Friday, December 1, 2006

"The Public Be Damned!"

Who said it and what does it mean?

The phrase is attributed to William Henry Vanderbilt, railroad magnate, on October 8, 1882. Vanderbilt had just arrived in Chicago from Michigan City, Indiana and was about to eat supper in his private railroad car when a young freelance reporter, Clarence Dresser, invaded his domain and demanded that Vanderbilt give him an immediate interview on the topics of railroad financing and the guidelines used for establishing freight rates.

Vanderbilt said he would talk to him after supper.

Dresser persisted: "But I have a deadline to meet, and the public has a right to know."

Whereupon Vanderbilt uttered his famous four words and told him to get out.

Dresser tried to sell the encounter to the Chicago Daily News, but they turned it down. Then he rewrote the story and sold it to the Tribune. Here is what they printed:
“Does your limited express [between New York and Chicago] pay?” Dresser asked.

“No, not a bit of it. We only run it because we are forced to do so by the action of the Pennsylvania Road. It doesn’t pay expenses. We would abandon it if it was not for our competitor keeping its train on.”

“But don’t you run it for the public benefit?”

“The public be damned. What does the public care for the railroads except to get as much out of them for as small a consideration as possible. I don’t take any stock in this silly nonsense about working for anybody’s good but our own, because we are not. When we make a move we do it because it is our interest to do so, not because we expect to do somebody else some good. Of course we like to do everything possible for the benefit of humanity in general, but when we do we first see that we are benefiting ourselves. Railroads are not run on sentiment, but on business principles and to pay, and I don’t mean to be egotistic when I say that the roads which I have had anything to do with have generally paid pretty well.”
Vanderbilt biographer William A. Croffut had another version, published in 1886:
“Why are you going to stop this fast mail-train?” Dresser asked in this version.

“Because it doesn’t pay. I can’t run a train as far as this permanently at a loss.”

“But the public find it very convenient and useful. You ought to accommodate them.”

“The public? How do you know they find it useful? How do you know, or how can I know, that they want it? If they want it, why don’t they patronize it and make it pay? That’s the only test I have of whether a thing is wanted—does it pay? If it doesn’t pay, I suppose it isn’t wanted.”

“Mr. Vanderbilt, are you working for the public or for your stockholders?”

“The public be damned! I am working for my stockholders! If the public want the train, why don’t they support it?”
On October 17, 1882, Tribune writer Rufus Hatch wrote a piece savaging Vanderbilt. Hatch claims that
Mr. Vanderbilt take the position that he has the same right to run his railways on selfish, exacting principles as the private merchant has. He forgets that his rights come from the people, when he says, "The public be damned!"
Isn't it nice to know where our rights come from?

Hatch stated further that
When the reporter [Dresser] asked his views on Railroad Commissioners, the despot [Vanderbilt] answered, "They usually have to be bought up, whenever legislation favorable to the road is needed; they are usually ignorant persons."

"The Railroad Commissioners be damned."
Hatch's hatchet job popularized the four-word response.

Vanderbilt claimed he worked for himself and his stockholders. If we take "the public" to mean those who pay to use his railroad, how is their welfare served, if at all? According to Ludwig von Mises:
In the capitalist system of society's economic organization the entrepreneurs determine the course of production. In the performance of this function they are unconditionally and totally subject to the sovereignty of the buying public, the consumers. If they fail to produce in the cheapest and best possible way those commodities which the consumers are asking for most urgently, they suffer losses and are finally eliminated from their entrepreneurial position. Other men who know better how to serve the consumers replace them.
So when Vanderbilt uttered "the public be damned," was he claiming indifference to his customers' preferences? When he died in 1885 William H. Vanderbilt was one of the richest men in the world. Money, sometimes great fortunes, can be made through political privileges and protections. The same can be achieved without political favors. James J. Hill was one of the 19th century's greatest examples of market success.

Vanderbilt tried to use political means to eliminate competition. Yet, as John Steele Gordon concluded:
. . . William Henry Vanderbilt’s purported words, while hard-nosed and certainly impolitic, are embedded in inescapable economic truth. Both father [Cornelius Vanderbilt] and son [William Vanderbilt] thought the key to success was to seek profits by giving the public good service, but both knew full well that companies that seek to serve the public rather than make a profit will not be around to do either for very long.

1 comment:

Anonymous said...


“The Remissness of our People in Paying Taxes is highly blameable; the Unwillingness to pay them is still more so. I see, in some Resolutions of Town Meetings, a Remonstrance against giving Congress a Power to take, as they call it, the People's Money out of their Pockets, tho' only to pay the Interest and Principal of Debts duly contracted. They seem to mistake the Point. Money, justly due from the People, is their Creditors' Money, and no longer the Money of the People, who, if they withold it, should be compell'd to pay by some Law.
“All Property, indeed, except the Savage's temporary Cabin, his Bow, his Matchcoat, and other little Acquisitions, absolutely necessary for his Subsistence, seems to me to be the Creature of public Convention. Hence the Public has the Right of Regulating Descents, and all other Conveyances of Property, and even of limiting the Quantity and the Uses of it. All the Property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other Laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition. He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it. “
---- Benjamin Franklin, December 25, 1783, in a letter to Robert Morris.