These
six bubbles - from the telegraph to the real-estate boom - show how
Americans end up better off after a bubble, says the author of "Pop!
Why bubbles are great for the economy" (Harper Collins).
By Daniel Gross
After Samuel Morse first showed Congress how he could send information
via wires in the early 1840s, the nation caught telegraph fever.
Between 1846 and 1852, the number of telegraph miles in the United
States rose more than ten-fold, from 2,000 to 23,000.
But many
of the lines were redundant - by 1849, three telegraphs vied for the
tiny amount of traffic between Boston and New York. And many others
were plagued by floods, weather, and poor connectivity. The combination
of excess capacity, brutal competition and technological kinks led most
of the start-up telegraph companies to fail.
But the country
wound up with a new communications infrastructure that created a
national market in information. The rapid spread of cheap telegraph set
other key innovations into motion: the creation of the Associated
Press, the ability to send money via wire through Western Union, and
the real-time transmission of stock data.