One hundred fifty years ago, just before Christmas, Michigan’s first telegraph line was finished. The line between Detroit and Ypsilanti changed the way Michiganians communicated, and it taught an important lesson about government’s 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 country’s 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 business—as much as ten times more than it spent—that 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.
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
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