Between 1848 and 1947, institutional arrangements protected the supply of news. In the United States, weak regulation of telegraphy, permissive state laws, and favorable court decisions facilitated the maintenance of an exclusive form of news association that privileged those newspapers fortunate enough to be among its members. Although the AP’s exclusive organization encouraged the emergence of rivals, competition was always contrived. When the UP threatened the AP, the latter became more inclusive. To increase the number of newspapers that benefited from the fruits of cooperation, AP v. US prohibited the association from excluding newspapers from membership based on concerns about newspaper competition. After the Supreme Court forced open the AP in 1945, as the Illinois Supreme Court had done in 1900, the AP resembled a public utility. In this respect, it was similar to the British PA, which from the time of its establishment in 1868 was required by the Post Office to provide its news reports to all paying provincial newspapers.

In Britain, the Telegraph Act of 1868, and continued attempts to maintain the market structure it engendered, provided considerable protection for the provincial press until World War I. The operation of telegraphy in Britain enabled members of the PA to benefit from the comparative wealth of the London press and from the revenues of Extel and Reuters. First telephony and then the onset of war in 1914 contributed to undermining the mid-Victorian settlement brought about by the Telegraph Act. After the war, it broke down entirely. Protection for the supply of news continued but shifted from the press to radio. By 1930, the PA had largely ceased to rely on the public system of telegraphy the Post Office provided, and instead developed a private network of leased lines.

Although the increase in competition that telegraphy generated during the 1840s encouraged newspapers to cooperate, the limited reach of the nascent communications network, and the consequent costs of coordination among a large group of publishers, kept participation in these early news organizations small, personal, and regional. Limited telegraph bandwidth, and then opportunistic behavior, prevented the loose federation of news associations that emerged after the Civil War from establishing a comprehensive nationwide organization. Yet, by 1897, the operations of the Associated Press not only encompassed the territory from the East Coast to the West, it had eliminated potential rivals and consolidated its control over the newsgathering business of the country. The path to the establishment of a nationwide news association lay not through merger or horizontal integration, but through the maintenance of exclusivity and the elimination of competitors.

The Formation and Ascendance of the AP

Following disagreeable revelations about the secret agreements between the WAP and UPA, Lawson and several Midwestern publishers fulminated a rearrangement of relations that would better serve their interests and protect their exclusive franchises. Their efforts culminated in December 1892 with the incorporation of the AP in Chicago, which that year surpassed Philadelphia as the second largest city in the United States. The AP charter entitled the association to not only to “buy, gather and accumulate information and news; to vend, supply, distribute and publish the same,” but also “to purchase, erect, lease operate, and sell telegraph and telephone lines and other means of transmitting news; to publish periodicals; to make and deal in periodicals.” The AP reserved the right to erect and operate telegraphs for fear that relations with Western Union might sour or that Western Union might either raise its rates or enter the news business. In other respects, the new association was much the same as the WAP, save that Lawson was in charge. Initially, Lawson and his friends contemplated the continuance of an integrated two-firm solution, believing that closer cooperation between Chicago and New York might advantageously stifle competition from hostile third parties. During the winter of 1892–1893, Lawson drew up the bylaws of the AP in conjunction with executives of the UPA.

John Sayward’s scoop was big news, especially in Bangor, Maine. It ran in the Saturday issue of the Whig and Courier, published February 24, 1849 and Sayward, the paper’s editor, deployed a large bold font to announce it. The “First Dispatch of Foreign News from the East!”, Sayward explained, was obtained only with considerable effort. The news from Europe, which crossed the Atlantic aboard the royal mail steamship Europa, was the first foreign news ever to pass by telegraph from St. John, Nova Scotia westward. After the Europa arrived at Halifax on the evening of February 21, a relay of horses carried the news 144 miles to Digby through a recent and heavy fall of snow, the heaviest, it was said, that had been experienced in fifty years. The news did not arrive in Digby until four o’clock the following morning. There it was delayed nearly twelve hours, a consequence of the utter impossibility of breaking a passage for a steamer through the ice with which Digby Bay was jammed. Only with the full force of the engine and paddle wheels, and with the assistance of twenty men, was a channel finally made by which the steamer could pass through the gut between Bay View and Victoria Beach, out into the Bay of Fundy, and onward to St. John, whence the news was finally telegraphed to Bangor, and thence to points south.

For centuries the supply of news has been protected from market forces. Various institutional arrangements have provided protection by subsidizing the provision of news. Direct government grants or subventions have been relatively rare. Although at various times during the nineteenth century political patronage of the press was commonplace in Britain and the United States, rarely was it sustained. Instead, subsidies were largely indirect. A classic example, about which much has been written, is postal subsidies for the distribution of newspapers. Postal subsidies have a long history stretching back to seventeenth-century England. A group of post office officials called the Clerks of the Road could frank newspapers for domestic and foreign distribution, which were then free from postage. For this service they charged newspapers a small fee, which they pocketed personally. In the American colonies and later in the United States, the Post Office also subsidized the distribution of newspapers. With successive developments in telecommunications, such as telegraphy and radio broadcasting, new institutional arrangements were devised that protected the supply of news. The twin subsidies of cooperation and exclusivity and the way in which state action and business activities shaped these subsidies are the focus of this book. Looking closely at the processes by which newspapers obtained news provides a clearer sense of how the supply of news was funded.

Cooperation subsidized the supply of news in two ways. First, by cooperating, newspaper publishers could share with each other the costs of gathering news. During the 1850s and 1860s, the promise of reduced telegraphy costs encouraged newspapers around the world to form associations to collect news. These associations occupied the top of the news pyramid. They supplied reports of breaking news to newspapers and other news outlets such as newsrooms and later radio stations. In turn, these reports either formed the basis for further reporting or were reproduced verbatim. The British Press Association (PA), established in 1868, is the oldest surviving news association. The American Associated Press (AP), incorporated in 1892, grew out of several regional news associations that emerged across the United States during the 1840s, 1850s, and 1860s. In these associations the cost of collecting the news was apportioned among the members of the association according to their respective use of the news reports. The assessments levied on the newspapers were in turn used to meet the costs of supplying the news.

World War I helped to precipitate the demise of the settlement achieved under the Telegraph Act of 1868, but it did not collapse until the eve of World War II. The end of war in 1918 ushered in an age of “rationalization” among newsgatherers, concentration of ownership among newspapers, and a period of increased competition in both sectors. The British government played an important part in this process by creating an environment generally conducive to rationalization and combination, particularly during the wars and especially with respect to broadcasting, even if the rationale that motivated interwar intervention was not as explicit as that which motivated the Victorians. The BBC, established as a public corporation in 1926, wielded considerable power in the market by virtue of the monopoly granted to it by the state. The threat the BBC posed to existing industry alliances undermined cooperation and precipitated merger. Seen in this light, the subsidization of the press by the British state did not disappear. Instead, it shifted to radio. The creation of the BBC marked the end of the consensus established in 1868 and signaled the start of a new policy regime with respect to news.

The war brought to fruition those changes already underway in the 1890s. The PA embraced leased lines, but it continued to rely on the London press, Extel, and Reuters to subsidize the news reports it provided to the provincial press. Only when these alternative lines of revenue dried up, was the PA forced to charge provincial newspapers differently for a like service of news. As in other areas of industrial activity, such as alcohol and chemicals, mergers occurred during the interwar period among firms previously linked by agreements. Reuters and the PA merged, which in retrospect appears to have been the culmination of a fifty-five-year courtship, the operations of Extel and the PA became more closely intertwined, and the PA purchased Central News, a tertiary organization that had long been the PA’s foil. More so than before the war, the landscape in Britain resembled that in the United States. The British United Press (BUP), a subsidiary of the American UP, increased competition in the United Kingdom. The largest visible difference between the two countries lay in their varying responses to broadcasting.

The tension between cooperation and exclusion in the supply of news was as pronounced throughout the British Empire as it was in the British Isles and in the United States. To spread costs and increase profits, Reuters, like the United Press in the United States, had an incentive to sell its news as widely as possible, but it too encountered a desire on the part of the press throughout the Empire to possess news exclusively. Colonial and commonwealth administrations regulated this relationship, typically by changes in telecommunications policy or by the allocation of intellectual property rights, and occasionally through judicial intervention and outright financial subsidy. On a daily basis, however, Reuters attempted to moderate the tension between exclusivity and cooperation among newspaper interests throughout the Empire. But, more often than not, access to Reuters’s news reports was used as a bargaining chip in the internecine conflicts between warring factions of the colonial press. As a consequence, Reuters’s news business was never particularly profitable. Before World War I, Reuters developed a private telegram business and associated lines of work to subsidize its newsgathering. After the war, in conjunction with the use of radio, Reuters developed a highly profitable and influential commercial news business. After 1930, the PA, which owned Reuters as a subsidiary, relied on these alternative sources of revenue, and the profits Reuters earned from its news services in the Empire, to offset the cost of international news to the newspapers of the British Isles.

In 1942, Kent Cooper, general manager of the AP, wrote Barriers Down, a book in which he told of his “great crusade” against the “most powerful international monopoly of the nineteenth century”: the European news agencies. In the book, Cooper developed his thesis that through exclusive cooperative agreements, these agencies had placed restrictions on the “freedom of international news exchange,” contributed to the causes of World War II, and that there could be no “permanent peace” unless this freedom was guaranteed. Yet these agreements were at the center of the antitrust suit brought against the AP. In fact, Cooper’s book was partly intended to exculpate the AP from the suit. The eminent First-Amendment scholar Zechariah Chafee found it “inconceivable” that “men like Kent Cooper who put the barriers down in Europe think the barriers to the free flow of news should be kept high at home.” Managers at the UP, Reuters, and even the AP regarded the book’s narrative as misleading. In fact, in 1942, the same year the book was published, Cooper and Reuters concluded another cooperative contract. Agreements along these lines continued in various forms until at least 1967.

Cooper’s bias and hypocrisy are insufficient reasons to ignore his central thesis. Cooper’s idea that breaking down “the dams holding up the free exchange of news” would contribute to peace was a byproduct of, and integral to, the metaphor of the marketplace for ideas. Such logic was also a continuation, albeit in another form, of the rationalist illusion according to which news, if freely and competitively traded, is said to increase knowledge. In fact, cooperation was an effective means to subsidize the collection and supply of international news. However, as in the United States, the British Isles, and the British Empire, the world’s leading news agencies had to search continually for a balance between exclusivity and cooperation that fit with changing economic, political, and technological conditions.

The American state regulated news associations through competition policy to protect newspaper plurality. In Britain, the state also sought to protect plurality but it did so through telecommunications policy. By nationalizing telegraphy, Parliament sought to create and maintain a level playing field for competition among provincial publishers while subsidizing their newsgathering collectively. These policies, the intellectual origins of which may be traced to the Enlightenment, continued until World War I.

Government control of telegraphy delayed vertical and horizontal integration and encouraged the perpetuation of several specialized newsgathering organizations which were loosely combined through various agreements. In this way, the structure of the newsgathering market in Britain was similar to that of British manufacturing. If America was the land of the trust, then Britain was the land of the gentlemen’s agreement; but whereas the attempts of small firms to limit competition in large markets through agreement during the nineteenth century were often ineffective, the influence of government policy ensured that those among news organizations worked.