Clarification on the early use of the telegraph in financial transactions
I wrote this piece in Sunday's paper, in which I wrapped up a lot of dismal economic data from last week and noted that most of the wobbly economic recovery we've had so far has come from various government stimuli, which will run out at some point, or have to be redoubled, raising our deficit and debt. Either way, not a pretty picture.
But a couple of alert readers latched onto something I wrote toward the bottom of the article, where I commented on this Paul Krugman piece discussing the Long Depression that began in 1873.
"The fastest that information and capital could move in this sprawling nation in 1873 was about 80 mph -- the top speed of a steam locomotive. When bad times hit back then, they tended to settle in for a good, long time."
If I had been smarter, I would have written:
"Despite the fact that the first money transfer by telegraph had occurred two years earlier, the fastest that information and capital could move to most people in this sprawling nation in 1873 was about 80 mph -- the top speed of a steam locomotive. When bad times hit back then, they tended to settle in for a good, long time."
But I didn't. My alert readers pointed out that, in 1873, there were several dozen telegraph companies and, in 1871, Western Union sent its first money transfer via telegrah.
So, fair enough. That's the advantage of having readers smarter than you are. (And a symptom of evidently forgetting much of what I learned in my history of science and technology classes in college.)
But consider this: Train robberies were rampant in the late 19th century. Jesse James committed a train robbery in Iowa in 1873. Butch Cassidy's gang robbed a Wyoming train in 1899.
Why did outlaws rob trains? As another famous robber, Willie Sutton, once said, "Because that's where the money is." He was speaking of banks, but you get the point.
By 1900, train robberies had dropped off substantially for numerous reasons, including better security. But a big reason was the prevalence, by then, of wire transfers of money around the U.S. Less actual currency was being physically transferred.
These days, we're used to fast uptake of new technology -- consider the DVR and cellphones. But that wasn't always the case. When I discussed the Long Depression in Sunday's piece, I was thinking about its impact on regular folks in 1873 -- think of the Minnesota farmer or Savannah shopkeeper. And not all of them had access to the cutting-edge business technology of the day. For many of them, their fortunes rose and fell on the rails, not the telegraph wire.
All that being said, this sort of back-and-forth with my readers is exactly the sort of thing that makes this blog better, so I appreciate it.
July 6, 2010; 12:38 PM ET
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