Subsidies, bailouts, stimulus packages, and calls for federal takeovers proliferate amid the current economic melee.  Finance managers who concocted crisis-inducing instruments are receiving million dollar retention fees that look suspiciously like bonuses.  The repercussions of Lehman Brothers’ failure loom over government decisions regarding A.I.G., Citigroup, and General Motors.  For more than a decade the monetary giants, supported by the polity, shunned regulations while digging a hole so deep that apparently there is nothing left but to pass out shovels to the rest of us.

In the Gilded Age, a time of excess and greed not unlike our own, fundamental changes in the American economy raised questions about the future of the capitalist system.  In the last decades of the 19th century telegraphic communication, along with the railroads, allowed commerce to extend beyond local boundaries.  Businesses evolved into corporations and then monopolies as Congress struggled to decide on regulations.  Then as now the populace was divided over which to fear more:  big business or big government.

Because of its importance the telegraph was a particularly vexing issue.  By 1880 Western Union Telegraph had squeezed or bought out its competitors and become part of a communication cartel.  It and all 8 of the transatlantic telegraph cables were controlled by a single entity headed by the infamous “Skunk of Wall Street,” Jay Gould.  Revisionists have argued that Gould, one of the original villains in the Robber Baron school of historiography, was simply a businessman who outfoxed his foes.  Be that as it may, at the time he was perceived as a ruthless architect of disorder.  Former ally Daniel Drew famously said:  “His touch is death.”  Competitors feared how Gould would use his telegraph cartel to control the flow of information.  In 1881 the New York Times lamented that Gould’s acquisition of the Associated Press, added to his domination of the telegraph, seemed a death knell for the free press in America.

Congress was ready to act.  Legislators condemned the idea that the transmission of “instantaneous” information might be subjugated to corporate will.  They believed they needed to break up Western Union and nationalize the telegraph.  A Senate bill to erect government telegraph lines was introduced.

 It was a man named John Mackay who eliminated the need for government intervention.  He was the richest of the miners of the Comstock Lode in Nevada having worked his way up from a day-wage miner.  He held the majority interest in a partnership that defeated the Comstock’s Bank Ring, a predatory monopoly that had controlled the area’s mines, mills, and transportation.

After leaving the Comstock Mackay told a friend that his riches were merely a trust, and that he owed his country some service.  Instead of joining his wife who moved to Paris, where she became the first ultra-wealthy American to conquer European society, Mackay employed his fortune in an attempt to break the Gould monopoly.  Everyone agreed that the cartel was charging usurious rates and could not be trusted.  Ominously no one dared join Mackay except the avowed Gould hater James Gordon Bennett Jr., eccentric owner of the New York Herald.  So Mackay contributed over 70% of the new firm’s financing.

Mackay was an Irish immigrant, raised by a widowed mother in New York City.  He was a quiet man, handsome and powerfully built, renowned for his decent treatment of workers and his charities.  His original plan was to build cables across the Atlantic to compete with Gould’s lines, which were charging an oppressive 75 cents a word.  Mackay soon realized that messages coming from Europe on his system would have low priority in Gould’s cross country network, and so he challenged Western Union as well.

The problems with a land telegraph system were myriad.  Western Union had exclusive rights-of-way along the major railroad lines so Mackay had to secure permissions and buyouts along roadways and across private properties.  At one point Mackay purchased another company’s system of poles and lines.  Gould’s men cut and confiscated the cables in New York City, Baltimore, and three other cities claiming Western Union owned them.  It was a lie, but succeeded in delaying Mackay's work for years as he fought Gould in the courts.

A rate war between the transatlantic companies lasted 4 years.  It saw Gould’s rates plummet as low as a ruinous 12 cents a word.  Mackay kept his rate at 25 cents asking businesses to continue their support.  Many did, knowing that if Mackay was broken Gould could again raise prices to whatever level he wished.

During the battle Mackay’s immense fortune was nearly depleted.  His silver mines yielded little after 1880.  The acting president of a Mackay-owned bank lost many millions in a secret scheme gone awry.  Mackay saved the bank by making the losses good.  His businesses had to survive the Panic of 1893 and the depression that followed.  Through it all he maintained wages and covered telegraph deficits from his own dwindling reserve.  He persevered, and in the end he and the country benefited.  Although his land telegraph never exceeded 17% of the national market, rates were forced down from 38 cents a word to 31 cents.  Transatlantic rates remained at 25 cents for many years.  Mackay’s international business expanded, eventually adding cables across the Pacific Ocean.  In 1928, when the company merged with International Telephone and Telegraph, its slogan was, “The sun never sets on the Mackay system.”

At his death Mackay received a universal eulogy recounting his decency, uprightness, and honor.  It was heroic praise, espousing a quality of character as unique then as it would be now.