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History of the Atlantic Cable & Undersea Communications
from the first submarine cable of 1850 to the worldwide fiber optic network

The Submarine Cables Trust
by Bill Burns

The Submarine Cables Trust, formed in 1871, was one of the earliest Unit Trusts in Britain, what would now be called a Mutual Fund in the USA.

Investing in submarine cable companies was a risky business, as many of the early cables either failed to begin operation, or encountered technical difficulties after working for a short time. The Trust spread this risk by investing its members' funds in several different cable enterprises, paying regular dividends if the underlying companies were successful. The document shown below is a notice of a dividend of £1 10s. (about $8 at the time) from the Submarine Cables Trust, payable on 15 October 1887 to the account of Dr. William Scott in Dumfries, Scotland. The document was folded to form its own envelope, and bears a cancelled halfpenny stamp.

The payment was to be made through merchant bankers Glyn, Mills & Co., of Lombard Street, then one of the largest private banking houses in the world, and now part of the Royal Bank of Scotland.

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The earliest forms of unit trusts set up in the UK were fixed schemes which provided for the purchase of a predetermined number of investment or portfolio units by a manager and held by a trustee. Sub-units were then sold to investors. The amount of sub-units could only be increased if the trust deed provided for the creation of further investment units. The first scheme was the Foreign and Colonial Government Trust which was advertised for subscription on 20 March 1868. This was followed by various other schemes, including the Submarine Cables Trust. [1]

In 1879 came a Court ruling, later overruled, that unit trusts were illegal associations. By the time the decision was overruled, all unit trusts bar one had converted to limited corporate status. The survivor, Submarine Cables Trust, came to a natural and profitable end in 1926. [2]

The case in 1879 was Smith v. Anderson, concerning the Submarine Cables Trust. The trust had advertised and drawn in numerous investors who all had unit trust interests in the trust property. The business of the trust, the investment in submarine cables, was managed by the Board of Trustees. The Submarine Cables Trust refused to incorporate, and English authorities then alleged that it was an unlawful association because it consisted of more than twenty people carrying on business in common with a view to profit. The courts refuted that. They agreed that all the investors in the trust invested with a view to profit; but they recognised that this was a normal unit trust arrangement: the investors were beneficiaries of the trust, they each had a relationship with the trustees but they shared no common relationship one to another; there was no community between the investors. [3]

In November 1894, Sir John Pender was listed as Chairman of the Submarine Cables Trust. [4]


1. Farrer & Co

2. The Association of Corporate Trustees (UK)

3. The University of Queensland Law Society

4. Records of the Proceedings at Festivals Held in Connection with the Commemoration of the 25th Anniversary of the Establishment of Submarine Telegraphic Communication with the Far East (London, 1894)

Last revised: 5 December, 2016

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