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CNRI's Infrastructure History Series |
CNRI is sponsoring a series of studies that address historical examples of large-scale infrastructure. CNRI makes the first print run of approximately 1,000 copies available to individuals free-of-charge on a first come, first served basis. Thereafter, each copy will be available at $10.00 each to cover the costs of printing, shipping, and handling.
As of May 1, 1997, existing supplies of the first three volumes of this series have been exhausted. To request copies of these volumes, please send a copy of the attached order form with your payment of $10.00 per volume to:
Corporation for National Research InitiativesLimited supplies of the fourth volume are still available to individuals free-of-charge on a first come, first served basis. Please use the order form to request a copy of this item.
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Emerging Infrastructure: The Growth of Railroads
Amy Friedlander, 1995
Dr. Robert E. Kahn, President
Corporation for National Research Initiatives
October 1994
"Railroad Infrastructure" is the first in a series of explorations into the history of specific infrastructure developments in the United States commissioned by the Corporation for National Research Initiatives (CNRI). A not-for-profit organization, CNRI was created in 1986 to foster research and development for the National Information Infrastructure (NII). Among CNRI’s major goals is to identify and nurture infrastructural technology and services that can unlock the world of information and knowledge. Although the components of the evolving information infrastructure represent new technical, social and economic challenges, there is much to be learned from historical precedents, such as the evolution of the railroad infrastructure described in this study. Future studies will describe the evolution of other emergent infrastructures in detail.Several basic questions framed this study, such as:
In this study Dr. Friedlander brings together a wide range of historical, economic, and technical literature to provide practical insights into these and other important questions. Some have argued that “history is destiny;” others, that “those who do not know history are doomed to repeat it.” As we design and build a national information infrastructure, experiences drawn from infrastructure developments in other times may help us to understand better the choices we make today, and their ramifications for tomorrow.
This paper examines the historical literature with respect to three related questions about the development of railroads: When and how did take-off occur? What were the public and private roles? And, how did an integrated infrastructure emerge from a web of independently owned lines with frequently incompatible physical attributes?
Railroad construction in the U.S. began in the late 1820s and 1830s and took place over the next 70 years in the context of enormous geographical, demographic, social, and economic growth in the country as a whole. The railroads do not appear to have caused this growth, as has sometimes been alleged. But they did profoundly affect its course, and in so doing, became the dominant element of the national transportation system.
By all accounts, "take-off" for the railroads occurred in the 1850s. Before that time, the lines were mostly local. During and after the 1850s, however, construction accelerated rapidly, and relatively short routes were linked to provide longer distance traffic. Much of this traffic went from eastern urban centers to Chicago, which emerged as a transportation/processing hub between 1850 and 1860. By the Civil War, several companies had begun construction west of the Mississippi River in anticipation of a transcontinental railroad. Between 1860 and 1890, the national rail system became increasingly elaborate and uniform, characterized by standardization of gauge and administrative practices, and increasingly dominated by an emerging, informal group of major companies.
As the first "Big Business," the major railroad companies pioneered modern business practices and organizational structures to cope with their own size, expansive operations, and internal complexities. With increasing size, moreover, they also became more similar and discovered advantages to cooperation in a climate otherwise characterized by fierce competition.
Construction of railroads, like public works projects since the 1780s, was a joint public/private enterprise. The majority of the funding appears to have come from private sources. But public intervention played an important role, both in increasing investors' confidence and ensuring that sufficient funds would be available to complete construction.
Amy Friedlander
To request a copy of Emerging Infrastructure, please send a message with your postal address to: request@cnri.reston.va.us.
Robert E. Kahn, President
The studies that make up this series are framed by several basic
questions:
In this volume, Dr. Friedlander brings together a wide range of
historical, economic, and technical perspectives to provide practical
insights into these and other important topics in technology and
culture. The past is, in many ways, a foreign country, but in
other ways, it is surprisingly familiar. The combined story of
telegraphy and telephony resonates with contemporary issues, as
inventors and entrepreneurs gradually solved problems that arose
from developing and disseminating new communications technologies.
In so doing, they transformed their present and set up our tomorrow.
This study examines the history of the telegraph and telephone
industries in the United States from the perspectives of technology,
corporate strategy, politics, and economics. Under the aegis of
the Bell Company and its successors, the telephone followed a
path similar to that pioneered in the 1860s by the telegraph giant,
Western Union. Indeed, the telephone itself was invented in the
1870s as an unanticipated product of efforts to solve technological
limitations of telegraphy. Like Western Union, Bell targeted communications
among urban, commercial interests (as opposed to private residential
and/or rural users). And, like Western Union, Bell was eventually
organized as a private sector monopoly. Limitations in telephone
transmission capability in the 1870s and early 1880s initially
confined the telephone company to local service, while telegraphy
remained the only means of long distance communication. After
1885, Bell also began to move toward long distance service by
forming a subsidiary, American Telephone and Telegraph (AT&T).
However, technology represented a constraint on long distance
service until the introduction of the loading coil in 1900-1901.
What drove AT&T's research and development in long distance
telephone technology in the late 1880s was the coming expiration
of key patents in 1894, when AT&T foresaw intense competition
that did, indeed, occur. Between 1894 and 1907, independent telephone
companies proliferated to meet consumer demand that AT&T (re-structured
in 1899 as the holding company of regional operating companies)
had ignored. This partially organized independent movement challenged
the Bell companies in key regions, notably the Midwest and the
North Central states. To counter it, AT&T through its affiliates
similarly expanded its scope of service. AT&T gradually assumed
technological and organizational control of an integrated system
of local and long distance service through a policy of interconnections
with selected independent companies as well as through acquisitions,
mergers, and (after 1907) a willing acceptance of state and federal
regulation. Although dual service (i.e., access either to the
Bell System or to telephone service offered by an independent
company) persisted into the 1920s, the independents operated within
the technological standard set by AT&T.
The telephone system was not fully extended to provide potential
access to the entire population, particularly the dispersed rural
poor, until the Rural Electrification Act (REA) and other federal
programs provided the incentive after World War II. Thus, state
and federal programs, which were designed for other purposes,
were also instrumental in the expansion of telephone service to
serve national needs.
Amy Friedlander
To request a copy of Natural Monopoly and Universal Service, please send a message with your
postal address to:
request@cnri.reston.va.us.
Robert E. Kahn
CNRI is a not-for-profit organization, formed in 1986 to foster
research and development for the National Information Infrastructure
(NII). Among CNRI's major goals is a program of research to identify
and nurture infrastructural technologies and services that will
unlock the world of information and knowledge and enhance the
nation's productivity, particularly in science and engineering.
The NII will probably take shape over time through a Brownian
motion of competing interests, largely but not exclusively from
the private sector, with sources and applications ranging from
entertainment to medicine to geophysics. In this sense, the developmental
model is an evolutionary one, and it is reasonable to ask the
historical question, how have other large-scale infrastructures
evolved? In their separate ways, the volumes in this series answer
that question.
Each of these studies begins with the same set of questions:
In this survey of the literature on electricity and electrification,
Dr. Friedlander traces the inter-relationships among technology,
economics, society, and politics. These dynamics have often been
conveniently reduced to the adage, "technology push; demand
pull." But as the following discussion will show, the "push"
and the "pull" are two extremes in a complex continuum
in which electrical technology was pushed to meet demand even
as advances in technology increased expectations.
Not too long ago, the Chronicle of Higher Education (July
7, 1995) ran a cartoon showing a travel agent confirming reservations;
the caption reads, "let me see if I've got this -- tropical,
lush, remote, unspoiled, king-size bed, Internet access."
As we build the information infrastructure of tomorrow, we can
expect advancing technologies to offer similar opportunities and
choices.
After disparate experiments in the U.S. and abroad, beginning
with Michael Faraday's in 1831, electricity owes its origins as
an energy infrastructure in the U.S. to Thomas Edison's work in
the late 1870s. Edison was not just exploring the properties of
electricity. Rather, he and the members of his laboratory were
examining the attributes of electricity in the context of solving
a particular problem: devising a system of interior illumination
that was competitive with gas. The gas companies also provided
Edison with his model of organization, distribution, and delivery
of services to prospective customers. Thus, he conceptualized
a specific product -- lamps -- in terms of a technological and
an organizational system that contained generation, transmission,
regulation, and delivery of electrical power together with a mass
production manufacturing process and a corporate management structure.
Quickly, however, electric illumination split off into separate
but related companies that manufactured and sold appliances and
equipment or provided services to power users. Eventually, power
generation and distribution itself divided into the power producers
(whether hydro or coal), the electrical transmission companies,
and the local utilities. Separate from these companies were the
financiers. Most of these entities formed interlocking relationships
that culminated in the organization of holding companies after
1910.
The advantages of the holding companies were that they stabilized
financially precarious small utility companies and supplied management
and engineering expertise, thus implicitly standardizing operations
and equipment. The disadvantages were that they tended to reduce
competition and were said to be unresponsive to local needs. Moreover,
since the companies were highly leveraged, a tremor in one part
of the organizational system could and did have far-reaching repercussions
for consumers. Samuel Insull's electric power holding company
controlled and generated one-eighth of the nation's power in 1931,
and when the company failed, it affected over 1 million stock
and bond holders as well as 41 million customers.
Unlike gas, electricity cannot be effectively stored in large
quantities. Thus, plant size was a function of maximum or peak
demand. Despite decentralized alternatives offered by batteries
or self-contained generating plants that served one or two buildings
or perhaps an industrial complex, the American model was central
station generation and distribution on an increasingly expansive
scale. The focus on central station electric power generation
and distribution derived partly from Edison's vision and partly
from Insull's strategy, which called for encouraging energy use
to achieve greater production capacity and increased revenues,
while passing off savings to the consumer in the form of lower
prices to stimulate even greater consumption.
Edison's system had been based on direct current (DC), which had
a practicable transmission range of about one mile. From 1880
to 1920, most of the innovations, including the use of alternating
current (AC), were designed to increase the range, scale, and
capacity of the central power station concept. Indeed, the Niagara
project (1895) demonstrated the possibility of a regional system
based on a hydroelectric generating station, high voltage transmission
lines, substations, and local distribution. Improvement in coal-fired,
steam-powered generators achieved similar increases in capacity.
In the 1920s, inter-connection of generating plants and distribution
systems together with pooling of energy sources enabled transmission
grids to integrate coal- and hydro-powered generating plants into
an expansive distribution system that served a diverse range of
demands.
Interior electric illumination in the 1880s was initially a luxury
for the average consumer. It was introduced first into commercial
establishments, like theaters and department stores, as well as
into affluent residences. Electricity was first adopted by industry
in small, labor-intensive and new industries, which took advantage
of its fractional attributes -- meaning that the same system could
support small machines, which used motors of less than 1 horsepower,
and larger ones, such as motors of 1 to 10 horsepower. Central
power station delivery allowed them to pay only for what they
consumed and did not have to meet the relatively high threshold
cost of installing and maintaining a self-contained power source,
like a steam engine or an independent electric power plant nor
find a means of exhausting the generated heat. Electricity was
subsequently adopted by the large scale, heat-intensive industries,
such metallurgy or food processing, in which the thermal properties
possessed value for the industrial process. Electrification of
industry led to substantial re-engineering of the industrial plant
to achieve ancillary benefits in the form of more efficient uses
of space as well as unit drive systems (i.e., one energy source
per machine).
The 1920s were the era in which electricity permeated the home.
By then, occupants of cities and burgeoning suburbs had access
to multiple energy technologies. Although electricity continued
to be most intensively used by the affluent, the presence of interproduct
competition from gas and oil meant that prices for electricity
tended to stay low. Falling prices, increased wages, and the decrease
in the number of servants willing to staff middle and upper-middle
class households fundamentally increased the material standard
of living for the working class, while increasing the burden of
housework for many women. With improvements in several household
energy systems, which brought about gas and electric ranges, hot
water heaters, irons, vacuum cleaners and refrigerators, Americans
began to enjoy and to expect a cleaner personal and environmental
standard. Laundry, which in an earlier time might have been sent
out or assigned to a laundress who came in once a week, now became
a routine household chore for the lady of the house.
From Edison's lab in New Jersey to John Ryan's copper mines in
Montana, electrification was largely a private sector phenomenon.
Cities, of course, were among the earlier consumers, and municipal
regulation was a constant from the 1880s onward. From experience
with both water and gas, which predated the Civil War (1861-1865),
it was obvious that municipal franchises, which implied a degree
of regulation, would be necessary to obtain access to rights-of-way
within which to construct the conduits. State regulation of electric
utilities was instituted in 1887 in Massachusetts, and state regulation,
exercised through setting rates, has remained the dominant form
of public oversight.
For the most part, industry executives pursued a cooperative policy
toward state regulatory agencies, with the savings they achieved
through improved technology passed along to consumers in the form
of lower rates. Interproduct competition from gas and oil for
heat (if not for interior illumination) as well as the specter
of public regulation or even public acquisition became powerful
incentives for cooperation with regulatory agencies as well as
for price discipline by the utility companies themselves. Regulation
tended to manifest itself primarily through setting rates, and
the rate structure itself became a marketing tool, designed to
attract large, industrial users who might otherwise have installed
self-contained, independent plants which potentially competed
with central station power. Although residential consumers paid
more per unit of power on average than large industrial consumers
did, and, indeed, generated more profitable revenues for the power
companies, stable or falling prices relative to higher wages,
particularly in the 1920s, muffled consumer discontent.
Federal New Deal programs were aimed toward dismantling holding
companies and limiting interstate operation of electric holding
companies. Regulation was believed justified in order to protect
the public from widely perceived abuses. It is unclear how successful
this regulatory function has been, based on studies of consumer
prices and the extent to which early regulatory agencies in fact
protected power companies from competition. It is, however, evident
that federal intervention, in particular, was instrumental in
expanding electric power to underserved, predominantly rural populations
through the REA and other New Deal and Truman-era programs.
Amy Friedlander
To request a copy of Power and Light, please send a message with your postal address to:
request@cnri.reston.va.us.
Natural Monopoly and Universal Service:
Telephones and Telegraphs in the U.S. Communications Infrastructure,
1837-1940
Preface
Corporation for National Research Initiatives
March 1995
"Natural Monopoly and Universal Service" describes the
development of the telegraph and telephone systems in the United
States and is the second in a series of explorations into the
history of specific infrastructures, commissioned by the Corporation
for National Research Initiatives (CNRI). A not-for-profit organization,
CNRI was created in 1986 to foster research and development for
the National Information Infrastructure (NII). Among CNRI's major
goals is to identify and nurture infrastructural technology and
services that can unlock the world of information and knowledge.
Although the components of the evolving information infrastructure
represent new technical, social and economic challenges, there
is much to be learned from historical precedents. This volume
addresses a dimension of the communications infrastructure.
Abstract
Power and Light: Electricity in the U.S. Energy Infrastructure, 1870-
1940
Amy Friedlander, 1996
Preface
President, Corporation for National Research Initiatives
January 1996
"Power and Light" is the third in a series sponsored
by the Corporation for National Research Initiatives (CNRI) on
the historical development of large-scale infrastructure in the
United States. It concerns the technology and infrastructure of
electricity.
Abstract
Corporation for National Research Initiatives
Last updated, af, 5/2/97