Monopoly Subchapter Burton Summary

In this subchapter Burton writes about how Vanderbilt got his start and became a major player in the steamship industry. It shows that even in the infancy of Vanderbilt's career his practice of embracing competition and making better products for lower prices Vanderbilt was able to beat out the government subsidize companies. Burton starts off by talking about Robert Fulton, a man who ran a government franchise steamship company. Fulton's company was simply Monopoly enforced by the state. One of his competitors Thomas Givens hired Cornelius Vanderbilt the challenge Phil Fulton by charging less than the Monopoly rates. The chapter also talks about the effects of the Gobbins v. Ogden Where the supreme court struck down Fulton monopoly. This sparked a new wave of competition, which brought about technological advancements, lower prices and increased passenger traffic. Vanderbilt soon left his partnership with Miller and moved on to create his own shipping company. In the rest of the subchapter Burton gives examples of different political entrepreneurs and government
subsidized businesses that Vanderbilt challenge. Most of them did not want to engage in competition with him so the went bankrupt, bought him out or were bought out by him.
II.
In the second subchapter Burton writes about Vanderbilt's escapades in the mail delivery service. Vanderbilt watched from the sidelines as the government granted Edward Collins over $ 3 million to deliver mail, a job he knew he could do for much less. After approaching congress about getting a subsidy and being refused Vanderbilt decides he would take on Collins. Vanderbilt continued to cut prices over and over again, and after a rough first year began to saw profit. Vanderbilt continued to innovate and produces better ships,so that he could keep lowering his prices until he was able to beat out Collins. The government soon saw it was a mistake to back Collins and pulled their support. Burton really showed how Collins’ lack of motivation to produces better ships, and superior services cause him to lose out to Vanderbilt, who did not have the the advantage of government subsidy.
III
The third subchapter was fairly similar to the second, in that we saw Vanderbilt take on another government subsidized business. Here he takes one two mail delivery lines that went to California. Vanderbilt continued to make good business choices which allowed him to use less resources and time. One such choice, was the the canal he built in Nicaragua, by using this canal Vanderbilt was able to cut the length of the trip to california by 500 millions. Even after this canal was taken from him by William Walker he continued to beat out the subsidized companies by offer good services and low prices. His competition,showed their fear of true market competition when the bought him out for $672,000, 75% of the money the government had given them.

1* I remember being taught that these rich men were a problem for the market, they would grow their companies and and eliminate competition then raise all their prices. This book says to complete opposite and it also makes a lot more sense. Vanderbilt was a man who believed in competition who did eliminate much of his competition but that's becauses they were not able to adapt to the changing market. It wouldn't make sense for him to eliminate his competition then raise all his prices because if he does, someone is going to come along and do what he did . They are going to offer their service at a lower price, and if he were not to adapt he too would go out of business.

2* I was taught that the government was the hero of the story who came and fought against the shady monopolist, when in reality the government was and enabler that helped created many of the monopolies.
Something important that i've learned this year is that when government get involved it usually cause competition to decline. The way I see monopolies now is, most of them are government franchises such as ConEd.

3* I've never viewed either of these men as bad men or as robber baron, i've always admires the men of the 19th and 20th century who saw these new industries developing and adapted to make a mostly honest profit. These men were friends of consumers because the put pressure on their competitors to provide better goods and services and reasonable prices. They embraces competition, made good products and sold them for low prices. When companies compete the consumer usually
benefits.