TELECOM Digest OnLine - Sorted: Re: Western Union History

Re: Western Union History
27 Jun 2005 09:55:40 -0700

Lisa Minter wrote:

> For your reading this weekend, a look though the Digest Archives at
> the Western Union Telegraph Company, as presented by Jim Haynes in
> this Digest in February, 1992. The original series of articles
> appeared in three articles that weekend, now 13 years ago.

Thanks for posting it. Very interesting.

I am always curious as to the recent history of Western Union. There
are many books on its pre-1900 history "The Victorian Internet", but
little on its post 1900, and esp WW II and later except for Oslin's.

I know that around 1975 WU carried relatively few classic telegrams,
the bulk of its businses was money transfers (which it still does,
under new owners). It also had Mailgram that seemed reasonably
popular in the business world.

But I don't understand how WU missed the explosion of computers. It
had a microwave system in place. It even put up a satellite. I think
it could've been a long distance carrier, perhaps a niche player, but
a carrier just the same -- with a good name.

I do know WU was saddled with an old physical plant (they knew it in
1960, but had a long way to go to get rid of it) and expensive union
labor. I knew a fellow student who worked for them and earned great
money for a kid -- they had huge wage rates; certainly that didn't

A dying company is awfully hard to turn around. The trick is for
management to foresee the future and turn a company to deal with that
future. It sure seems that way back in 1960 WU mgmt saw the future --
correctly -- in data communications, yet somehow later on they missed
the boat.

> It will be able to provide increased telegraphic service, leased voice
> channels, facsimile, closed-circuit television, and perhaps most
> important of all, high-speed data processing channels that can handle
> digital information at computer speeds.

AFAIK, this was completed. I wonder how effectively it was used to
earn revenue during the 1960s. One would think it would do a lot.

> "Although the number of leased wires has not been reduced in absolute
> terms, today their proportion has decreased to about 60%. S. M. Barr,
> Western Union vice-president in charge of planning, expects this
> percentage to drop to 40% in the next few years, hopes to get the
> proportion of leased facilities down to 20% eventually.

Did they get the reduction they forecast? The expense of leased lines
was a big problem for Western Union in the 1970s. I heard they were
mostly dependent on AT&T even then.

> "-Private Expansion- But it does expect its private wire services to
> expand greatly. Here, particularly, Western Union's new facilities
> will be of help in solving communications problems for private
> customers. Western Union already has a good deal of savvy when it
> comes to tailoring a special system to a customer's needs. About
> 2,000 companies in the U.S. -- among them U.S. Steel, General
> Electric, Sylvania, and United Air Lines -- have private
> communications networks leased from Western Union. And its bank wire
> service interconnects 213 banks in 55 cities with pushbutton
> switching.

So, did this service -- where the money is -- expand or contract in
the 1960s? Obviously eventually it contracted. Why?

> [1] One would think that a writer for such an astute publication
> as {Business Week} would have noted the price elasticity of personal
> communication. This would have suggested that the dropping price of
> long-distance telephony would devastate public Telegram service,
> as it did.

But I think in 1960 WU recognized just that and was getting out of
that business. Maintaining local telegraph offers for that service
was very expensive.

> "-Government Contracts- Part of the load the new microwave system will
> carry is already under contract. The U.S. Air Force hired Western
> Union to build an automatic system of data and message handling that
> will interconnect all domestic Air Force bases. The combat and
> logistics network (COMLOGNET) [1] also costs, coincidentally, $56-
> million and will be operated by Air Force personnel. Western Union
> also built for the Air Force an international automatic switching
> telegraph network, [2] which was completed last May, and has put in a
> high-speed weather map facsimile system for the Strategic Air Command.
> In addition, it built a nationwide weather map facsimile system for
> the Weather Bureau that serves several hundred points.

Again, this is good business. What happened to the government

> "Finally, during the war, it became obvious that Postal couldn't go
> on. Operations for several years had been dependent on RFC [2] loans.
> So Congress finally permitted Western Union to absorb its competitor
> (BW - Aug. 7 '43, p102).

According to Oslin's book, the government _forced_ WU to absorb Postal
and Postal was in miserable shape. He says the Postal addition
badly hurt WU.

> [2] RFC = Reconstruction Finance Corporation, a Depression-era
> government agency in the business of lending money to business firms
> to help them get back on their feet.

Side note: The RFC was started during the Hoover Administration as a
way to fight the Depression. Many people credit it as part of FDR's
New Deal, but it was a Hoover program. Hoover did more than credited
to fight the Depression.

[Other perspectives welcome. public replies please]

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