Essay 12-A: The Telegraph and the Railroad Connecting the American People

Essay Read by Constituting America Founder, Actress Janine Turner

The telegraph message sent in 1844 by Samuel Morse from Baltimore to The Capitol building in Washington, DC, read simply, “What hath God wrought?” This was the first major demonstration of the ability of Morse’s invention to send and receive messages over long distances. The general question could also be applied to other significant technological developments of the nineteenth century. Two innovations, the telegraph and railroads, dramatically impacted government, industry, and the American people overall.

The telegraph and the steam engine-based railroads developed along parallel lines in their early years, but their advent had ripple effects throughout the country and throughout the world. Before steam and later diesel engines powered modern trains, wheeled carriages ran along metal rails, usually pulled by horses or mules. With the invention of the steam engine, trains could transport freight and passengers much further and faster than was even imaginable only a few years earlier. At first, the railroad industry was a relatively localized enterprise, with tracks that stretched only a bit further than the rails traveled by horse-drawn vehicles. But the nascent business grew and expanded its reach with the help of state government subsidies and joint ventures between corporations and state governments.

The telegraph was also aided by government assistance. Morse’s telegraph line from Baltimore to Washington, DC was supported by a $30,000 appropriation from Congress, and later expansions of telegraph lines were supported by state governments. In the 1830s and 1840s, many joint ventures between state governments and businesses were marred by scandal and fiscal turmoil, leading many states to default on their bonds. Changes in state constitutions to prohibit states from extending their credit to private firms put a stop to the defaults.

Government also became involved in aiding both telegraph and railroads by using its power of eminent domain to assemble various land parcels to permit telegraph lines and railroad tracks to cross land when individual land owners would not voluntarily sell. The power of eminent domain is constrained by the “taking clause” of the Fifth Amendment of the Constitution, which states that private property shall not “be taken for public use, without just compensation.”

Almost all states have comparable provisions in their constitutions. This is an example of the government delegation of its power to a private party, which is often very controversial.

Both telegraph and railroad lines grew, sometimes slowly but at other times very rapidly in some parts of the country. Financial panics in the 1840s slowed their expansion, but in the 1850s the industries took off often, at least in some regions. Chicago, which had only one rail line in 1850, was the railroad center of the country by 1860.

Initially, the two industries were quite decentralized, with different companies competing against others in various regions of the country. But soon, through mergers and cartelization, a few dominant firms emerged in different parts of the nation. Western Union became the dominant telegraph corporation, and several railroad companies controlled service in large sections of the national market.

Railroads in particular were and are enterprises that have huge, initial start-up costs. Especially in the early years of operation, they have heavily capital-intensive, sunk costs. Government subsidies often helped railroad companies in their beginnings, but the corporations had to raise enormous amounts of capital to be successful. If they were successful in raising enough money to function effectively, the railroads enjoyed enormous economies of scale. Once the railroads reached a certain size threshold, they were poised to grow even larger and larger. The railroads became America’s first major corporations, with scale and scope that would have been unthinkable to Americans in the first half of the nineteenth century.

The impact of these industries was massive. Before the telegraph, information traveled at the speed of a horse-drawn vehicle or a ship carrying mail across a body of water. With the telegraph, messages could travel hundreds of miles in seconds. The telegraph became a practical tool in improving the safety of rail traffic. Before the development of the telegraph, railroads relied on trains following precise schedules to prevent different trains from colliding head-on from opposite directions. By the 1850s, the telegraph was used to signal ahead to the next rail station, warning of the approach of another train. Head-on collisions became extremely rare. In a mutually beneficial arrangement, railroad companies began to grant rights-of-way to telegraph operators to set up poles and wires along their tracks.

The telegraph provided the opportunity for businesses to communicate asset and commodity prices, sales orders, and management reports all over the country. Railroads allowed firms to transport raw materials, finished goods, and corporate officers within a matter of days. Investors could now easily put their money in enterprises hundreds or even thousands of miles away. Farmers could sell their produce to a much larger market. Consumers could purchase goods that were not available from local producers. Overall, Americans became economically connected to all sections of the country. Since information flowed more freely and quickly, Americans became aware of what was going on throughout the nation and throughout the world. Prior to that time, most Americans knew only what was happening in their own locality and state. Former President Ulysses S. Grant, a heavy but not very successful investor in railroads after his presidency, said, “In the early days of the country, before we had  railroads, telegraphs and steamboats–in a word, rapid transit of any sort—the States were each almost a separate nationality.

The telegraph and railroad industries affected different regions and sectors of the American economy in different ways. Subsistence farming declined as commercial farming could enjoy access to a national market. Development along railheads surged while areas remote from rail access struggled. Older means of communication and transportation faded away after the telegraph and railroads entered a region. Stagecoaches and horse- and mule-drawn freight wagons lost market share when trains became a feasible form of transportation for people and cargo. Joseph Schumpeter used the railroads as a prime example of what he called “creative destruction.” As new innovations and technologies developed, some older industries would fall by the wayside. This could lead to some hardship for the employees and investors of those industries, but those costs would have to be borne for economic growth to occur.

The rise of these industries, particularly as they grew to massive scale, led to some public concern and political reaction. State governments initially regulated telegraph services, particularly in providing for rights-of-way and to protect the safety of telegraph lines and the privacy of messages. Both state and local governments granted franchises to some companies to provide exclusive telegraph service in designated areas. Since telegraph lines were crossing state lines, the federal government soon became involved in regulating the service, justified by the Commerce Clause of the Constitution (Article I, Section 8, Clause 3), which authorizes Congress, “to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” In the 1866 Post Roads Act, the federal government preempted many state regulations regarding telegraphy. Federal preemption, authorized by the Supremacy Clause in Article VI, Clause 2 of the Constitution, means that federal laws prevail when state laws conflict with them. The post office lightly regulated telegraph services until the passage of the Interstate Commerce Act in 1890, which created an independent commission to regulate industries. The Interstate Commerce Commission formally had authority over telegraph services, but its primary focus was on regulating railroads, particularly allocating routes among companies, setting standards of service, and regulating rates on freight shipping. The political motivations and policy objectives behind the passage of the Interstate Commerce Act continue to be debated, with some scholars arguing that the new regulations served the interests of the biggest railroads by protecting them from competitors, while others claim that the policies of the ICC were intended to combat price discrimination against short-haul shippers of agricultural produce and other goods. The massive size of some railroad corporations, and their connections with other major firms, made them the target of enforcement actions by the Justice Department after the passage of the Sherman Antitrust Act. The regulatory frameworks established by The Interstate Commerce Act and the Sherman Antitrust became precedents for a host of regulatory regimes in the twentieth century.

A century after Morse transmitted his message to the U.S. Capitol building, the telegraph had been largely replaced by new telecommunication technologies. Railroads continue to provide valuable freight service throughout much of the country, and passenger service is still available in some parts of the country, particularly the northeastern corridor stretching from Boston to the District of Columbia. Yet, trucking, buses, and automobiles have taken over a large part of the market that railroads once served. Nonetheless, the historic role of these two industries cannot be underestimated. These industries shaped Americans’ expectations about what they could accomplish, where they could travel, and what news they could learn. They set precedents for corporate management and entrepreneurship. The government response to their corporate actions became the model for modern regulatory policy.

James C. Clinger is an emeritus professor in the Department of Political Science and Sociology at Murray State. For many years, he was the director of the Master of Public Administration Program at Murray State. He now serves as an on-line adjunct instructor for any university willing to hire him and as a substitute teacher for the Henry County (Tennessee) School System.

Click here to receive our Daily 90-Day Study Essay emailed directly to your inbox.

Click here for the essay schedule with today’s essay and previously published essays hyperlinked.

PRINT ARTICLE