The Myth of Capitalism

Chapter SevenWhat Trusts and Nazis Had in Common

Just as we must convince the Germans on the political side of the unsoundness of making an irrevocable grant of power to a dictator … we must also convince them on the economic side of the unsoundness of allowing a private enterprise to acquire dictatorial power over any part of the economy.”

—A Year of Potsdam: German Economy Since Surrender United States War Department

Cornelius Vanderbilt was the embodiment of the nineteenth century American monopolist. He came to represent the idea of the corporation as a Goliath, yet he started out as a David.

In 1808 the State of New York created a monopoly on ferry travel for a term of 20 years. Former New Jersey Governor Aaron Ogden purchased the monopoly rights and entered into partnership with Thomas Gibbons, a wealthy lawyer. When their partnership collapsed, the two began competing with each other between New York and New Jersey. The partners ended up suing each other in the New York court.

Gibbons decided to take his case against the monopoly all the way to the Supreme Court. As history would have it, Gibbons had hired a boatman in his mid‐twenties named Cornelius Vanderbilt to pilot his ferries. Vanderbilt captained the boats, defying jail, cutting prices against the big monopolists.

The case Gibbons v. Ogden in 1824 became a legal landmark in favor of free trade. The Supreme Court decided that Congress's power to regulate interstate commerce included the power to regulate transportation. ...