A Story of Monopoly and Regulation From Mark Twain

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In his memoir Life on the Mississippi, Mark Twain has an interesting anecdote about the emergence of a monopoly.

This was when he was a young steamboat pilot. It started with the development of a union, to protect wages at a time when there was an amply supply of steamboat pilots. Initially, the union came to attract weaker applicants.

For a long time wages had been two hundred and fifty dollars a month;
but curiously enough, as steamboats multiplied and business increased,
the wages began to fall little by little. It was easy to discover
the reason of this. Too many pilots were being ‘made.’ It was nice
to have a ‘cub,’ a steersman, to do all the hard work for a couple
of years, gratis, while his master sat on a high bench and smoked;
all pilots and captains had sons or nephews who wanted to be pilots. By and
by it came to pass that nearly every pilot on the river had a steersman.
When a steersman had made an amount of progress that was satisfactory
to any two pilots in the trade, they could get a pilot’s license for him
by signing an application directed to the United States Inspector.
Nothing further was needed; usually no questions were asked, no proofs
of capacity required.

Very well, this growing swarm of new pilots presently
began to undermine the wages, in order to get berths.
Too late–apparently–the knights of the tiller perceived
their mistake. Plainly, something had to be done, and quickly;
but what was to be the needful thing. A close organization.
Nothing else would answer. To compass this seemed an impossibility;
so it was talked, and talked, and then dropped.
It was too likely to ruin whoever ventured to move
in the matter. But at last about a dozen of the boldest–
and some of them the best–pilots on the river launched
themselves into the enterprise and took all the chances.
They got a special charter from the legislature, with large powers,
under the name of the Pilots’ Benevolent Association;
elected their officers, completed their organization,
contributed capital, put ‘association’ wages up to two hundred
and fifty dollars at once–and then retired to their homes,
for they were promptly discharged from employment.
But there were two or three unnoticed trifles in their by-laws
which had the seeds of propagation in them. For instance,
all idle members of the association, in good standing,
were entitled to a pension of twenty-five dollars per month.
This began to bring in one straggler after another from the ranks
of the new-fledged pilots, in the dull (summer) season.
Better have twenty-five dollars than starve; the initiation
fee was only twelve dollars, and no dues required
from the unemployed.

Also, the widows of deceased members in good standing could
draw twenty-five dollars per month, and a certain sum for each
of their children. Also, the said deceased would be buried
at the association’s expense. These things resurrected all
the superannuated and forgotten pilots in the Mississippi Valley.
They came from farms, they came from interior villages, they came
from everywhere. They came on crutches, on drays, in ambulances,–
any way, so they got there. They paid in their twelve dollars,
and straightway began to draw out twenty-five dollars a month,
and calculate their burial bills.

By and by, all the useless, helpless pilots, and a dozen first-class ones,
were in the association, and nine-tenths of the best pilots out of it
and laughing at it. It was the laughing-stock of the whole river.
Everybody joked about the by-law requiring members to pay ten per cent.
of their wages, every month, into the treasury for the support
of the association, whereas all the members were outcast and tabooed,
and no one would employ them. Everybody was derisively grateful
to the association for taking all the worthless pilots out of the way
and leaving the whole field to the excellent and the deserving;
and everybody was not only jocularly grateful for that, but for a
result which naturally followed, namely, the gradual advance of wages
as the busy season approached. Wages had gone up from the low figure
of one hundred dollars a month to one hundred and twenty-five, and in
some cases to one hundred and fifty; and it was great fun to enlarge
upon the fact that this charming thing had been accomplished by a body
of men not one of whom received a particle of benefit from it.

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But then there came a need to hire pilots, even if they were in the association. Once they got their jobs, they made life harder for anyone from outside.

Winter approached,
business doubled and trebled, and an avalanche of Missouri,
Illinois and Upper Mississippi River boats came pouring down
to take a chance in the New Orleans trade. All of a sudden
pilots were in great demand, and were correspondingly scarce.
The time for revenge was come. It was a bitter pill to have to
accept association pilots at last, yet captains and owners agreed
that there was no other way. But none of these outcasts offered!
So there was a still bitterer pill to be swallowed:
they must be sought out and asked for their services.
Captain —- was the first man who found it necessary to take
the dose, and he had been the loudest derider of the organization.
He hunted up one of the best of the association pilots and said–

‘Well, you boys have rather got the best of us for a
little while, so I’ll give in with as good a grace as I can.
I’ve come to hire you; get your trunk aboard right away.
I want to leave at twelve o’clock.’

‘I don’t know about that. Who is your other pilot?’

‘I’ve got I. S—-. Why?’

‘I can’t go with him. He don’t belong to the association.’

‘What!’

‘It’s so.’

‘Do you mean to tell me that you won’t turn a wheel with one of the very best
and oldest pilots on the river because he don’t belong to your association?’

‘Yes, I do.’

‘Well, if this isn’t putting on airs! I supposed I was doing you
a benevolence; but I begin to think that I am the party that wants
a favor done. Are you acting under a law of the concern?’

‘Yes.’

‘Show it to me.’

So they stepped into the association rooms, and the secretary
soon satisfied the captain, who said–

‘Well, what am I to do? I have hired Mr. S—- for the entire season.’

‘I will provide for you,’ said the secretary. ‘I will detail a pilot
to go with you, and he shall be on board at twelve o’clock.’

‘But if I discharge S—-, he will come on me for the whole season’s wages.’

‘Of course that is a matter between you and Mr. S—-, captain.
We cannot meddle in your private affairs.’

The captain stormed, but to no purpose. In the end he had to discharge
S—-, pay him about a thousand dollars, and take an association pilot
in his place. The laugh was beginning to turn the other way now.
Every day, thenceforward, a new victim fell; every day some outraged
captain discharged a non-association pet, with tears and profanity,
and installed a hated association man in his berth. In a very
little while, idle non-associationists began to be pretty plenty,
brisk as business was, and much as their services were desired.
The laugh was shifting to the other side of their mouths most palpably.
These victims, together with the captains and owners, presently ceased
to laugh altogether, and began to rage about the revenge they would take
when the passing business ‘spurt’ was over.

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Soon all the laughers that were left were the owners
and crews of boats that had two non-association pilots.
But their triumph was not very long-lived. For this reason:
It was a rigid rule of the association that its members should never,
under any circumstances whatever, give information about the channel
to any ‘outsider.’ By this time about half the boats had none
but association pilots, and the other half had none but outsiders.
At the first glance one would suppose that when it came
to forbidding information about the river these two parties
could play equally at that game; but this was not so.
At every good-sized town from one end of the river to the other,
there was a ‘wharf-boat’ to land at, instead of a wharf or a pier.
Freight was stored in it for transportation; waiting passengers slept
in its cabins. Upon each of these wharf-boats the association’s
officers placed a strong box fastened with a peculiar lock which was
used in no other service but one–the United States mail service.
It was the letter-bag lock, a sacred governmental thing.
By dint of much beseeching the government had been
persuaded to allow the association to use this lock.
Every association man carried a key which would open these boxes.
That key, or rather a peculiar way of holding it in the hand
when its owner was asked for river information by a stranger–
for the success of the St. Louis and New Orleans association
had now bred tolerably thriving branches in a dozen neighboring
steamboat trades–was the association man’s sign and diploma
of membership; and if the stranger did not respond by producing
a similar key and holding it in a certain manner duly prescribed,
his question was politely ignored.

It’s an interesting anecdote about the rise of a monopoly, albeit one that started at the bottom.

About Thomas Mets

I’m a comic book fan, wannabe writer, politics buff and New Yorker. I don’t actually follow baseball. In the Estonian language, “Mets” simply means forest, or lousy sports team. You can email me at mistermets@gmail.com
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