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The Structure of the News Market in Britain, 1870–1914

Published online by Cambridge University Press:  14 April 2011

Jonathan Silberstein-Loeb
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Extract

In this essay, I grapple with three main questions: What effect did the nationalization of telegraphy in 1868–70 have on the structure of the news market in Britain? How did this market structure affect the pricing and supply of news? What effects did subsequent technological change have on the structure of the news market? I show that nationalization resulted in a tripartite market arrangement characterized by collusion that benefited the provincial press over the London press, but retarded the productivity of the General Post Office and the adoption of new technology.

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Articles
Information
Business History Review , Volume 83 , Issue 4 , Winter 2009 , pp. 759 - 788
Copyright
Copyright © Harvard Business School 2009

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References

1 David A. Moss has usefully directed attention to the historical role of American govern ment as the “ultimate risk manager.” Surprisingly, he devotes little attention to the way in which government has protected itself from uncertainty and risk. See When All Else Fails: Government as the Ultimate Risk Manager (London, 2002).

2 These reformers wrote numerous pamphlets on the subject, but the most famous itera tion of this argument may be found in Mill, John Stuart, On Liberty (London, 1859).Google Scholar For the debates surrounding repeal of the stamp taxes on newspapers in the 1830s, see Wiener, Joel, The War of the Unstamped: The Movement to Repeal the British Newspaper Tax, 1830–1836 (London, 1969).Google Scholar On the relationship between education and political economy see Geoffrey Searle, R., Morality and the Market in Victorian Britain (Oxford, U.K., 1998): 36–41.CrossRefGoogle Scholar

3 As quoted in Ingber, Stanley, “The Marketplace for Ideas: A Legitimizing Myth,” Duke Law Journal 1984, no. 1 (Feb., 1984): 3.Google Scholar

4 In a discussion germane to this essay concerning the differing approaches to regulation in the markets for goods as compared with that in the market for ideas, Ronald Coase defined the latter as containing “the activities covered by the First Amendment—speech, writing, and the exercise of religious beliefs….” See “The Market for Goods and the Market for Ideas,” American Economic Review 64, no. 2 (May, 1974): 384.

5 For clarity, throughout the essay I distinguish the marketplace for ideas from the market for news. During the nineteenth century, government deregulated other sectors of the mar ketplace for ideas in addition to the market for news. For the example of theater, see Bakker, Gerben, Entertainment Industrialised: The Emergence of the International Film Industry, 1890–1940 (Cambridge, U.K., 2008)CrossRefGoogle Scholar, ch. 1. Structure of the News Market in Britain, 1870–1914 / 761

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7 Harold A. Innis's claim that, “the monopoly of London that was strengthened by the railway was destroyed by the invention of the telegraph,” was largely, but not entirely, correct. See “The Bias of Communication,” Canadian Journal of Economics and Political Science 15, no. 4 (Nov., 1949): 475.

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9 Frank Ives Scudamore (1823–84) joined the Post Office in 1840 and rose quickly through the ranks. In 1865, Lord Stanley of Alderley, then postmaster general, commissioned Scudamore to study the commercial telegraph companies. He became a great advocate for nationalization thereafter. Perry, Charles R., “Scudamore, Frank Ives (1823–1884),” Oxford Dictionary of National Biography (Oxford, 2004).Google Scholar (John) Edward Taylor (1830–1905) was the son of John Edward Taylor, founder of the Manchester Guardian. Known for his extensive art collection, Taylor's main interest in the paper was in management, and he applied his managerial expertise to form the Press Association. Taylor, Geoffrey, “Taylor, John Edward (1830–1905),” Oxford Dictionary of National Biography (Oxford, 2004).Google Scholar

10 Neil Fligstein refers to such moments as crises in the “conception of control.” See “Markets as Politics: A Political-Cultural Approach to Market Institutions,” American Sociological Review 61, no. 4 (Aug., 1996): 658. “Scudamore to Taylor, 16 May 1868, MS 35356, Guildhall Archives (hereafter GA), London.

12 Chadwick, Edwin, “On the Economy of Telegraphy as Part of a Public System of Postal Communication,” Journal of the Royal Society of Arts 15, no. 22 (1 Mar. 1867): 222–30.Google Scholar In fact, the two mediums were not analogous. See Jevons, William S., Methods of Social Reform (London, 1883), 277–92Google Scholar; Hochfelder, David, “A Comparison of the Postal Telegraph Move ment in Great Britain and the United States, 1866–1900,” Enterprise & Society 1, no. 4 (Dec, 2000): 739–61.CrossRefGoogle Scholar

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14 Mercer, Helen, Constructing a Competitive Order: The Hidden History of British Antitrust Policies (Cambridge, U.K., 1995), 2.CrossRefGoogle Scholar

15 Leslie Hannah points out that nationalization might not have been necessary. See “A Failed Experiment: The State Ownership of Industry,” in The Cambridge Economic History of Modern Britain, vol. 3: Structural Change and Growth, 1939–2000, ed. Floud, Roderick and Johnson, Paul (Cambridge, U.K., 2004), 91.Google Scholar

16 Electric telegraphs. Reports to the postmaster general by Mr. Scudamore …; 1868 (202) XLI.555.

17 Among them, John Edward Taylor (Manchester Guardian) and Dr. Charles Cameron (North British Daily Mail) both provided evidence in Parliament in favor of nationalization. Special Report from the Select Committee on the Electric Telegraphs Bill, pp. 91–7, 99–102; 1868 (435), XI.I, 333. See also Kieve, Jeffrey L., The Electric Telegraph: A Social and Economic History (London, 1973).Google Scholar

18 Brown, Lucy, Victorian News and Newspapers (Oxford, 1985), 52–53.Google Scholar

19 Lee, Alan J., “The Management of a Victorian Local Newspaper: The Manchester City News, 1864–1900,” Business History 15, no. 2 (1973): 134.CrossRefGoogle Scholar

20 Lee, Alan J., “The Structure, Ownership and Control of the Press, 1855–1914,” in Newspaper History from the Seventeenth Century to the Present Day, ed. Boyce, Gordon et al. (London, 1978), 120–22Google Scholar; and The Origins of the Popular Press in England, 1855–1914 (London, 1976).

21 “Newspaper Telegraphic Company,” 20 Sept. 1865, MS 35357, GA.

22 “Provincial Newspaper Society …,” 25 Jul. 1868, MS 35357, GA.

23 Manager's memoranda, 4 Mar. 1915, MS 35362/8,129, GA. Western Union developed a similar strategy in the United States.

24 Kieve, , Electric Telegraph, 72.Google Scholar

25 H. Weaver to All Stations, Oct. 1867, TGE 3/5, BT Archives (hereafter BT), London. Rep resentatives of the press made abortive attempts to improve the service through negotiations with the telegraph company. See J. E. Taylor et al. to EITC, 19 Oct. 1865, POST 81/115, GA.

26 George Toulmin, transcription of deputation before the postmaster general, 7 July 1910, MS 35362/1, 258, GA.

27 The postmaster general did supply such information as storm warnings, the course of ships, maritime casualties, time signals, and a variety of other services, but it never undertook the systematic supply of news for payment.

28 Scudamore to Taylor, 16 May 1868, MS 35356, GA. See also MS 35362/1, 259, GA.

29 As quoted in “Minute of the Postmaster-General Covering the Report of a Department Committee on Certain Matters Connected with the Transmission of Press Messages,” 1 Sept. 1907, POST 30/4322C, 33, BT.

30 The initial instigators of the Press Association included the Birmingham Daily Post; Edinburgh Scotsman; Glasgow Herald; Glasgow Daily Mail; Leeds Mercury; Liverpool Daily Post; Manchester Guardian; Manchester Examiner and Times; Manchester Courier; New castle Chronicle; and the Sheffield Independent. See Untitled, 30 Mar. 1868, MS 35356/1, GA.

31 All prices provided parenthetically were calculated using www.measuringworth.com and are in prices from 2008.

32 Boswell, H. A., About Newspapers (Edinburgh, 1888), 40–42.Google Scholar

33 Manager's memoranda, MS 35362/1, 171, GA; “Minute of the Postmaster-General,” 27–33.

34 Manager's memoranda, MS 35362/9, GA.

35 Supplementary Report of the Committee of Provincial Daily Newspaper Proprietors, 26 Jun. 1868, MS 35356, GA.

36 C. M. Foden, Barley Exchange, Mechanics Institute, to E. B. Bright, Electric Telegraph Co., 15 Dec. 1869, TGE 3/2, BT.

37 “Provincial Newspaper Society…,” 25 Jul. 1868, MS 35357, GA.

38 The twenty-odd newspaper proprietors involved in the initial meetings and negotiations among the provincial press represented all the principal British cities outside London, including Cork, Dublin, Dundee, Edinburgh, and Glasgow, although the majority were English. The papers of Manchester, with three attendees, were the best represented. Supplementary Report of the Committee of Provincial Daily Newspaper Proprietors.

39 Scudamore to George Harper, 25 Jul. 1868, MS 35357, GA.

40 For information on Central News, see: Herd, Harold, March of Journalism: The Story of the British Press from 1622 to the Present Day (London, 1952), 179Google Scholar; Grant, James, The Newspaper Press; Its Origin—Progress—and Present Position, vol. 2 (London, 1871), 349Google Scholar; Boswell, , About Newspapers, 113–15Google Scholar; Hart, H. G., The Central News Diamond Jubilee Souvenir (1931)Google Scholar, LN505, 1/9071166, Reuters Archive (hereafter RA), London. For information on Extel, see Scott, James M., Extel 100: The Centenary History of the Exchange Telegraph Company (London, 1972).Google Scholar American capital and technology were behind Extel. See Extel to Lefferts, 31 Jan. 1874, Marshall Lefferts Papers, New-York Historical Society, New York. I am grateful to David Hochfelder for this reference. See also 1 Sept. 1917, MS 35418/1, GA, and Scott, George, Reporter Anonymous: The Story of the Press Association (London, 1968), 153.Google Scholar

41 Foden to Bright.

42 In 1868, nominal capital was £18,000 divided into 1,800 shares of £10 each. In 1904, management increased capital to £100,000 by the creation of 8,200 new shares of £10 each. PA Articles of Association (1904), Jones papers (J), series 1, box 69, RA.

43 PA board minutes, 30 July 1907, MS 35358/13, 91, GA. Meeting of the Committee for Establishing a News Association (Manchester), 15 Sept. 1868, MS 35356, GA.

44 “Supplementary Report…,” 26 Jun. 1868, MS 35356, GA.

45 In contrast, the exclusionary practices of the American Associated Press (AP), which were far more restrictive than those of the PA, were the subject of repeated litigation. See Silberstein-Loeb, Jonathan, “Business, Politics, Technology, and the International Supply of News, 1845–1945,” unpublished PhD diss., Univ. of Cambridge, 2009, ch. 2.Google Scholar

46 Minutes of meeting of provincial newspaper proprietors held at United Hotel, Hay- market, 29 Jun. 1868, MS 35356/2, 11, GA.

47 The telegraph company's preference for contract rather than amalgamation was typical of its behavior generally. See Foreman-Peck, , “Competition, Co-operation and Nationalization,” 82.Google Scholar

48 Director's letter book, MS 35414, passim, GA.

49 William Saunders to A. C. Wilson, director's letter book, 23 Nov. 1868, MS 35414, GA; Cartel agreements, 20 Apr. 1867, LN288/883501, RA.

50 PA board minutes, 22 Mar. 1869, MS 35358/1. Reuters declined requests from competitors of the PA for access to its news. Reuters's board minutes, 4 Aug. 1875, RA.

51 Manager's memoranda, 3 Aug. 1917, MS 35362/10,1327, GA.

52 “Minute of the Post-Master General,” 63–64.

53 PA board minutes, 5 Nov. 1878, MS 35358/3, GA.

54 PA board minutes, 30 July 1940, MS 35358/25,121, GA.

55 For example, PA board minutes, 4 Oct. 1878, MS 35358/2, GA; PA board minutes, 8 Jan. 1889, MS 35358/5, GA.

56 PA board minutes, 8 Jan. 1889.

57 PA board minutes, MS 35358/4, 280, GA.

58 Manager's memoranda, 1 Aug. 1916, MS 35362/9, 710, GA.

59 Manager's memoranda, 5 Nov. 1917, MS 35362/10,1392, GA.

60 Manager's memoranda, 10 May 1915, MS 35362/8, 235, GA.

61 A monthly subscription overcame the difficulty inherent in valuing information before utilization, because it reduced the marginal price of each news item to zero. Bakker, Gerben, “Trading Facts: Arrow's Fundamental Paradox and the Emergence of Global News Networks, 1750–1900,” Working Papers on the Nature of Evidence: How Well do “Facts” Travel? (London School of Economics and Political Science, June 2007), 10–11.Google Scholar

62 Profit-and-loss statements, LN224, RA.

63 Silberstein-Loeb, , “Business, Politics, Technology,” ch. 6.Google Scholar

64 Ibid.

65 John MacDonald to Paul Reuter, 5 Feb. 1877, LN87/3324, RA.

66 Apparently, Reuters did not know the number of newspapers in the PA. Samuel Clements to Roderick Jones, 1 May 1928, J.1.68, RA.

67 Reuters board minutes, 24 June 1885, RA.

68 Reuters board minutes, 10, 24 June, 8 July 1885, and 6 Jan. 1886, RA.

69 PA board minutes, 2 Dec. 1890, MS 35358/6, 30, GA.

70 PA board minutes, 5 Nov. 1890, MS 35358/6,17–23, GA.

71 PA board minutes, 25 Nov. 1892, MS 35358/6,199, GA.

72 See, for example, Manager's memoranda, 10 Mar. 1911, MS 35362/2,146, GA.

73 Manager's memoranda, 5 Nov. 1917, MS 35362/10,1392, GA.