Where is Teddy “trust buster” Roosevelt when we need him?
It is curious – maybe even eerie – how often history repeats itself. There is very little that happens today that has not – in some way, shape or form – happened in the past. It is equally as true that if history is not studied and understood in a way that allows it to become a learning tool, it is likely that the mistakes of the past will also be repeated. Knowledge of history creates the perspective to recognize when history is recycling itself in the present and it shows a clear path around the mistakes of the past in order to avoid repeating them in the present.
The current controversy over what is called “net neutrality” is a good example of history repeating itself. At first glance it may not seem so, because “net neutrality” is about the conflicting interests in the debate over providing fair access to and equitable use of the Internet. Since the Internet was not even invented until the end of the 20th century, how on earth can this be history repeating itself and how can history possibly help us deal with this complex, modern-day problem?
Well, in the late 19th century the country was deeply divided in debate over access to and equitable use of the “Internet” of that time – a burgeoning railroad system – that was coming under the monopolist control of huge corporate trusts. For all the uncanny parallels with the net neutrality controversy of today, the debate over the access to and use of railroads of 120 years ago could just as easily have been dubbed “railroad neutrality.”
Here is a look at a little history.
Around the middle of the 19th century the federal government took an active role in the development and expansion of a national railroad system. Through the use of direct subsidies, tax incentives, exclusive charter rights; as well as the power to use eminent domain and the right to charge tolls, the government provided the incentive for entrepreneurs to risk their capital to build the rail system. Just as in the 18th century when the government had encouraged the development of roads, rivers and canals that were then available to all on an equal basis, the intent of government in stimulating the building of a railway system was to create a new “highway of commerce” that would be open to all on an equal basis; believing this would bind the country together by stimulating industry and commerce across the nation.
The plan worked better than anyone could have imagined. Railroads sprung up all across America and soon the country was pockmarked with railroad tracks that crisscrossed the nation from east to west and north to south. Many historians credit the expansion of railroads as the primary driver of the industrial revolution; a revolution that allowed America to become the largest industrial power in the history of the world. But the railroads also “shared the wealth” by allowing small farmers and manufacturers to compete and sell their products on Main Streets across the country.
But soon the original intent that the railroads would be available to everyone in an open and fair basis came off the tracks. As commerce became ever more dependent on the use of railroads, ever alert capitalists recognized the potential power and profit that would come with controlling this “steel highway of commerce.” With the federal government in full-bodied laissez-faire mode, there was nothing to prevent the consolidation of railroad ownership and as the 19th century came to a close, huge trusts had been formed that resulted in the entire railroad system being controlled by a few very wealthy individuals. This consolidation of railroad control reduced competition, eliminated options for shippers and restricted access to the system.
If that was not bad enough, the same individuals who controlled the railroads also controlled the monopolist trusts in steel, oil, sugar, finance, tobacco and numerous others: the Vanderbilts, Carnegies, J.P Morgans, et. al. With the control of the “highway of commerce” these wealthy individuals and trusts were free collude with each other to favor one company over another and effectively eliminate competition, causing these trusts and individuals to become even more powerful and wealthy, at the expense of everyone else.
As just one example of many, John D. Rockefeller’s Standard Oil trust could and did collude with the railroad trust to receive rebates and preferential treatment for the transport of his oil at the expense of independent oil companies that had no option other than to use the railroads controlled by Rockefeller and his “friends.” In effect, this unholy group choked off competition and commerce, causing the rich to get richer and more powerful as others grew poorer and were at the mercy (and there was not much of that) of the few. (Sound familiar?)
While the unfairness, abuse and monopolistic actions made possible by the absolute control of the railroads by a few wealthy individuals and large trusts was recognized, there was nothing done about it because, while it may have been immoral, it was not illegal. The laissez-faire attitude of government meant that it took no action to assure “railroad neutrality.” Indeed, the elected officials in government often facilitated these anti-competitive actions that clogged the “highway to commerce.” (In no small part due to bribes, political contributions, pay-offs and kick-backs.)
This attitude did not change until the dawn of the 20th century, when Teddy Roosevelt became president. Although a Republican, Roosevelt was at odds with the entrenched leaders of his party who supported the trusts and believed that government should let business do what it does best without any interference from government. Roosevelt was far from being reactionary and anti-business, but he was also concerned that the continued concentration of wealth and power in the hands of a few wealthy individuals and giant companies would ultimately destroy economic opportunity the country for all but a few.
Roosevelt battled his party and long odds to break up the railroad trust (and others) in order to encourage competition and re-open the “highway of commerce” to all on a fair and equal basis. The irony is that this action actually opened up the economic system to all, ultimately creating the strong middle class that drove the American economy to become the largest and most democratic in the world. Wealth was not destroyed, it was created.
Fast forward to today as history repeats itself.
Soon after the development of the computers in the 1950s came the realization of the need and value in linking these computers in a “network.” Again, the government took the lead in developing this “new highway of commerce.” In 1960 the Department of Defense issued the first contract seeking to develop a way to “link” all of their computers together to “share” information. The government began to offer incentives and even direct grants intended to stimulate private companies and educational institutions to development and grow of this new “railroad system.” The objective was to develop a system that would be available to all on a fair and equitable basis creating opportunity for ideas to be shared, new businesses to grow and to drive commerce. And, as they say, the rest is history.
We all know the revolutionary impact the Internet has had on our personal lives, our culture and commerce. Can you imagine life now without access to the Internet? Even worse, can you imagine how it would be and what potential abuse would follow if our access to and use of the Internet came under the control of just a few very large corporations?
Well, welcome to history repeating itself. Just as the “railroad internet” fell prey to the control of a few, so too has the modern-day Internet. Companies such as Verizon, AT&T, Comcast, Time Warner and Charter have as much control over access to, and use of, the Internet as did Rockefeller and his robber baron clique of friends did over the railroads 120 years ago. (And who does not believe that future “consolidation” will further reduce freedom of access?) Just as Rockefeller could use his control of railroads to squeeze out his competition, Verizon can use its control as an “Internet provider” to squeeze out competition. That makes us all just as susceptible to abuse and exploitation as those individuals and businesses that depended on the railroads in the 19th century. These companies have the power to control who has access to the Internet, who can use it to deliver “product” and at what cost.
Of course, just as those who controlled the railroads did, the modern-day Internet trusts argue that government has no right to interfere with business being business and that they would never do anything to abuse their power. Sure, and if you believe that, you might believe that the KKK is not racist.
The mistake that the government made in dealing with the control of the railway system was to wait until the abuses enabled by such an unhealthy consolidation of power and influence became so stifling to the free-flow of competition and commerce that it almost brought down the very concept of the American system. Even when finally recognized, it took years of civil proceedings and legislation to break the rail-monopoly choke-hold on competition and commerce.
What we can learn from history – so as not to repeat the mistakes of the past – is to intercept this effort to limit access to and use of the Internet by a few powerful corporations, before it becomes almost impossible to do so. We can take the example from Teddy Roosevelt who championed the concept of “common carrier” to break the hold of the railroads and open up the “highway of commerce” to all.
Roosevelt argued that the railroads were too vital to the flow of commerce to allow them to be controlled by a few. He believed it was the responsibility of government to make sure that the railroads were available on an unfettered, fair and equitable basis to all. It was fine that the railroads were owned and controlled by a few, but those few were required by law and regulation to provide a “railway neutrality” system that was open to all on the same basis.
We can learn this lesson from history so as not to repeat the same mistakes. We can resolve the potential problems and abuse of the Internet under the control of just a few wealthy corporations by declaring the Internet to be a “common carrier.” As source of communication, commerce and trade that is so vital to the country as a whole that it must remain open to all on the same basis. If Congress were to declare the Internet a “common carried” it would assure that “net neutrality” remained a reality and thus maintain the freedom of opportunity and competition for all; and that would lead to even greater growth, just as it did with the railroads. If we don’t learn this lesson we will have no one to blame but ourselves for repeating the mistakes of the past. It is a great history lesson to learn.