The Story of the Atlantic Telegraph

To raise capital for a new cable, it was necessary to have some better security than the hazards of a vast and doubtful undertaking. Hence the Company asked the Government to guarantee the interest on a certain amount of stock, even if the second attempt should not prove a success. With such a guarantee, the capital could be raised in London in a day. In this application they might have been successful, but for an untoward event, which dampened the confidence of the public in all submarine enterprises--the failure of the Red Sea Telegraph. The British Government, anxious to forward communication with India, had given that Company an unconditional guarantee, on the strength of which the capital was raised, and the cable manufactured and laid. But in a short time it ceased to work, a loss which the treasury of Great Britain had to make good. To the public, which did not understand the cause of the failure to be the imperfect construction of the cable, the effect was to impair confidence in all long submarine telegraphs. Of course, after such an experience, the Government was not disposed to bind itself by such pledges again. It was, however, ready to aid the enterprise by any safe means. It therefore increased its subsidy from fourteen thousand pounds to twenty thousand pounds; and guaranteed eight per cent on six hundred thousand pounds of new capital for twenty-five years, with only one condition--that the cable should work. This was a liberal grant, and under the circumstances, was all that could be expected.