One hundred fifty years ago, just before Christmas, Michigans first telegraph line was finished. The line between Detroit and Ypsilanti changed the way Michiganians communicated, and it taught an important lesson about governments role in business.
The line was built and operated by private entrepreneurs, but telegraph had not always been that way. Three years earlier, in 1844, the countrys first line was put in between Washington, D. C. and Baltimore, and it was subsidized and controlled by the federal government.
Federal officials agreed with the postmaster general who said telegraph was so powerful it could not be left in the hands of private individuals; that only government could be trusted.
The government lost so much tax money on its telegraph businessas much as ten times more than it spentthat Congress turned it over to private enterprise. Within a year, entrepreneurs expanded the telegraph at a profit to cities not reached by the government line. In 15 years, telegraph rates were as little as one-tenth what they had been when government was in charge.
The postmaster general was wrong. It was privatization, not government control, that truly supported the public interest.
For the Mackinac Center, this is Catherine Martin.