Government and Business

For the last couple of days the morning radio news has abounded with stories of the Federal government "taking over" banks. I seem to be one of the few people who's not enthused over this idea, and I believe I have history to back me up.



When the United States entered World War I on April 6, 1917 the government realized, correctly, that there was one industry that would have a major stategic role to play in success in that conflict. It was an industry comprised of a large number of competing companies, often providing comparable products to the same markets and run by some of the most cut-throat businessmen ever to head a corporation. Some of these companies were crippled by labor disputes, the corporate infrastructure was aging and in many cases in need of replacement, and lack of standardization meant that most equipment was custom made.



That industry was the railroad system, which would be needed to move troops and equipment from all parts of the nation to the Eastern ports for shipment to Europe. Many doubted that the railroads were up to the task, so in 1918 the government nationalized most of the railroads under the United States Railroad Administration. This administration was responsible for allocating and upgrading equipment, dealing with labor, and controlling how railroads operated. While many good things came out of the USRA, such as standardized locomotive and freight-car designs, the costs to the government (and thus to the taxpayers) were staggering. After the conflict the railroads were returned to the prior ownership and operation.



It is, I think, significant that twenty-three years later, when the United States became embroiled in a larger conflict where even more troops and equipment needed to be transported to both coasts for shipment overseas, the government decided to let the railroads operate with minimal interference from the government. It would seem that the elected officials realized that corporations run for profit by men whose job it was to operate railroads could provide rail transport more efficiently than government bureaucrats could.



Answer this: who do you trust more with your money, the manager of your local bank or an appointee from a group of local politicians? Who do you think knows more about investing your money for a favorable rate of return, a person whose job is to manage money or a person whose job is to get re-elected? Who is more likely to make sure you get your money back when you want it, someone who has to compete with others providing similar services or someone who can take your money under power of law whenever he or she sees fit?