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This week we were assigned to listen to a talk that Burt Folsom did on the Myth of Robber Barrons. He discusses multiple different stories that really opened my eyes to the downfalls of government subsidies in American history. The stories include the very successful “Robber Barrons” in American history, such as Andrew Carnegie, Cornelius Vanderbilt, and John D. Rockefeller, as well as other entrepreneurs that competed with these men in their respective industries. The shocking thing was that all of these “Robber Barrons” received no government subsidies and their competitors did.
One example comes from the steamboat race against England. America was falling behind in their exports and felt the need to stimulate their own steamboat companies. Edward Collins took advantage of this opportunity and milked the government for as much as he could, getting between $400,000 and $800,000 a year for multiple years to help stimulate his steamboat business, even getting a $3 million payment at the beginning to fund the building of the steamboats. After seeing Collins getting all these subsidies, Vanderbilt decided he could do a much better job that Collins in the steamboat industry, and started a rivaling business. Folsom shared stories of how Vanderbilt had smarter business strategies by offering cheaper fares for less-luxurious trips and minimizing his fuel costs by not traveling as fast. Collins’ business never turned a profit, loosing all of his business to Vanderbilt, who relied on no government subsidies.
When I first starting writing this reflection after listing to the talk, I honestly couldn’t think as to why the government subsidized businesses always failed and the others succeeded with no government help. However after writing the paragraph above, more specifically the part about how Vanderbilt had smarter business strategies and maximized efficiency, it suddenly hit me. Collins’ steamboat business failed because of his reliance on government subsidies. He did not make attempts to maximize his profits because he had big brother bailing him out every year when he got a raise in his paycheck. Vanderbilt, with no help, had to employ smart business tactics to make up for the immense head start Collins had, and eventually won. One man went down as one of the most successful men of all time, and the other I had to Google his name after listening to the talk because I had already forgot.