Lest we forget - Standard Oil was a monopoly formed by a private citizen through the use of predatory business practices to put competing businesses out of business.
Amtrak - was formed as a near monopoly (certain carriers opted out) formed by the government to relieve carriers of the financial burden of continuing passenger service and was expected to vaporize at the sunset of it’s enabling legislation.
I disagree labeling Standard Oil and J.D. Rockefeller with monopolizing the oil industry. J.D. purchased many companies when the were producing an inferior product (not white, burned dirty and smokey, not safe or healthy) of kerosene but left other “quality” producers alone. In the process he would hire the entire staffs of the purchased company and fold them into his companies. He was not afraid of competition as long as the competition was as good as his. He got into problems when shaving wood barrels to 3/8 of an inch to save tare weight when shipping and later going to thin steel barrels for both better tare weight and less space or larger barrel content; thus wood barrel makers made all kinds of claims against him. J.D. was shrewd, smart, practical with his money and prosperous: all attributes which attract criticism and attacks in our society.
Balt,
I hate to be disagreeable, especially with a guy as thoughtful has you are. But here I have to add my own thoughts. I just cannot believe that anyone in Congress or the Executive branches of our national government would make a law creating an agency without realizing that they are also creating a whole host of people who have a vested interest in that agency continuing and will bitterly oppose any effort to shut it down. Amtrak was proposed to the Congress by President Nixon. Whatever Nixon was he was not stupid and he was not naïve. Certainly our law makers had to realize that Amtrak would fight in every way possible to survive and continue and they had to realize that when they created it.
John
You have a very interesting perspective here, Henry. I never thought of you as a historical revisionist. When I was in college my history professor (who I do not particularly admire) did believe John D. was one of the prime examples of a monopolist.
John
You have to put yourself into the context of the age. When the Railpax legislation was signed man had just landed on the moon and the public genuinely believed we would all be driving flying cars by the end of the decade. It’s hard to even think about it now but that’s how it was. The passenger train would be relegated to the museums next to the stagecoach and mule barge. And then a funny thing happened: The 1973 oil embargo, the laws of thermodynamics reared their ugly heads. The nation was caught without a “plan b” with only NRPC as a possible entry. It was then and only then that the nation realized that we may need these passenger trains going forward.
That is not my revisionist thinking…but one I read in a biography about 15 years ago. It was the daughter of a cooper who started the anti Rockefeller movement when he abandoned her father’s barrels in favor of steel. He was not lily white by any means…but he was shrewd and knew how to spend or not spend in order to make money. He believed his product, kerosene, was a good product but would lose not only market share but also credibility if poor quality was marketed for less money…his nickle for the good stuff vs. 3 cents for poor quality. If the products were so bad everyone, he feared, would stop buying all products because of the danger of explosion or flaming up and putting a dirty smoke into a room. One day he had to borrow a nickle from a coworker and paid it back the very next day…His coworker was surprised and said so but J.D. explained the value of that nickle was the interest earnings on a dollar for a year. (How much is in your savings account today? How much does it earn you in a year?) He was a Scotsman and knew the value of everything plus the value of the return. Not only was the tare weight important to the cost of shipping 50 gallons of crude or kerosene, but also in the ability to keep the price at a nickle a quart despite other factors Yes, there were things he didn’t want to know about as well as things he didn’t know about which caused him problems or dictated the way he dealt with them. But his business acumen cannot be denied nor dismissed.
No doubt John D. Rockerfeller worked hard and worked smart. But so did all of the robber barons. They were focused and strongly goal directed and worked and worked until the job was done. Many of them had been poor boys with little or no education and very little behind them. Some years ago I read Maury Klein’s biography of Jay Gould, a man who was widely hated in his own lifetime. He, too, worked compulsively to make his money.
But history has not judged Rockerfeller or Gould or many who made fortunes after the Civil War kindly.
We assume greed was the driving force for the Robber Barons. But there also is a good argument that either with or without greed as a driving force they were traveling in areas no businesses, industry or government had ever been before…it was ll new and no one really understood (nor probably cared) what they were doing or how they were going to do it. They saw opportunities and ways to build railroads or factories so they went ahead and did it not knowing or understanding fully the consequences of their actions. One railroad to one town was perceived a monopoly, two or more, cutthroat competition or collusion. Steel, railroads, banks, and anything new that came along had the same growing pains. Money was power. J.P. Morgan wielded more power than Trust Buster Teddy Roosevelt. But even Teddy couldn’t fight J.P. when the banker told him that the steel industry and the country were about to fall if one Ohio steel company failed and that the President would not condemn or shut down the division of the company to various other companies under anti trust laws or of his own Presidential Powers. In the long run I believe the Robber Barons did more good for our country, its industry and economy, than what we learned in school. These guys were not the same as today’s investors and bankers in that they built businesses and industry and thus towns and cities and products for our country and others to consume. Today their ilk have taken manufacturing off shore, closed factories and made ghost towns of industrial cities. Railroads today are put together and operated solely for the purpose of moving products for the benefit of manufacturers and exporters rather than for the benefit of our consumers.
Having lived through the 60’s and 70’s it is really hard for me to think of that time as an “age.” But if it was I think it must have been the age of the Vietnam war. That is what everyone I knew was talking about and had on their minds. And the guys were almost all afraid of the war. I lucked out. I enlisted in the Army as it began to heat up but was never sent to Vietnam. But that was rare.
Flying cars? That isn’t my experience but perhaps we traveled in different circles. However, accepting your experience (which is certainly as valid as mine is), why then did Nixon and the Congress create Railpax in the first place? Why not just subsidize Conrail and the private roads to continue the passenger service they had and make it easier for them to abandon service that was too costly? There was no reason to create a whole new Federal agency unless you believed it was important to preserve passenger rail.
The railroads wanted out of the passenger business but knew it was not a popular thing to do…so they talked the Nixon Administration into taking the passenger trains off their hands. The railroads would “sell” the equipment to the government which in turn would “operate” the services with scheduling, crewing the train for handling passengers, maintain the equipment, do the advertising and the marketing, and pay the railroads to allow the trains to run on their tracks. It was expected to fail because the freight railroads and politicians believed and wanted us to believe that people either wanted to drive their own cars or fly on jet planes to wherever they wanted or needed to go. Railpax would die a quiet death and nobody would be the wiser. The problem was, of course, that the people were the wiser and them damned passengers kept buyint tikets to ride trains. Subsidizing was out of the question because that would mean the railroads were still in the passenger business and they didn’t want to be.
When it comes to Jay Gould he knew early on what he wanted: To make money. He might have gone to college but did not do that to pursue his goal. He started working as a book keeper for a blacksmith and worked for free to learn book keeping. He moved to the leather industry where he was quite successful and either loved or hated. Then he moved to New York City, became a day trader and opened his own brokerage. Next he bought the Rutland Railroad to learn the business, sold it and came back to his brokerage, Gould and Belden. John Eldridge want to build the Boston Hartford and Erie; Gould became his underwriter and got a seat on the Board of Directors. Then in 1867 he parleyed that to a seat on the New York and Erie Board where Daniel Drew was Treasurer and Jim Fisk was another Director . He listened and learned. When Henry Workman, who represented Cornelius Vanderbilt, suggested a pool with the New York Central Gould and Fisk balked; they wanted to operate the railroad and compete. Vanderbilt was outraged when the Erie charged only $100 a carload to ship live cattle undercutting the NYC’s price of $125 a carload. Ultimately the NYC reduced the tariff to $1 a carload. Gould and Fisk went to Chicago and brought up all of the live cattle they could and shipped then to New York City. On the New York Central. They made a bundle and began the Erie wars.
The Erie wars were one ting that caused Gould to have his reputation of robber baron. And yes, he did some things that we would see as underhanded. Bribing legislators, for example. He learned from Vanderbilt and Cornelius Vanderbilt was not exactly a paragon of virtue. Gould also is accused of trying to corner the gold market
I agree with you Henry up to the point where, after creating Railpax, you believe the Congress and President expected to to “die a quiet death.” D. Carlton, who after all writes a lot about railroads agrees with you and I suspect just about everyone else who posts here agrees with you. Except for me. I just can’t bring myself to believe that anyone would create a whole new Federal agency in the belief that it is going to suddenly wither away and die. So there I guess we just have to agree to disagree.
A couple of railroads held on to the passenger business but most turned it over to the Feds. But why would they have been reluctant to accept a subsidy for a business there believed was dying out anyway? Except, perhaps, because they really did not believe that and were really not in good faith?
Just to be clear, today’s Amtrak is nothing like what was made in 1971. On May 1 those railroad employees that were clearly passenger (station/ticket agents, car knockers, etc.) went to work at the same places they reported before but the paycheck came from Washington. Operating crews remained with the railroads. The corporation was made up of 15 directors, a mix of Presidential appointees and railroad men. Common stock was issued to the railroads and preferred stock to the USDOT. As Don Phillips wrote at the time, “In short, the corporation mainly was to be owned by the railroads, but all the decisions were to be made by a board composed largely of Presidential appointees.”
I would like to interject a little of our history here. When one reads the industry periodicals of the mid-to-late 1960s there is a continuous call/desire on the part of the railroads for some sort of government welfare for the railroad industry. It was believed they were due some sort of relief due to the overt subsidizing of their competition. Then came Penn Central Black
Amtrak is like the Federal Reserve it is private but the people who run it are from the government.
Amtrak’s budget is practically a rounding error in the Federal budget. Its not just too small to matter it…doesn’t even register.
D.Carlton: a good summary of the genesis of Amtrak, Conrail, and today’s railroading picture.
D. Carlton,
You offer a fascinating historical note with insightful analysis of Amtrak’s early years, an evolution that I suspect continues. Even after reading your post three times I cannot grasp all of your implications. You may be assured I’ll carefully follow your future posts.
Of course when the tide is at its ebb that doesn’t mean it has gone away and we now stand on dry land; rather it means the tide is turning and it will come back.
John
But if you listen to the politicians when it comes to Amtrak - they would have you believe it is higher than the World’s debt, let alone our National debt and will cause the end of the world as we know it if Amtrak gets $1 more.
Yes. But then there are other politicians who are more favorably disposed toward Amtrak.