Innovation in technology and organization

Modern business enterprises came to operate the railroad and telegraph networks for both technological and organizational reasons. Railroad companies were the first transportation firms to build and to own rightsof- way and at the same time to operate the common carriers using those rights-of-way. Telegraph companies also both built the lines and ran the messages through them. The enterprises, both public and private, that constructed and maintained the canals and turnpikes rarely operated the canal boat companies, stage lines, or mail routes that used them. Even when they did, their rights-of-way were used by many other independent transportation companies.

On the railroad, however, the movements of carriers had to be carefully coordinated and controlled if the goods and passengers were to be moved in safety and with a modicum of efficiency. The first railroads – those using horses for motive power – were often able to allow common carriers operated by other individuals and companies to use their rails. But as soon as the much faster steam locomotive began to replace the horse-drawn vehicles, operations had to be controlled from a single headquarters if only to prevent accidents. Considerations of safety were particularly compelling in the United States, where nearly all railroads relied on a single line of track. For a time railroad managers experimented in hauling cars owned by local merchants and freight forwarders. However, the coordination of the movement of cars and the handling of charges and payment proved exceedingly difficult.