Telecommunications

The half-century following the Civil War witnessed an epochal transformation in American telecommunications. In the 1870s, the telegraph network became a spawning ground for a remarkable spate of inventions that included the phonograph and the telephone, and around 1900 the telephone network became the first electrical communications medium that network providers intended to be accessible to the entire population. This transformation was a centerpiece of the still unprecedented burst of inventive activity that economic historians call the Second Industrial Revolution.¹

This essay builds on recent historical writing, as well as my own research, to sketch some of the ways in which this transformation was shaped not only by market trends and technological imperatives, but also by governmental institutions and civic ideals. It is intended as a study in the centrality of politics to the making of what is today sometimes called the information infrastructure.² My thesis can be simply put. To understand the transformation of American telecommunications, one must locate the telegraph and telephone networks in their political as well as their economic setting, or in what contemporaries would have called the political economy.³

Today, it is customary to lump together the telegraph and telephone networks as telecommunications. In the nineteenth century, however, these two networks remained distinct. At their core, both consisted of a small number of network providers that followed separate, and, in some ways, divergent paths. In the case of the telegraph, the dominant network provider was Western Union; in the case of the telephone, the dominant network providers were the operating companies licensed by American Bell (later AT&T). The Western Union network was nationwide, the Bell network was regional and in certain instances city-based. This distinction shaped in various ways the inventive process, which was regulated primarily by the patent office and the courts. In addition, it affected the rates network providers could charge and the rights-of-way they could obtain. For telegraph network providers, rate-and-entry regulations were coordinated by state and federal legislatures; for telephone network providers, by city councils. As it happens, what might appear to be a minor difference had major consequences for the way in which these two networks evolved.

Until quite recently, historical writing on the telegraph and telephone routinely discounted the extent to which the evolution of Western Union and the Bell-associated network providers had been shaped by the political economy. This was true even though it has long been widely known that the telegraph network was jump-started by a federal government grant and that the telephone network coalesced around patent rights.

The relative unimportance of political economy to the creation of the American telegraph network was implicit in Robert Luther Thompson's Wiring a Continent (1947), still the standard history of the network's beginnings. By 1860, Thompson contended, telegraph promoters had concluded that the network was best coordinated by a single provider, since it was a "natural monopoly."⁴ In so doing, he consigned to the dustbin of history Western Union's many post-1860 challengers and obscured the extent to which the nineteenth-century telegraph network had been shaped by governmental institutions and civic ideals.

Thompson's conclusion has recently been challenged, at least implicitly, by a number of scholars.⁵ Even so, for many decades it predisposed historians and economists to discount the influence of politics on the telegraph. For Alfred D. Chandler, Jr., Western Union was the "first nationwide multiunit modern business enterprise," making it, along with certain railroads, of which the most important was the Pennsylvania, the "most relevant administrative models" for the architects of the modern industrial corporation.⁶ For Richard B. Du Boff, Western Union was a technically backward monopoly run by grasping rentiers.⁷ Chandler and Du Boff differed widely in their characterization of Western Union's business strategy. Yet they agreed that the firm remained essentially unregulated until the New Deal. For Chandler, Western Union's managers proved so effective in meeting user demand that few called for federal regulation.⁸ For Du Boff, Western Union's lobbyists were so devious in manipulating the political process that they...