A repost from 2013.
First up, Bloomberg Echoes:
Federal Telegraph Co. was one of the first technology companies in Palo Alto, California. Source: historysanjose.org
The revelations that U.S. technology giants may be assisting the National Security Agency seem to contradict Silicon Valley’s image as a bastion of libertarian thinking.And from the New Yorker:
But such cooperation would be nothing new: A century ago, the federal government signed a lucrative defense contract with Silicon Valley’s original technology company.
That was Federal Telegraph Co., founded in 1909 in Palo Alto, California. Before 1913, the company had worked on a wireless system that it hoped would compete with wired network of Western Union, which once wielded the sort of industry power later associated with AT&T Inc. (T) Federal Telegraph established a network that included stations in Phoenix; Kansas City, Missouri; and Chicago.
Unfortunately, the West Coast’s mild weather had given Federal Telegraph’s management false optimism about its ability to expand its network east from San Francisco, Los Angeles and San Diego. The summer of 1912 brought disaster, as users experienced dropped connections because of thunderstorms and accompanying static in the Midwest. The resulting exodus of customers forced the company to seek other opportunities.
Wireless Stations
The most promising was supplying the government. In 1913, Federal Telegraph received a contract to build transmission equipment for the U.S. Navy’s Panama Canal Zone wireless station. Since its victory over Spain in the 1898 Spanish-American War, the U.S. government had sought a way to safeguard its overseas possessions. Just before the outbreak of World War I, Congress authorized the creation of a chain of wireless stations, including the Canal Zone, Hawaii, Puerto Rico and the Philippines. Each station would become another source of revenue for the young telecommunications company.
Federal Telegraph began by seeking a private-sector customer base. Yet only when it became an industrial extension of U.S. foreign policy did Federal Telegraph grow into a million-dollar enterprise with a workforce of 300. By the 1920s, the State Department was supporting Federal Telegraph’s $13 million contract to supply telecommunications equipment to the Chinese government....MORE
Change the World
Silicon Valley transfers its slogans—and its money—to the realm of politics
In 1978, the year that I graduated from high school, in Palo Alto, the name Silicon Valley was not in use beyond a small group of tech cognoscenti. Apple Computer had incorporated the previous year, releasing the first popular personal computer, the Apple II. The major technology companies made electronics hardware, and on the way to school I rode my bike through the Stanford Industrial Park, past the offices of Hewlett-Packard, Varian, and Xerox PARC. The neighborhoods of the Santa Clara Valley were dotted with cheap, modern, one-story houses—called Eichlers, after the builder Joseph Eichler—with glass walls, open floor plans, and flat-roofed carports.
(Steve Jobs grew up in an imitation Eichler, called a Likeler.)
The average house in Palo Alto cost about a hundred and twenty-five thousand dollars. Along the main downtown street, University Avenue—the future address of PayPal, Facebook, and Google—were sports shops, discount variety stores, and several art-house cinemas, together with the shuttered, X-rated Paris Theatre. Across El Camino Real, the Stanford Shopping Center was anchored by Macy’s and Woolworth’s, with one boutique store—a Victoria’s Secret had opened in 1977—and a parking lot full of Datsuns and Chevy Novas.
High-end dining was virtually unknown in Palo Alto, as was the adjective “high-end.” The public schools in the area were excellent and almost universally attended; the few kids I knew who went to private school had somehow messed up. The Valley was thoroughly middle class, egalitarian, pleasant, and a little boring.
Thirty-five years later, the average house in Palo Alto sells for more than two million dollars. The Stanford Shopping Center’s parking lot is a sea of Lexuses and Audis, and their owners are shopping at Burberry and Louis Vuitton. There are fifty or so billionaires and tens of thousands of millionaires in Silicon Valley; last year’s Facebook public stock offering alone created half a dozen more of the former and more than a thousand of the latter. There are also record numbers of poor people, and the past two years have seen a twenty-per-cent rise in homelessness, largely because of the soaring cost of housing. After decades in which the country has become less and less equal, Silicon Valley is one of the most unequal places in America.
Private-school attendance has surged, while public schools in poor communities—such as East Palo Alto, which is mostly cut off from the city by Highway 101—have fallen into disrepair and lack basic supplies. In wealthy districts, the public schools have essentially been privatized; they insulate themselves from shortfalls in state funding with money raised by foundations they have set up for themselves.
In 1983, parents at Woodside Elementary School, which is surrounded by some of the Valley’s wealthiest tech families, started a foundation in order to offset budget cuts resulting from the enactment of Proposition 13, in 1978, which drastically limited California property taxes. The Woodside School Foundation now brings in about two million dollars a year for a school with fewer than five hundred children, and every spring it hosts a gala with a live auction. I attended it two years ago, when the theme was RockStar, and one of Google’s first employees sat at my table after performing in a pickup band called Parental Indiscretion. School benefactors, dressed up as Tina Turner or Jimmy Page, and consuming Jump’n Jack Flash hanger steaks, bid thirteen thousand dollars for Pimp My Hog! (“Ride through town in your very own customized 1996 Harley Davidson XLH1200C Sportster”) and twenty thousand for a tour of the Japanese gardens on the estate of Larry Ellison, the founder of Oracle and the country’s highest-paid chief executive. The climax arrived when a Mad Men Supper Club dinner for sixteen guests—which promised to transport couples back to a time when local residents lived in two-thousand-square-foot houses—sold for forty-three thousand dollars....MORE
And just to drive the point home here's the last paragraph before the jump in 2019's Silicon Valley: A Region High on Historical Amnesia":
....One idea in particular animates the book’s sprawling narrative: the role of federal patrons (and not private monies) in making Silicon Valley. The government’s role isn’t news to academic historians but it might come as a surprise to the general audience O’Mara’s book is intended for. Not necessarily always a sexy story, it’s nonetheless an important one that destabilizes popular notions about the region. As she recounts in the early pages of her book, the symbiosis between federal patrons and private enterprise was securely baked into the region well over a century ago with the rise of Leland Stanford’s vast railroad empire. Founder of the eponymous university, he had made his fortune as the ruler of that empire — which he most certainly could not have done without the direct support of federal powers. The federal government’s stake was clear enough even at this early date: lushly fertile Santa Clara Valley, circa 1900, was an increasingly pivotal node in a continent-spanning agricultural network that relied on dependable rail service to ferry streams of immigrant pickers and packers to key agricultural destinations....
