Government Involvement in Private Enterprise

“The Great Northern[railroad, built by James Hill] was a famously efficient and profitable operation; by contrast, the Union Pacific and Central Pacific [built with government money] were so inefficient that they were bankrupt as soon as they were completed in 1869.

‘Our own line in the North,’ Hill boasted, ‘was built without any government aid, even the right of way, through hundreds of miles of public lands, being paid for in cash.’ Hill (naturally) resented the fact that his rivals were receiving millions of dollars in government subsidies. In an 1893 letter to a friend he complained, ‘The government should not furnish capital to these companies, in addition to their enormous land subsidies, to enable them to conduct their business in competition with enterprises that have received no aid from the public treasury.’

Whenever government subsidizes any industry, the inevitable result is inefficiency and corruption…When private investors have their own funds at stake, they can be expected to do everything possible to assure that the funds are used economically…On the free market…railroads are built in a way that will serve consumers most effectively. If not, profits will decline. Consumer sovereignty prevails over the whims of politicians.”

From The Real Lincoln by Thomas DiLorenzo, pp. 247-249

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