Pro-Consumer Legislation Supported by Elites: The Curious Case of the 1866 Post Roads Act
Public Choice Analyses of American Economic History Vol. III
32 Pages Posted: 26 Sep 2016 Last revised: 21 Oct 2019
Date Written: September 25, 2016
Politicians connected to elites who anticipated benefiting from the 1866 Post Roads Act overcame the problem of collective action and passed pro-consumer legislation over the objections of a concentrated economic interest. Mancur Olson’s (1965, 1982) theory on the cost of collective action predicts a concentrated interest should prevail over dispersed consumers. The exclusion of Southern Democrats elected from states that supported the Confederacy enabled a coalition within the Republican Party to push the act through the federal legislature over the vigorous objections of Western Union. Without the support of Republican politicians linked to economic and political elites who stood to benefit from the act, the pro-consumer 1866 Post Roads Act would have failed to pass in the United States Congress or Senate.
Keywords: Telegraph, Telecommunication, Regulated Industries, Federalism, Competition, Antimonopoly, Preemption, Entry, Deregulation, Regulation, Economic History
JEL Classification: D720, H110, H770, K210, K230, L120, L130, L430, L960, L980, N410, O250
Suggested Citation: Suggested Citation