> How do you figure libraries would be deemed illegal? They operate today.

The history of public libraries is extremely messy, and the RIAA almost managed to get secondhand music made illegal in the 90s. Publishers did not ever support the idea of loaning a single copy of a work to dozens of people. While it's a huge stretch to say that every illegal download represents a lost sale (people download 100x more than they read), it's a lot less of a stretch to say that people who would sit down and read an entire book are fairly likely to have bought it.

Also, when books were relatively more expensive for people (19th century), a lot of income from publishers came from renting their books, rather than selling them. Public libraries involved a lot of positive propaganda and promises of societal uplift from wealthy benefactors, along the same lines and around the same time as the introduction of universal free public education. I remember hearing a lot about this history at the Enoch Pratt Library in Baltimore, which iirc was the first. Libraries were at that time normally private membership clubs.

edit: I also agree that the free book thing was stupid and have been very harsh about it. I don't know if it's possible to be too harsh about it, because it was obviously never going to get past a court. It felt almost like intentional sabotage.