The answer is actually alluded to in RFC 1918 (which established the
When the internet was invented, it's creators were really focused on computers connecting to each other across the public internet. The idea of "private internets" wasn't really factored into the addressing system.
When enterprises began using private networks, a real problem arose: The IANA was running out of IP addresses. Private networks that needed to communicate with the public internet were in a bind... if they registered an IP Address for their private network, then this reduced the pool of IP addresses that others could use, but if they didn't, then there was no guarantee that the IP Addresses they ended up using for their private network wouldn't conflict with some external service that the company would eventually want to use.
To solve this problem, the IANA reserved an unused block of IP Addresses for private networks. Enterprises (and, eventually, home networks) could use these addresses with the certainty that they'd never conflict with a public internet IP Address.
Here's the relevant text from the RFC:
For the purposes of this document, an enterprise is an entity
autonomously operating a network using TCP/IP and in particular
determining the addressing plan and address assignments within that
This document describes address allocation for private internets. The
allocation permits full network layer connectivity among all hosts
inside an enterprise as well as among all public hosts of different
enterprises. The cost of using private internet address space is the
potentially costly effort to renumber hosts and networks between
public and private.
With the proliferation of TCP/IP technology worldwide, including
outside the Internet itself, an increasing number of non-connected
enterprises use this technology and its addressing capabilities for
sole intra-enterprise communications, without any intention to ever
directly connect to other enterprises or the Internet itself.
3. Private Address Space
An enterprise that decides to use IP addresses out of the address
space defined in this document can do so without any coordination
with IANA or an Internet registry. The address space can thus be used
by many enterprises. Addresses within this private address space will
only be unique within the enterprise, or the set of enterprises which
choose to cooperate over this space so they may communicate with each
other in their own private internet.
As before, any enterprise that needs globally unique address space is
required to obtain such addresses from an Internet registry. An
enterprise that requests IP addresses for its external connectivity
will never be assigned addresses from the blocks defined above.