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Review Essay: Network Nation — Inventing American Telecommunications

Here is a forthcoming review essay that will appear shortly in the journal, Business History. The book that inspired the review is: John, Richard R.  (2010). Network Nation: Inventing American Telecommunications. Cambridge, MA: Belknap Press of Harvard University Press, i-viii, 520pp.

Network Nation is an important book by one of the most highly-regarded communication and media historians in the U.S., Richard R. John. It is probably the most substantive and innovative book to come out on the telegraph and telephone in all their business, political and cultural aspects in years. In the following essay, I review the book and place it within the scholarly literature on the topic, while critically examining some of its key arguments.

Situating the development of the telegraph and telephone into a longer history than usual, this outstanding book takes its point of departure not from the advent of the telegraph in the 1830s or 1840s, but decades earlier with the Post Office Act in 1792, which John dubs “one of the most far-reaching pieces of legislation enacted in the early republic” (p. 18). The book finishes with the consolidation of the ‘regulated natural monopoly’ regime for telecommunications and market segmentation between the telegraph, telephone and radio in the 1920s, a situation that stayed remarkably stable for most of the rest of the century.

John uses the Post Office Act of 1792 to set the scene because its capacious and open-ended mandate gave the government-owned Post Office a huge role in facilitating the flow of ‘intelligence’ and cultivating republican democracy. In its wake, the Post Office became the first national ‘medium’ to bring correspondence and news to “every man’s door” (p. 20). Its exchange system allowed publishers to swap newspapers and magazines across the country free of charge. It also established the notion that an integrated network operated under unified administrative control – i.e. a network monopoly – and guided by enlightened civic ideals could be a useful support for a multiplicity of commercial uses as well as a diversity of voices, a sturdy pillar in other words of a dynamic market economy, a democratic society and a free press. Most observers, including the early developer of the electric telegraph, Samuel Morse, simply took it for granted that the telegraph would become an arm of the Post Office.

Together, these factors set down several durable principles: first, that networks tended toward monopoly, and that whether that was a good or bad thing depended on how they were managed and regulated; second, that single networks supported a multiplicity of uses and thus whether a monopoly was managed and regulated poor or well was crucial to the commercial and social life of the nation; third, and perhaps most surprising in light of prevailing opinion, the U.S. government can take whatever steps its citizens approve of to improve the media environment. Indeed, the first amendment, as John stresses more than once, poses few obstacles to doing just that. Network Nation crystallizes these vitally important principles between the late-18th and early-20th centuries, while their relevance in the 21st century is underscored by ongoing debates today over ‘network neutrality’ and broadband internet development (Benkler, 2010) and the so-called ‘crisis of journalism’ (McChesney & Nichols, 2010). Indeed, the latter authors, in particular, draw very heavily from John’s work to make their case for the steps needed to shore up what they see as the deteriorating state of the U.S. press in the age of the Internet.

Despite the wide scope for government intervention established by the history of the Post Office, government ownership never did extend to the telegraph or telephone in the U.S., other than for a brief and deeply unsatisfactory period at the end of the First World War. Why?

According to John, several factors conspired against the idea of the ‘postal telegraph’. Initially, lingering memories of failed public works projects in the late-1830s as well as the high expense of the US-Mexico War (1846) were two such factors. A more important and enduring consideration was the popular view that the telegraph was the luxury of a wealthy few for whom private enterprise would serve just fine rather than a necessity of the masses requiring public intervention. The same view hung over the development of the telephone until the push for its popularization began to yield fruit after the turn-of-the-20th century. Last, and most importantly, the broadly held belief that competition and regulation were better than any monopoly, government or private, consistently stood in the way of efforts to extend the Post Office’s mandate to include the telegraph or any other means of electrical communication.

John calls this latter set of beliefs the ‘antimonopoly view’ and places a great deal of emphasis on it. He argues that the ‘antimonopoly creed’ should not be seen as either synonymous with, or as being led by populist, agrarian movements in the 1860s or 1870s, or as belonging to the progressive era. Instead, the creed appealed to a disparate cross-section of interests; it was also a mainstay of liberal political economy. According to John, antimonopoly movements had already flourished in cities as well as in state and federal politics for decades before rural populist and labour movements made telegraph and telephone monopolies a target of their criticisms and reform efforts during the 1860s and 1870s (rural populism) or the progressive era (1880-1920), respectively, as most historians claim (e.g. Fischer, 1992; Gabel, 1969; Schiller, 1996).

By the early-1840s, as John observes, “the telegraph business [had] congealed around . . . the [federal] patents that Morse obtained in 1840 and 1846” (p. 43). Indeed, these patents propelled the efforts of two of Morse’s business partners, the former Postmaster General Amos Kendall and Maine Congressman, Francis O.J. (Fog) Smith, who set up companies along the U.S. Atlantic coast and into Canada, while licensing individual franchisees to extend the lines in every other direction. Kendall and Smith attempted to cobble these separate lines into a single, albeit loosely federated system in the early-1850s, but failed. Nonetheless, their attempt to create a ‘single system’ borrowed the vision of a universal integrated network from the Post Office, but also raised the spectre of a private telegraph monopoly, and one buttressed by the Federal Government’s strong defense of the Morse patents. Antimonopolists reacted to such a prospect by appealing to state governments to charter general corporations to foster greater competition, with the New York Telegraph Act (1848) emblematic of the trend. A flood of rivals entered the field, but most quickly failed and/or were acquired by Western Union (est. 1855) and the American Telegraph Company (est. 1859), before being folded into a six-member cartel created in 1857 and led by Western Union: the North American Telegraph Association.

Early ‘network builders’ essentially created a “rich man’s mail service” as well as vastly over-capitalized firms that paid handsome dividends to themselves. However, by the late-1860s a new managerial type began to emerge, as typified best by William Orton who became President of Western Union after his predecessor Hiram Sibley’s ouster in 1867. Far more the professional manager than financial speculator, Orton and others like him play a star role in Network Nation. This is because, according to John, they built the early prototypes of the modern corporation, created complex technological systems, embraced modest civic goals, and steadily committed to more research and development – decades before these phenomenon usually appear in the economic and business history literature (Berles & Means, 1932/1968; Chandler, 1977).

The rise of the professional manager also marked the potential triumph of expertise over speculative finance, although the pendulum continued to swing back and forth between the two until the 1910s when the ‘regulated natural monopoly’ and ‘market segmentation’ (i.e. the lines drawn between telegraph, telephone and radio) regime was finally locked into place for the next seventy years, and with expert managers in charge. Professional managers such as William Orton and, later, Theodore N. Vail also served to fragment the antimonopolist voices because while these two icons of the modern manager shared the latter’s disdain for financial speculators and greedy private monopolies, they believed that well-run monopolies would inevitably be a fixture of late-19th and 20th centuries’ capitalism, and a good thing to boot. As time passed, the earlier experience of the 1840s and 1850s only seemed to confirm such views by demonstrating that the various attempts by individual states to create competition were contrived, and that monopolies in telecommunications were, as it were, natural, and thus in need of competent, uniform regulation, which meant regulation by the federal government. In sum, the initial question of which political economy would prevail — individual states and contrived competition or a strong federal state and regulated ‘natural monopoly’? – gave way by 1910 to a firm answer fully in favour of the latter option. John’s sustained focus on how these two distinct political economies played out during the development of the telegraph and telephone is another major contribution of this volume.

Despite the rising class of professional managers, however, Western Union’s ongoing penchant for meddling in elections, political interference in its operations by Congress (e.g. the ‘dragnet subpoenas’ case), as well as its tight ties to the New York Associated Press continued to stir the antimonopoly forces. Indeed, the only thing worse than the telegraph monopoly, many contemporaries felt, was the ‘double-headed news monopoly’ between Western Union and the NYAP (p. 147; also Blondheim, 2004). This situation broadened the range of antimonopoly voices by raising the ire of newspapers and many journalists outside the NYAP umbrella alongside the already existing, and intensifying, calls for reform by other critics. The situation also, as Menahem Blondheim illustrates, captured the attention of Congress between 1866 and 1900, a period that he and John generally see as a crucial time in the development of the commercial media and media regulation in the US.

Ironically, however, the mounting opposition in the 1870s arguably played into the hands of the era’s most reviled robber baron, leading to Jay Gould’s hostile take-over Western Union in 1881. John does not denounce or demonize Gould, but methodically picks apart his seven-year campaign (1874–1881) to gain control of Western Union. Over the course of this time, John stresses how Gould manipulated antimonopoly sentiment, Wall Street, the press, and the prevailing state-centred political economy to compete with Western Union before finally taking it over. Gould was already the owner of two or three New York newspapers (the Tribune, the World, and Mail and Express) at the time, and used those as vehicles to advance his own ends. His acquisition of Western Union tightened the company’s ties to the press even further. For all this, however, and crucially as John observes emphatically, the long-term rivalry preceding the take-over played out on the frontiers of technological innovation as Gould and Orton at Western Union threw vast sums of money at the leading technological geniuses of their time – Thomas Edison, Elisha Gray, and Alexander Graham Bell. The results produced several cutting-edge innovations that shaped the communication and entertainment industries into the 20th century: (1) the quadraplex technology that doubled the speed of telegraphs, (2) the telephone, and (3) the phonograph.

Historians often point to Orton’s decline of an offer to buy all of Bell’s telephone patents for $100,000 in 1876 as proof of Western Union’s status as a stodgy monopolist adverse to technological progress. John’s remarkable account, however, turns prevailing wisdom on its head by explaining that Orton initially spurned Bell only because he was backing Elisha Gray and Thomas Edison in a far bigger struggle over the telegraph and telephone industries. Far from shying away from the telephone business, Orton rushed headlong into it. In fact, by late 1879, Western Union’s municipal telephone exchanges were competing head-to-head with, and even growing faster than, those of the National Bell Telephone Company in several major U.S. cities (p. 169).

Competition in telephony, in other words, did not emerge from small, rural outfits after the expiry of Bell’s telephone patents in 1893, as most scholarly accounts would have it (e.g. Fischer, 1992; Gabel, 1969). Instead, it had emerged nearly fifteen years earlier in major U.S. cities – New York, Boston, Chicago (and Montreal in Canada, one might add) – and between the two biggest corporations of their day: Western Union and Bell. Rather than continuing to compete, however, the two companies struck a deal in November 1879 intended to keep Gould at bay. Consequently, all of Western Union’s telephone patents and municipal exchanges were given to Bell in return for annual royalties and mutual pledges to stay out of one another’s turf. While John does not say so, the agreement’s reach led to a similar outcome in some of Canada’s larger cities, notably Montreal. By this point, John’s account has completely upset the settled view of Western Union and technological innovation. Equally impressive, it has drawn the telegraph and telephone into a far vaster sweep of history than usual that stretches back to the origins of the postal system in 1792, on the one side, and then forward to the modern entertainment industries in the late-19th and early-20th centuries, on the other. It is an expansive canvas, indeed, and the author fills it in with masterful, colourful and detailed strokes.

John supports these radical departures from conventional knowledge with a wealth of archival evidence, some of which has been previously unavailable. He also invites us to see many familiar things from striking new angles: e.g. semi-autonomous Bell operating companies scattered in cities across the country and loosely affiliated with National Bell, the grubby role of crooked politicians who used their ability to grant municipal telephone franchises to line their own pockets (most notoriously in Chicago), the politics of rate caps that began in the cities in the 1880s (not the countryside, contra Fischer, 1992; Gabel, 1969, etc.) but which paved the way everywhere for the popularization of telephone service after 1900. By the 1920s, the early principles of ‘government ownership and ‘regulated competition’ were replaced by regulated monopolies and market segmentation between the telegraph, telephone and radio, divisions maintained until the passage of the Telecommunications Act (1996) seventy years later.

While John cuts many new paths, I also felt there were several points where he should have given more credit to others where it is due. The concept of market segmentation is a good case in point. Scholars have examined the factors that have separated different media along technological lines for decades, but none are referenced. Erik Barnouw (1975), for example, discussed the division of radio broadcasting from the telephone, telegraph and electronics industries in the 1920s long ago. Ithiel de Sola Pool (1983) likewise examined the segmentation of the telecommunications, broadcasting, computing and publishing industries over the course of the 20th century, before visiting the potential for media (re-)convergence today, as has Robert Babe (1990) and others, including this author. The common point behind these sources and John’s Network Nation is that the separation of media along technological and functional lines is primarily an artifact of corporate strategy, government policies and popular pressures, rather than underlying technological conditions. While the point is reasonably well-known, it is not so common as to not warrant citing at least some of the relevant scholarly literature.

The concepts of ‘methodless enthusiasm’ and ‘ruinous competition’ that also play a significant role in John’s account were first used, to the best of my knowledge, in a systematic way in Robert L. Thompson’s (1947) classic, Wiring a Continent, which also is not cited. Add in that author’s third concept, ‘strategic consolidation’, and the trilogy of concepts nicely captures the trajectory and tenor of developments in the telegraph industry and, as John shows in detail and with due regard to the specific twists and turns, the telephone and radio industries. John also spars with some phantom foes regarding agrarian populism and the progressive era, but seems too polite to name them. A few small errors are important. For instance, on page 184 John states that Gould owned three newspapers, but on page 187 he claims it was two.

Finally, John fails to seriously consider how the “network nation” is intertwined with global, or at least trans-Atlantic trends, cutting short his analysis in important ways and betraying an implicit methodological nationalism as a result. The ‘cheap telegraph rates’ movement in the 1880s, for example, did not just reflect intensified angst with Western Union after its take-over by Gould, but a broader global, or at least trans-Atlantic trend. Henniker Heaton, the Australian born British Member of Parliament, for example, was influential in U.S. circles and quoted often in the New York Time and New York Herald on the topic (see Winseck & Pike, 2007, ch. 5).

John’s examination of the post-WWI re-organization of the electric communication industries in chapter 10 betrays the same limitation. Here, John problematically uses the assertion that “every cable linking the United States and Europe in the First World War was under British control” (p. 398) to explain why Theodore Vail stood solidly behind the Wilson Administration’s take over of the telegraph, telephone, radio and international cables. The problem is, however, that Vail had announced Western Union’s take-over of the British trans-Atlantic cables nearly ten years earlier, when he was President of the company. According to the New York Times, the acquisition gave Western Union “a real system of competitive cables, free of the stigma . . . of foreign domination” (“Letters by cable is . . . .”, 1911, p. 6). The pre-eminent British cable expert, Charles Bright, agreed, but bemoaned the fact (Bright, 1911, p. xvii; also Winseck & Pike, 2007, pp. 187-190).

As a matter of fact, Western Union and another predominantly U.S-based company, the Commercial Cable Company, had been staking out ever-stronger positions in the trans-Atlantic cable market since the 1880s. Adding this element to John’s otherwise brilliant account would not diminish it one iota, but actually enrich it by showing how characters that are already significant in his story – e.g. Jay Gould, James Gordon Bennett, the New York Herald, the Postal Telegraph Company — fit into the global picture. By WWI, the British did leverage their control over cable landing rights to implement a comprehensive system of cable surveillance, but this was not unusual and both companies begrudgingly went along.

These shortcomings aside, Network Nation is a ground-breaking work. Its account of the importance of bringing ‘intelligence’ and communications innovations to “every man’s door” from the late-18th century onwards has a great deal of relevance to current debates about broadband Internet access and the ‘crisis of journalism’, among many others. It is also part and parcel and on the leading edge of a welcomed renewal that is taking place in media history. Wonderfully written, brilliantly told, and beautifully illustrated, Network Nation will quickly assume its place alongside other seminal works, such as Paul Star’s (2004) The Creation of the Media.

References:

Babe, Robert E. (1990). Telecommunications in Canada. Toronto: University of Toronto.

Barnouw, Erik (1975). Tube of Plenty. New York: Oxford University.

Berle, Adolf A. & Means, Gardiner C. (1932/1968). The Modern Corporation and Private Property. New York: Harcourt, Brace & World.

Benkler, Yochai, Faris, Rob, Gasser, Urs, Miyakawa, Laura, & Schultze, Stephen. (2010. Next generation connectivity: A review of broadband Internet transitions and policy from around the world. Cambridge, MA: Berkman Center for Internet & Society. URL: http://cyber.law.harvard.edu/publications/2010/NextGenerationConnectivity [Last visited March 14, 2011].

Blondheim, Menahem (2004). “Rehearsal for Media Regulation: Congress Versus the Telegraph-News Monopoly , 1866-1900,” Federal Communications Law Journal, 56, 299-328.

Bright, Charles (1911). Imperial Telegraphic Communications. London: P.S. King & Son.

Chandler, Alfred, Jr. (1977). Visible Hand: the Managerial Revolution in American Business. Cambridge, MA: Harvard University Press.

Fischer, Claude (1992). America Calling: A Social History of the Telephone to 1940. Berkeley, CA: University of California Press.

Gabel, Richard (1969). The early competitive Era in Telephone Communications, 1893-1920. Law and Contemporary Problems, 34(Spring), 340-359.

“Letters by cable is the plan now”, New York Times, September 15, 1911, 6.

McChesney, Robert & Nichols, John. (2010). The Death and Life of American Journalism. Philadelphia, PA: Nation Books.

Pool, Ithiel de Sola (1983). Technologies of Freedom. Cambridge, MA: MIT.

Schiller, Dan (1996). Theorizing Communication. New York: Oxford University Press.

Starr, Paul (2004). The Creation of the Media. New York: Basic Books.

Thompson, Robert L. (1947). Wiring a Continent. Princeton, N.J.: Princeton University Press.

Winseck, Dwayne & Pike, Robert M. (2007). Communication and Empire: Media, Markets and Globalization, 1860-1930. Durham, NC: Duke University Press.

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