The Market Revolution, Industrialization, and New Technologies

Start Free Trial

How did the telegraph impact the economy?

Expert Answers

An illustration of the letter 'A' in a speech bubbles

The telegraph significantly influenced the enhancement of larger and more efficient economic markets. Nationwide markets came into existence as a result of this invention. Prior to the invention of the telegraph, data could only travel as fast as people. While transportation had significantly improved in 1800s, the slow speed of travel impeded the growth of nationwide markets. As such, these speeds impeded the exchange of data that was necessary for the growth of economic markets.

The telegraph considerably reduced the time taken to communicate information across distances. For example, most of the United States was connected by telegraph seven years after the development of the Baltimore-to-Washington line in the US. Consequently, the telegraph expanded the market area, since participants could almost interact instantaneously to gather and analyze data essential for market transactions.

Furthermore, the telegraph influenced the integration of manufacturing firms. Larger market areas resulted in increased demand thereby stimulating manufacturers to devise new methods of increasing production. The technological improvements of mass production and large batch processing took place in the late nineteenth century. As such, this led to the establishment of economies of scale that prompted firms to decrease their costs of production. Evidently, the telegraph in combination with other factors considerably influenced the forms of economic organization in the mid nineteenth century. It favored the development of extensive economic markets as well as integrated firms.

Approved by eNotes Editorial
An illustration of the letter 'A' in a speech bubbles

The telegraph represented a key piece of technology, one with revolutionary effect. Its economic implications were profound.

For one thing, there are the large-scale implications regarding business and manufacturing. Consider that the telegraph allowed operations to be coordinated across far-flung distances. Whether we're discussing production, transportation, sales, or the coordination of all these various operations, the telegraph greatly increased the scale by which businesses could operate while retaining levels of efficiency that would have been impossible in an earlier age.

At the same time, this revolution in communications had powerful effects on specific industries. Consider the expansion of the railroads, for example: an industry that, by its very nature, demands rapid communications and intricate coordination in order to effectively function across large distances. Thus, the telegraph and the railroad synergized greatly with one another, and in this respect, the telegraph also contributed greatly to the extraordinary growth and success of the railroad (itself one of the critical industries of the nineteenth century, with a revolutionary impact all on its own). In addition, one can point towards the telegraph's transformative impact on the newspaper industry, which could now (more than ever before) quickly report on stories of national and even international scope. These are just two examples regarding ways by which the telegraph impacted specific industries to powerful effect.

Approved by eNotes Editorial
An illustration of the letter 'A' in a speech bubbles

The telegraph impacted the American economy. The telegraph allowed for faster communication, which allowed businesses to grow. Before the telegraph, orders for products came by mail, which could take days or weeks to arrive. With the telegraph, businesses could receive orders and fill them quickly. As a result, businesses had the ability to expand their operations.

The telegraph also allowed business owners to communicate faster with people throughout the country and eventually throughout the world. This helped business owners implement policies more quickly and become aware of activities and trends in faraway places that might impact their business. As business owners established more coordinated activities, they were able to meet consumer demand and create jobs, which helped the economy to grow. A business owner in New York could operate his or her business more efficiently throughout the country because the information needed to run the business could be quickly sent to branch locations. Improved communications changed the business landscape, as business owners were able to control various industries and establish monopolies; distance became less of an impediment to operating in many locations.

Approved by eNotes Editorial
An illustration of the letter 'A' in a speech bubbles

In 1844, the first telegraph message was sent, and by 1853, the only state east of the Mississippi that didn't have telegraph communications was Florida. By 1861, the entire country was connected through telegraph. By making long-distance communication faster and less expensive, the telegraph increased the efficiency and size of markets, facilitating the Industrial Revolution and accelerating the growth of the American economy.

In addition, the telegraph helped corporations develop the ability to coordinate multiple functions at the same time, leading to monopolies with vertically integrated businesses. Vertically integrated firms were able to control the entire supply chain along a business's production process; for example, Carnegie steel was one of the first vertically integrated firms, and the company not only controlled the manufacturing of steel but also owned the mines that produced the iron and the ships that transported the steel to markets. The telegraph facilitated communications among the different divisions of the business, leading to larger companies that were able to control many aspects of a product's production process. 

Approved by eNotes Editorial
An illustration of the letter 'A' in a speech bubbles

The telegraph helped to integrate the economy, forging a national economic system. Along with its "sister" invention in transportation, the locomotive, it enabled long-distance transactions to take place. For example, merchants in New York City could be almost instantly apprised of cotton prices in New Orleans markets, and vice versa. Planters in the South could order farm implements and other capital goods from manufacturers in the North, and receive lines of credit from bankers far distant from home. Historian Daniel Walker Howe cites the invention of the telegraph as part of a "communications revolution" that occurred in the thirty years or so before the Civil War. In his book What Hath God Wrought (named after the first words transmitted over the telegraph by Samuel Morse, its inventor) Howe sees the telegraph and the railroads as essential to the development of a market economy in the United States. "The electric telegraph," Howe writes, "helped integrate [the] continental empire." The telegraph made territorial expansion, so important to economic expansion, possible by linking distant regions. It also facilitated rapid communication between Europe and the United States after the first transatlantic cables were laid just before the Civil War. Before the telegraph, news and other information could only travel as fast as a horse or a ship. The telegraph connected the world in ways unimaginable before its invention.

See eNotes Ad-Free

Start your 48-hour free trial to get access to more than 30,000 additional guides and more than 350,000 Homework Help questions answered by our experts.

Get 48 Hours Free Access
Approved by eNotes Editorial