Hamilton and Tworek, “Natural History.”
57. Bonea, “Medium and Its Message,” 182; Winseck, “Double-Edged Swords,” 72f.
58. Ibid.