When the new wonder technology of the electric telegraph was first thrown open for commercial use on the line connecting Washington DC with Baltimore in 1845, it generated revenue of 1cent in its first four days. Actually, it really only earned half a cent. Its first and only customer was so unimpressed with what he got for his half-cent, a message about the time of day, that he didn't wait for his change but left. After three months the operating costs of the line had been $USI.859 and total revenue was $US193.56. It was such a failure that its owner, the US Govemment, decided to get rid of it and handed it over gratis to private owners. But within 30 years, the telegraph network expanded from a few dozen miles of wire to an online network of 650,000 miles of wire and 30,000 miles of submarine cable connecting 20,000 towns and villages.

The 10 weeks it had taken to get a message from London to Bombay shrank to four minutes. It became a vast industry and its champion was the magnificently lucrative Western Union. Time itself is telegraphed out of existence, enthused a newspaper itself named after this pinnacle of modernity, the London Daily Telegraph. The new technology transformed commerce, government and society. Scepticism gave way to euphoria. An ocean cable is not an iron chain, lying cold and dead in the icy depths of the Atlantic, chided an observer, it is a living, fleshy bond between severed portions of the human family, along which pulses of love and tenderness will run backward and forward forever. Or, as the chairman of the company today known as Cable & Wireless claimed in 1894, telegraphy had prevented diplomatic ruptures and consequent war, and been instrumental in promoting peace and happiness. No time was allowed for the growth of bad feeling. And so the author of a new book, The Victorian Internet, explains that the arrival of the telegraph a century and a half ago has some eerie parallels with the advent of the internet today.

The hype, scepticism and bewilderment associated with the internet concerns about new forms of crime, adjustment in social mores, and redefinition of business practices mirror precisely the hopes, fears and misunderstandings inspired by the telegraph, writes the author Tom Standage. Time-travelling Victorians arriving in the late twentieth century would, no doubt, be unimpressed by the internet, they had one of their own. And it is not just the cycle of suspicion and utopianism in the face of a new communications technology which has historically solid precedents. The current speculative fever surrounding internet stocks is one of the most common events in the past four centuries of financial history.

Speculative madness repeats regularly in all countries when economies are awash in easy money. The only aspect to change is the object of the speculation.

Charles Kindleberger lists 41 different objects from 1618 to 1996 which have been the focus of speculative excesses. The first was the boom in metal coins of the Holy Roman Empire, followed by the Dutch tulip craze in the 1630s. The list encompasses everything from copper to cotton, canals to railroads. And from the experience of just the last decade we can add another fiveto his list of speculative favourites. We had Japanese golf club memberships and French Impressionist art in the 1980s, Chinese red-chip stocks in the mid i990s, and, on a more modest scale, McDonalds Snoopytoys in Hong Kong in the late 1990s.

The internet bubble is only the latest. There is little that is original about it. The last time there was speculative overtrading in a hot new communications medium was in radio stocks on Wall Street, just before the Great Crash of 1929. Speculative crazes will always repeat, cycles of scepticism and euphoria over new technologies will recur, not because of the new technologies or the latest traded assets, but because of the only true constant, the human psyche. The lesson of history. of course, is that every speculative boom ultimately busts. It can last for years, but bust it must. The task for investors is to pick the timing. The job for policy makers is to work out how to insulate the real economy from the consequences.

And whatever became of the mighty Western Union? When a fellow called Alexander Graham Bell offered to sell the company the paten to a new- fangled invention called the telephone, the ytold him they were not interested but they would do him a deal: if he promised to stay out of the telegraph business, Western Union would promise to stay out of telephones.