Jacob Goldstein
Jacob Goldstein spent more than a decade as co-host of the Planet Money podcast. He's also the author of the book Money: The True Story of a Made-Up Thing, which the New…
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Before Reuters was a global news giant, it was a man and 45 homing pigeons. Julius Reuter saw that the telegraph would change how information moved, and he used that to his advantage. He didn’t have to get news out immediately — he just had to be first. Jacob Goldstein and Robert Smith follow Reuter from Germany to England, where he scoops The Times of London with news that Europe was headed to war.
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Pushkin. Too quick?
00:07
Speaker 2
No, it was perfect.
00:08
Speaker 1
Pushkin. Stop. You got it.
00:14
Speaker 2
Robert Smith, make the telegraph sound because I'm going to talk about the telegraph.
00:19
Speaker 1
I should practice it so it actually spells something.
00:21
Speaker 2
Oh, that would be cool.
00:22
Speaker 1
I'm going to work on that.
00:24
Speaker 2
It's a lot of letters. I think the telegraph is underrated. I think the telegraph is underrated. The telegraph, like, think of this. It's the first moment when you have instantaneous communication. It is the zero to one moment in the history of sending information instantly.
00:42
Speaker 1
Because something could have taken two weeks by horseback. Months!
00:46
Speaker 2
Months by ship!
00:47
Speaker 1
And then all of a sudden... It's now. You're sharing a simultaneous now.
00:52
Speaker 2
You can have a conversation across the Atlantic Ocean in basically real time. It was a huge change in the way people lived, in the way people thought, understood the world. And of course, it was a huge change in business. And one of the people who understood it first and who understood it best was one Julius Reuter. Of Reuters fame, I'm Jacob Goldstein.
01:15
Speaker 1
I'm Robert Smith, and this is Business History, a show about the history of business.
01:20
Speaker 2
Julius Reuter built Reuters, a news agency that I think is underrated in the United States.
01:25
Speaker 1
You used to have apostrophe S.
01:27
Speaker 2
Yes, now it's just Reuters like Father's Day, I think. Does Father's Day have an apostrophe? Or it's R apostrophe S, which makes no sense. It should be S apostrophe. Reuters is in 165 countries. They have thousands of journalists. The Pope in Rome is... was giving a speech in the late 20th century to a bunch of journalists, and he.
01:50
Speaker 1
Said, if St.
01:50
Speaker 2
Paul the Apostle, the man who spread Christianity, came back today, he would run Reuters. Because Reuters is Christian. It's not. It's not religious. But because in much of the world, when you think news, you don't think the New York Times or the BBC or in Rome, the Corriere della Sera.
02:10
Speaker 1
You think Reuters.
02:22
Speaker 2
Robert Smith, this is the time in our program when we do the full name, like in the second paragraph of the obituary.
02:30
Speaker 1
He's not just.
02:30
Speaker 2
Reuter, he is Paul Julius Reuter. Bonus, he was born Israel Beer Josaphat.
02:39
Speaker 1
I like beer much better than Julius. Julius is a weird middle name. I knew this middle name was my name, too.
02:46
Speaker 2
He was born in 1816 in Kassel, Germany. German Confederation at the time. Germany was not yet Germany, but we're just going to call it Germany. His father was a rabbi. And at an early age, he went off to Göttingen, I don't speak German, to work for his uncle's bank. One of his biographers described him as small, dark, keen of eye, and succinct in conversation.
03:14
Speaker 1
They're missing a big thing about Mr. Reuter. Jewish? Jewish. No, his giant, giant sideburns. And, you know, we've done a lot of sideburns in the show, but these are magnificent.
03:26
Speaker 2
Would you even call them sideburns? They're wings. As you pointed out the other day when we looked at this picture, we have this old picture of him.
03:34
Speaker 1
Of course, it's old.
03:36
Speaker 2
They come down like triangles off of his cheeks. And you pointed out that if he were to turn his head, they would sweep his shoulders like a broom. It's incredible. Yeah, I feel like he looks like a, A Jewish John.
03:51
Speaker 1
Lennon, basically.
03:51
Speaker 2
You know, he's got the John Lennon glasses, which we should call the Julius Reuter glasses. There is a story about Reuter as a young man when he's working for the bank in Göttingen. That is delightful and at least plausibly true. So I'm going to tell it to you.
04:06
Speaker 1
Go with it.
04:08
Speaker 2
There's a mathematician in town by the name of Friedrich Gauss. Maybe you've heard of him.
04:13
Speaker 1
I have.
04:14
Speaker 2
Normal distribution.
04:15
Speaker 1
Yeah, exactly.
04:16
Speaker 2
Bell curve.
04:18
Speaker 1
One day....
04:20
Speaker 2
Young Julius Reuter goes and picks up a bag of gold coins from Professor Gauss to be deposited at the bank.
04:28
Speaker 1
Apparently, it was very lucrative to draw curves back in the day.
04:31
Speaker 2
He was big in curves. And Reuter realizes that the brilliant mathematician has put too many gold coins in the bag. He has miscounted. Delightful. He goes back to tell him, because he's an honest man. And Gauss is very grateful and impressed. And he shows young Julius Reuter this thing he's tinkering with. This wire he has strung from the top of a church steeple to send messages electronically. It is a proto-telegraph.
05:03
Speaker 1
What, a block? Three blocks away?
05:04
Speaker 2
A few kilometers. A few kilometers, apparently. And Reuter is impressed. And, you know, they don't quite have the code part yet. Gauss is no Morse. But, you know, the idea is that Reuters sees this and sort of stores it away. Like, ah, here is a thing in the world that is coming.
05:22
Speaker 1
Yeah, as they say with AI today, this is the worst the telegraph will ever be. Yeah, yeah. It just gets better from there. And if you can see that, then you can see opportunities.
05:32
Speaker 2
So it will be Reuters' big opportunity. It will be what he seizes to build this enduring company. Although it's going to take him a little while. He's got to bounce around the world for a few years first.
05:44
Speaker 1
So.
05:45
Speaker 2
He goes to Berlin and works in publishing a little bit. He gets married, converts to Christianity, changes his name to something a little less Jewish than Israel, Josaphat, to Paul Julius Reuter. And after the revolutions of 1848, a tumultuous time, he moves to Paris, to France. And this is where he gets into the news business for the first time. He works initially as a translator in at this news agency called Havas, spelled Havas, but I think pronounced Havas. And Havas still exists today, amazingly, another one, like Reuters still exists today. It's even older. And there's actually two sides of it. You've probably heard of AFP, Agence France-Presse, the news agency out of France. So that is descended from Havas. And then there's also a company called Havas that it's in the marketing, kind of advertising communications business. Reuter, of course, was early. He was working for the original Havas, one Charles-Louis Havas, who had been a banker, who had loaned money to Napoleon. Of course, he didn't get paid back part of the risk of lending money to Napoleon.
07:02
Speaker 1
Yeah, that's why you have a high interest rate.
07:04
Speaker 2
That's right. So Havas' second act was to start this News agency. Basically, he started out gathering information from foreign newspapers around Europe, translating it into French, and distributing the information to newspapers around Paris.
07:22
Speaker 1
Which would have been useful if you were lending money to someone who's leading an army across Europe.
07:27
Speaker 2
Yeah, you want to know what's the word in Austria. This was after that. But if he could have only had a report from Belgium back in whatever it was, 1815? When was Waterloo?
07:38
Speaker 1
Yeah.
07:38
Speaker 2
So Reuter works for Avas for a little bit and then decides to strike out on his own. He's an entrepreneurial guy, decides to get into the news business himself. And his first business is going to be printing basically a newsletter, like a news sheet in German, and then sending it off to his contacts from when he worked in Germany. So it's basically delivering news from Paris to people in Germany. And he rents this kind of crappy top floor room on Rue Jean-Jacques Rousseau.
08:13
Speaker 1
I love Parisian street names. What a great address. I know.
08:16
Speaker 2
How come we don't have Herman Melville Boulevard?
08:19
Speaker 1
I mean, there's.
08:20
Speaker 2
Probably a block.
08:21
Speaker 1
You might in Rhode Island or something.
08:24
Speaker 2
Melville was a New Yorker. Melville was a New Yorker. And don't tell me about a block. Don't write to me about a block. Everybody's got a block in New York. So Reuter rents this place. crappy room, a walk-up, top floor of a walk-up on Jean-Jacques Rousseau. I love that. Love you, Paris.
08:42
Speaker 1
Oh, great, great news.
08:43
Speaker 2
It's got dirty windows, you know, tattered curtains. Somehow they get a printing press up to the top floor. His wife is doing most of the translation. And he's printing this daily news sheet. You know, there's like some gossip from Paris, some news from the Paris papers. And crucially... prices from the Paris stock market. And Reuter cleverly has rented this room right across the street from the main Paris post office. And what that means is he can get the market prices at the end of the day, print his news sheet, run it over to the post office, and get it in the last dispatch of the day sent off to Germany.
09:28
Speaker 1
It's like morning brew of the day. You've got to know exactly what's going to happen. And the interesting thing.
09:33
Speaker 2
To me about this is it's not like it's going to get to Germany instantaneously.
09:38
Speaker 3
It's going by post. It's going to take whatever, days, I guess. But if you get one day... by getting the mail out early. If you get one day on your competitors, that is worth money.
09:50
Speaker 1
Yes.
09:50
Speaker 2
Like if you're in Germany and you're getting market prices from Paris, you don't actually need to get them instantaneously. You just need to get them before everybody else does. Right. The advantage, interestingly, isn't in how fast you get it. It's a relative advantage. You just need to get it first. And so this is a crucial insight that Reuter has, still true today.
10:13
Speaker 1
And we should probably just say what this is for, which is, say a company is imploding in Paris and the stock prices are going down and everyone owns that company in Germany. If you have advance notice that the stock prices are dropping, you can sell before everyone else does.
10:29
Speaker 3
Yeah.
10:29
Speaker 2
Or even if you think of commodity prices, right? The prices of lots of things people are buying and selling in Germany are moving day to day in Paris. And If you're selling some commodity in Germany, then it matters to you what its price is in Paris. So this sounds good. But like many media businesses, it doesn't work. It doesn't work. Reuters' first business fails. Creditors seize his printing press. And Reuters thinks about it. And he comes up with a thesis for why it failed. And that is it wasn't focused enough. generally a good thesis in the media business, right? He realizes, oh, you know, his newsletter had market prices. It also had Paris gossip. It also had sort of news summaries.
11:18
Speaker 1
Movie reviews, classifieds in the back.
11:21
Speaker 2
And, you know, if you're paying for market prices, you don't want to be paying for Paris gossip. And so he decides two things, right? Two things. One, he's going to focus more on financial news. And two, crucially, he's going to find an edge. He's going to find an edge. And his edge is going to be the telegraph. This is the moment when Julius Reuter meets the telegraph. And at this point, so we're around 1850 now, back in Germany, they've just opened a telegraph line that runs from Berlin in the eastern part of the country to a town called Aachen in the west. And And there's a sort of telegraph news office in Berlin actually run by this guy who Reuter had worked with back at Avas, back in Paris. And so Reuter's like, oh, I'll open a telegraph office news office in the West, in Aachen. So he does that. He goes to Aachen and he opens the Institute for the Promotion of Telegraphic Dispatches.
12:29
Speaker 1
Institute? It's just him, right?
12:31
Speaker 2
Yeah, he's thinking big. He's thinking big. And he's going to focus on financial news. And it's interesting to think historically about this, about using a new information technology to deliver financial news faster. I mean, we'll see Edison do this a few decades later. He'll invent an improved stock ticker. That's one of his first big inventions to get people, you know, better, quicker information about stock prices. And you can jump all the way to the 21st century. I mean, you probably remember it was like, oh, 15 years ago now, a little more, there was this big story about companies spending hundreds of millions of dollars to build One company was building a fiber optic line. Another was doing.
13:15
Speaker 1
Lasers.
13:16
Speaker 2
Were there lasers? There were microwave towers. Just to get information from Chicago to outside of New York, like literally milliseconds faster. It was already instantaneous. But if it could be slightly more instantaneous to get information from the futures market in Chicago to the stock market, computers that are actually in New Jersey... you could profit. And so people spent hundreds of millions of dollars to gain milliseconds. This is the same game that Reuter is playing here. So Reuter opens this business in Aachen. It does fine. But of course, if he had stopped in Aachen, we wouldn't be talking about him. We would have never heard of him. And his next move, I'm going to be honest with you, it's my favorite part of the story. It's the most delightful part of the story. And it's delightful because it's about to telegraph But it's also about the lack of the telegraph. So picture Reuter, right? He's there in Aachen at the west end of the Prussia telegraph line.
14:16
Speaker 1
Seems like there's a limited number of things that you can profit on between Berlin and Aachen. Yes.
14:22
Speaker 2
And so, of course, it's not the only place there's a telegraph. There's also a telegraph network that connects, you know, Paris and Brussels and Brussels is just like 75 miles or so from Aachen they're close together but there is no telegraph line between them there is a gap right the telegraph is a new technology and there's a train a mail train that runs between Aachen and Brussels but it takes something like nine hours which is shockingly long like you could run it in that time but I guess it stops a lot it goes slow it's not a straight line um And Reuter realizes, oh, this gap, this gap between Aachen and Brussels, this is an opportunity. You know, you have instantaneous communication and then nine-hour train. And he realizes there is a faster way. It doesn't have to be instantaneous. It just has to be faster than the status quo. And it is not new. In fact, what he is going to do here is quite ancient. He is going to use the technology that was used by the ancient Greeks to report the winners of the Olympic Games, the technology that Julius Caesar used to communicate with his officers when he was conquering Gaul. Robert Smith, you know what it is. Say what it is.
15:38
Speaker 1
It is a homing pigeon.
15:40
Speaker 2
A pigeon. He's going to use pigeons.
15:41
Speaker 1
I need a pigeon sound to go with my telegraph sound.
15:46
Speaker 2
And this is not a secret. People are using pigeons even at this time. The Rothschilds are using pigeons of us occasionally use pigeons. but Reuter is gonna do pigeon plus telegraph, such a beautiful old, new hybrid.
16:01
Speaker 1
And it's interesting, when you have efficiencies on either end and a gap in the middle, it creates this demand. So you needed a lot more pigeons. And if you think about AI, and if you're worried about AI in your jobs.
16:12
Speaker 2
There it goes, okay, give it a shot, give it a shot.
16:14
Speaker 1
You just need to be the pigeon in the equation. Oh, that is it, that is it. That is it, if you have all these fast AIs, you're the pigeon.
16:21
Speaker 2
You want to be the pigeon.
16:22
Speaker 1
You can make them connect. Yes.
16:25
Speaker 2
Well, so there is this idea of like messy jobs, right? There's this basic idea with AI that AI can do a task, but that a job is actually a bundle of tasks. And so in that metaphor, like the task is the instantaneous part, but connecting the different tasks, we're going to see you don't need pigeons for long. That's the bad news for us. But for now, we can try and be the pigeons.
16:46
Speaker 1
Well, they can't run a telegraph wire.
16:48
Speaker 2
And so... So, right. So, I mean, presumably people know what a homing pigeon is, but just to say it, the way pigeons work, this amazing thing about homing pigeons, this kind of pigeon is like they are bred somewhere. They live, you know, in their little dove cot. Is that how you say that word? They live in their little pigeon coop on, say, on your roof in Aachen. And then if you take one of those pigeons on the slow train to Brussels and you release it, It will magically fly home to its coop.
17:21
Speaker 1
It's incredible. Do you have to show him the way on the train?
17:23
Speaker 2
On the train? Like, do they have to see the whole thing?
17:26
Speaker 1
It's incredible.
17:27
Speaker 2
It's incredible. So then you.
17:30
Speaker 1
Just have to attach a message to the pigeon and you have an almost instantaneous, well, whatever, an hour, whatever it takes.
17:36
Speaker 2
Two hours. It took about two hours relative to the nine hours on the train. And there's a lovely description of this in this book about Reuter and Reuters called The Power of News about this moment.
17:46
Speaker 1
Read it to us. On 24 April 1850, Reuter made an agreement with Heinrich Geller, an Aachen brewer, baker, and pigeon breeder. Yes, sure.
17:55
Speaker 2
A bundle of tasks.
17:57
Speaker 1
To supply a total of 45 trained birds to maintain a service between Brussels and Aachen. The birds were sent each day by rail to Brussels to fly back the next day. The messages, tied under the wings of the birds, were to be opened only by Geller himself upon their landing in his pigeon loft.
18:17
Speaker 2
So delightful.
18:19
Speaker 1
And in this miracle of nature, the bird lands and he opens a little thing. It's like gold down two francs. Yes.
18:25
Speaker 2
And you can build a fortune on that. There is a description from a messenger boy whose job was taking the messages from the pigeon guy to Reuter. This guy later became a journalist and wrote about what it was like. He said he would take it, you know, run over to... to, they said, Bureau Julius Reuter, like the brass plate outside the office. He'd get in there and Reuter and his clerks would be like hanging out, smoking cigars, reading the papers.
18:54
Speaker 1
Doing nothing, just like newsrooms today.
18:55
Speaker 2
Yeah, until the news shows up. And he's showing up with the news in from Brussels and it's like they jump into action and they're copying the message and they're, you know, sending it out to their local subscribers and running to the telegraph office to send it on to Berlin.
19:08
Speaker 1
And then they sold that as a service. And it worked. They grew. They grew.
19:13
Speaker 2
But of course, as we know today, Brussels and Aachen are connected by telegraph. That gap is not going to last. And in fact, very quickly, it gets smaller. They're building the wire. The gap is closing.
19:27
Speaker 1
Well, and it's not just out of nowhere, especially if you see someone making money off that gap in technology. That is your signal to say, oh, I'm going to build that wire and take his... Yes.
19:40
Speaker 2
Reuters margin is the telegraph builder's opportunity. In fact, Reuters' famous pigeon era lasts for less than a year. It's kind of like the Pony Express. of European news. The telegraph wire gets completed. No more need for the pigeons. I don't know, actually, what happened to the pigeons.
19:58
Speaker 1
They lived in retirement on the roof of the building.
20:01
Speaker 2
They lived in the mythology of news forever. Reuters was thinking big, as always. His next move, the center of the financial world in the mid-1800s, London. We'll talk about that in a minute. Today's segment is sponsored by ChatGPT. When we launched Business History last year, we started a list of story ideas, just a shared spreadsheet that has now grown to 470 rows. Although that does not mean 470 story ideas because the list is a mess. There are empty rows. There are dozens of stories that we've already done but never took off the list. On some rows, there are subject headings in the column where the idea's name should go. It got to the point where I had sort of stopped looking at the list because I couldn't deal with the mess anymore. So the other day, I uploaded the spreadsheet to ChatGPT, and I wrote this prompt. Please copy this spreadsheet into a new spreadsheet and clean it up. Remove episodes we've already done. Keep any organizing information slash metadata that is in the current spreadsheet. and add columns to help us categorize slash organize the story ideas we have along multiple dimensions. ChatGPT returned a new spreadsheet and this message. Cleaned workbook. It contains 284 ideas, merges 18 duplicate clusters, and removes 26 completed story entries. ChatGPT added some useful categories for each story idea, era, industry, geography, and a few gratuitous categories, record type, potential format. I asked it to get rid of those. Then, at the suggestion of our showrunner, Jake Harper, I asked ChatGPT to go through the list and look for well-reviewed, credible, nonfiction books that might work as key sources for each story idea. It came back with a long list of books, and I think my next move is to focus on that column and start reading through some of the books as I think about what stories to work on in the next few months. Get started at ChatGPT.com. Robert Smith, it's time for Paul Julius Reuter, nay, Israel Beer, Josaphat, to go to London.
22:21
Speaker 1
No more Aachen for him.
22:22
Speaker 2
Because not only is London, London, rad, powerful. But he's still following the wire, following the cable.
22:36
Speaker 1
He knows they're going to link up London with the continent.
22:38
Speaker 2
And they are laying a submarine cable, a cable going under the English Channel. They've actually been trying and failing. One time it snagged on some rocks. One time a French fishing boat somehow cut it, I guess.
22:53
Speaker 1
Still a problem with data cables, I will say, to this day. Yeah, amazing.
22:56
Speaker 2
Like the Internet. The Internet goes down when random boats snag it. But he knows. He knows the way technology is going. He knows what it's going to mean. So he moves to London and opens the Submarine Telegraph Office.
23:12
Speaker 1
No.
23:13
Speaker 2
Beautiful name.
23:14
Speaker 1
No, really?
23:15
Speaker 2
It is a submarine telegraph.
23:16
Speaker 1
Yes, of course.
23:17
Speaker 2
And a month after he opens his office, the cable is operational and Reuter is in business.
23:26
Speaker 1
I just want to pause to say he ran his news business in the air, on land, and now online. under the sea.
23:34
Speaker 2
What a legend. He has a reputation by this point of delivering fast, accurate news. He's big on the continent. They love him in Europe. And so he starts with the basics. He starts providing business clients in London and Paris with the opening and closing prices from the exchanges in both cities. And then he spreads out. You know, he expands to Amsterdam, Berlin, Vienna, Athens. And a crucial thing is, not only is he fast, but he is reliable. And this, I didn't really realize this before we did this show. Early telegraph messages were quite unreliable.
24:22
Speaker 1
Hmm. Your dots from your dashes, you'd sometimes mix them up.
24:26
Speaker 2
Yeah, and I guess they had to go through multiple telegraph operators, right?
24:30
Speaker 1
Of course, of course.
24:30
Speaker 2
It's not like you just start at the beginning and it goes all the way to the end.
24:33
Speaker 1
There's not a London to Athens line.
24:35
Speaker 2
The message degraded over space, and so you have people taking down the dots and dashes and then resending them. It was almost literally a game of telephone. And in fact, the telephone was invented as a way to improve telegraph communications. It was invented not so people could call each other, but so that telegraph operators could get the message more clearly.
24:58
Speaker 1
But in a normal message, a few words you get wrong doesn't matter. True. But in the financial business, one transposed number.
25:06
Speaker 2
One zero too many, or too few, and you are out of business. There is actually this story of a message going from London all the way to Bombay, Mumbai.
25:18
Speaker 1
Which must have been 10 different leaps. Many leaps.
25:21
Speaker 2
And it got garbled a little bit and caused a bank run because of the error. So as with today, in financial news in particular, you have to get it right. And Reuter had the reputation for getting it right. Now, there is, I don't want to call it a sickness. But there is this problem that media entrepreneurs seem to have. Reuter has carved out his successful niche. I'm always torn between niche and niche, but my children tell me that today it's all niche. Reuter has carved out this successful niche in financial news. Still today, I'm going to say the least bad kind of news business is financial news. And he can't help himself. He wants to go bigger. He wants to get into political news. Like every media baron ever, he wants to get into political news. And you can tell a story where this makes economic sense. There's this lovely underused phrase, economy of scope. You know, we talk about the economy of scale, where you make one car and it costs $ 100 million, but you make a million cars and each one costs you $ 10, 000 or whatever, right? The more you make, the less each one costs. That's the economy of scale. Economy of scope is if you're already doing financial news, it shouldn't cost you that much to expand into political news. You've already got your telegraph offices. You've already got your reporters like covering stock prices. Just cover what the prime minister said, too.
26:52
Speaker 1
I think there's another reason for it, which is proximity to power. You know, if you're sending financial information between billionaires, yeah, you can make a few pennies, but you're not going to really become a billionaire anymore. But if you are exchanging information between powerful people, you become powerful. You become part of the power equation. Yeah. They invite you to their parties.
27:13
Speaker 2
Right, the parties. So I do feel like you can tell two stories of that one. One is it's good for business to be close to the king. And two is it's fun to be close to the king.
27:24
Speaker 1
It's so fun.
27:24
Speaker 2
It seems more like two. In any case, Reuter wants to get into politics. The news business for real, not just financial news. He's in London. And in London at this point, mid-1800s, there is one giant of the news business, and that is The Times. Here in America, we call it The Times of London.
27:45
Speaker 1
It is just The Times. And if you see it to this day, it has that look of 1800s power to it. Just the paper version of it. It's a giant.
27:56
Speaker 2
Is it still giant? They used to say that the Wall Street Journal was as big as a bed sheet when you opened it out. Papers have been literally shrinking.
28:03
Speaker 1
Now it's a pillowcase. Yes.
28:05
Speaker 2
If you're lucky, now it's your phone. The Times of London, it's an interesting paper. It's the paper of the rising middle class, of the merchant class. It's kind of anti-aristocratic. It is bigger in terms of circulation than all the other London dailies put together. And it is winning. It is winning in the news business. You know, it breaks stories. It gets the first copies of diplomats' dispatches. And politicians are scared of The Times. So they, you know, they want to get in good. They give The Times scoops so that The Times doesn't get mad at them. Right. At this point, they're the biggest because they're the biggest. They're all over the world. They have special steamers going across the English Channel, the occasional camel convoy to deliver dues from faraway places. And so, you know, Reuter who wants power, who wants to be in the news business, if he's really going to succeed with his news agency, he needs to be selling to the Times. And the manager of the Times at this point is a man who is delightfully named Mowbray Morris.
29:16
Speaker 1
Is it Mowbray?
29:17
Speaker 2
M-O-W-B-R-A-Y.
29:19
Speaker 1
Mowbray. I'm going to picture him behind an enormous desk smoking a cigar.
29:23
Speaker 2
Probably wearing a hat. Is he wearing a hat? Mr.
29:25
Speaker 1
Morris. Mr.
29:25
Speaker 2
Morris. And so Reuter goes to Mr. Morris and offers the services of his telegraph news service. And Mr. Morris says to him, the proprietors of the Times are not prepared to enter into any arrangement. He doesn't want this newfangled telegraph stuff. He doesn't trust this man. No. Trust the camels. Reuter asks him again and again. And after, I think, the third time, Morris says to Reuter that his telegraphic summaries of foreign intelligence will not be used by The Times.
30:02
Speaker 1
I feel like this exact sentiment gets repeated again and again, except it's like, you know, we're not taking news from the Internet. We're not going to have your TikTok summaries.
30:14
Speaker 2
If there is one thing journalists hate, it is anything new.
30:19
Speaker 1
Which is funny because they're in the new business.
30:21
Speaker 2
They're in the new business. You know, I worked at the Miami Herald early in my career, 20 years ago now. And there was an old timer when I got there who had been there for 30 years at that point. So we're going a long way back. And he told me that the day that computers showed up in the newsroom, one reporter stood up at his desk and dumped his coffee out on the laptop and said, I will not use this machine. This is Mowbray-Morris. scoffing at the Telegraph. And, you know, at this moment, Morris doesn't need the Telegraph. Yes, he says it's untrustworthy and boring, but he doesn't need it because he is getting scoops because he is the Times. Fortunately for Paul Julius Reuter, other papers are growing. And they're growing in part because, well, because of the Industrial Revolution, kind of. The You know, we're well into the Industrial Revolution by this point. The Industrial Revolution started in England 75 years before this. And England is transforming as a society. Education is becoming much more widespread. The rate of literacy is going up. And new industrial technology means you can make newspapers. You can print newspapers more cheaply. And so the Times costs four pence. Now there are new papers that cost a penny more. which I guess is one pence, but old British money is very confusing to me, but I'm pretty sure they don't call it four pennies, four pence, but much cheaper. And so Reuters starts going to these new penny papers offering his news service. And actually, the editor of one of these papers, the morning advertiser, described what Reuters said when he came and made his pitch.
32:10
Speaker 1
Give it to us. It has occurred to me that I might, therefore, be able to supply, by telegraph, the daily press of London with earlier and more accurate intelligence of importance at a cheaper rate than the morning journals are now paying for their telegraphic communications from the continent. Cheaper, faster, more reliable?
32:29
Speaker 2
Cheaper, faster. He offers his service for 30 pounds a month, which is 10 pounds less than they were paying.
32:35
Speaker 1
Subscription model.
32:36
Speaker 2
Yes, subscription model. And my favorite part? First, Fortnite is free. A free trial. Free Fortnite. Loved it now, loved it then. What do you got to do to cancel?
32:48
Speaker 1
You can cancel anytime. Anytime.
32:49
Speaker 2
You just have to send a pigeon to Aachen.
32:52
Speaker 1
Yeah.
32:53
Speaker 2
Operators are not standing by when you want to cancel. The Morning Advertiser says yes to the Fortnite free trial. A bunch of other papers also agree to the trial. And when the trial period is up, they subscribe.
33:05
Speaker 1
They pay.
33:05
Speaker 2
It is, in fact, a good, reliable, cheaper service. Possibly the first or at least one of the first messages that goes out on this service in these papers in London is on October 8th, 1858. Robert, give it to us.
33:20
Speaker 1
All right, I'll do the voice. The following telegram was received at Mr. Reuter's office, October 8th, Berlin. The official Prussian correspondence announces that the king has charged the prince of Prussia to act as regent with full power.
33:34
Speaker 2
I like that it's always the 1945 American newsreel voice.
33:38
Speaker 1
I'm bringing it back.
33:41
Speaker 2
I actually want to point here, not to the whole thing about the regions. I don't care about that. What I care about is that first phrase, the following telegram was received at Mr. Reuters' office. Because that part actually went in the newspapers.
34:00
Speaker 1
Mr.
34:01
Speaker 2
Reuters' office. Reuters, from the start, really wanted the papers to put his name on the story. There's even evidence that in some instances he offered the service more cheaply if they would put his name in. Often they were happy to do it because then they, the newspapers, were not on the hook for the accuracy. They'd be like, well, this is what Reuters said. But Reuters realizes something really important here, which is the papers are paying him for this information. But if they're putting his name in, they are also advertising his service. They are turning this commodity service that he is providing, just the straight news, into Into a brand. Every time his name shows up in a newspaper, the idea that, oh, Reuters, that's where we get the news, gets stronger and stronger.
34:46
Speaker 1
And when Morris at the Times opens all these other penny papers and he sees Reuters' name, Reuters, Reuters, Reuters, Reuters.
34:53
Speaker 2
Reuters is spinning. The paper is spinning up toward the screen every time. Reuters is able to raise his rates. He's getting a brand, you know, moving from commodity to brand. As we always say, you can charge more. Now, Morris at The Times will now occasionally publish some of Reuters' dispatches, but he still is more into camels than into telegraph. Mowbray Morris will never really change. But Reuters is determined to crack The Times. He is determined to make The Times of London become a full subscriber to Mr. Reuters' telegraphic submarine cable news service. Sounds like a Sgt. Pepper song. And to do that, he comes up with a plan to get a scoop that will make even the times jealous. We'll talk about that scoop in just a minute.
35:43
Speaker 1
And by the way, if you have Pushkin Plus, you get to skip the ads and you'll get that scoop even faster. Look at me, Mr. Reuter, selling it.
35:50
Speaker 2
Pushkin.fm slash plus. The year is 1859. France is ruled by Napoleon III.
36:04
Speaker 1
What a way to come back from the break.
36:05
Speaker 2
Nephew of Napoleon Bonaparte. And France and Austria are maybe going to go to war over potential Italian unification.
36:19
Speaker 1
I feel like this is like the.
36:22
Speaker 2
1800s Europe story. And Napoleon III is going to give a speech. And the speech is a big deal because people expect that the speech will signal whether there will be war or peace.
36:33
Speaker 1
To this day, news organizations love this situation where there's something you can plan for, a big speech. And you don't quite know what it's going to be. So you can mass your forces ready to get that news as quickly as possible.
36:44
Speaker 2
Today we call that the Super Bowl.
36:46
Speaker 1
Yes. The big event.
36:48
Speaker 2
Everybody knows it's coming. Everybody knows it's going to be news. Send all the reporters. Do all the stories. This is the Super Bowl of its era. And this is Reuters' moment to win. To win the news business. And so he does two things here.
37:05
Speaker 1
First.
37:06
Speaker 2
He gets the French government to give him an advance copy of the Emperor Napoleon's speech under embargo. Embargo today is a thing. It was new then. An embargo means they will give you the information ahead of time, you, the reporter, and you, the reporter, agree not to publicize it until a certain time, in this case, when the speech happens. So that's thing one. Thing two is he gets the company to That owns the telegraph line between Paris and London.
37:40
Speaker 1
Under the English Channel.
37:41
Speaker 2
To give him exclusive use of the telegraph line for one hour at the time of the speech. So he's got the speech and he's locking up the telegraph line.
37:54
Speaker 1
So that he can send information but also no one else can. Yes.
37:57
Speaker 2
And so the day of the speech comes. And Reuters agent in Paris has the speech in a sealed envelope. And he opens the envelope when the speech starts and starts transmitting the speech to London right as the speech starts. It's a boring speech.
38:17
Speaker 1
He who ascends the steps of the throne supported by the voice and feeling of the people. Yeah, yeah, get to the key line.
38:21
Speaker 2
There's a key line.
38:22
Speaker 1
The first motives of his actions. Nope, that's not it.
38:24
Speaker 2
Next paragraph.
38:25
Speaker 1
Peace, I hope, will not be disturbed. Say it again. Peace, I hope, will not be disturbed.
38:31
Speaker 2
You know what that means?
38:33
Speaker 1
War.
38:35
Speaker 2
Somehow everybody knows.
38:36
Speaker 1
At the time. When a Napoleon says the word peace.
38:40
Speaker 2
It's bad news.
38:41
Speaker 1
It's bad news for everybody.
38:42
Speaker 2
Mass your armies.
38:44
Speaker 1
So.
38:46
Speaker 2
The speech lands in Reuters' office in basically real time. And within two hours, the full text of the speech, as reported by Reuters, is in the papers, extra, extra, read all about it. So this is his moment. So now Reuters has proved himself. He's not just the financial news guy. He has the most important story and he has it first. Give us this line from the Birmingham Journal singing Reuters praises at this moment.
39:20
Speaker 1
Reuters is not only the man of the time, but the master of time.
39:26
Speaker 2
This is the telegraph story. This is Reuters. using this new instantaneous communication to change what news means.
39:37
Speaker 1
Because think about it, at the time, you are in almost real time hearing news. what the leader of France is saying in London. I mean, it would just blow your mind that that is even physically possible.
39:52
Speaker 2
You would have been born, if you were our age at the time, you're in your 50s, when you were born, it would have taken days. Like when Napoleon Bonaparte lost at Waterloo, it took days for the news to arrive in London. The biggest story of the century took days to get there. And now it is coming instantaneously. The world has transformed and Reuters has... ridden that transformation to dominance. So what does it mean for Reuter and the Times? Just to close.
40:23
Speaker 1
Oh, Marbury Morris is still waiting for his camel to report.
40:26
Speaker 2
On Napoleon III's speech. Marbury Morris said that Reuter's transmission had omitted a key passage of the speech. Not true. Not true. Just the bitter old man.
40:36
Speaker 1
But he did look word for word to find the mistake.
40:40
Speaker 2
And he kept complaining about Reuter's telegrams being frivolous and desultory. Desultory, classic. But that is what the old newsman does, complain about the new thing. And in fact, what matters is that the Times becomes a customer of Reuters. The Times prints Reuters telegrams. Robert Smith, this is the moment in the show when we talk to the listeners.
41:08
Speaker 1
And usually we ask for their story ideas and we love them. Keep those coming.
41:12
Speaker 2
Business history at Pushkin.fm.
41:14
Speaker 1
But we want to also say today, if you like the show, if you're enjoying the show, tell a friend. Tell a friend that you really should listen to this amazing podcast called Business History.
41:27
Speaker 2
It actually makes a difference. Our show is small enough that a few people telling friends, we notice it in the numbers and we are super grateful.
41:34
Speaker 1
They will thank you later.
41:36
Speaker 2
And we will thank you now.
41:37
Speaker 1
Thank you.
41:38
Speaker 2
Today's show was produced by Gabriel Hunter Chang. It was engineered by Sarah Bruguier, our showrunner and editor. This is Jake Harper.
41:46
Speaker 1
My name is Jacob Julius Goldstein. I am Robert Anthony Smith. Thank you for listening. Thank you for listening.
The Hosts
Robert Smith
Robert Smith, co-host of the Business History podcast, is a Professor of Journalism at Columbia University and contributing host of NPR's Planet Money where he tells stories about how the…
