A proper understanding of capitalism is sorely lacking today. In order to gain such understanding, it is best to start with a true story that captures the spirit and sense of life of capitalism. Then it is possible to extract the deeper principles it embodies and the intellectual causes that give rise to it.
In the early 19th century, Robert Fulton, the inventor of the steamboat, held a monopoly granted by the state of New York to run all steamboat traffic in that state. The state-franchised monopoly legally prevented competition from entering the field, thereby keeping prices artificially high to the detriment of the customers, who detested the monopoly.
But in early 19th century America, men believed in their inalienable rights as free U.S. citizens, and did not bow compliantly to arbitrary government authority. In 1817, a New Jersey businessman hired 23 year old Cornelius Vanderbilt to ferry passengers between New Jersey and New York City in a direct challenge to the monopoly’s power. For the next six years, a cat-and-mouse game ensued between the monopoly and its challenger, with the young Vanderbilt at the epicenter of the struggle.
Vanderbilt hoisted a flag on the masthead of his boat, the Bellona, reading: “New Jersey must be free!” and for sixty consecutive days eluded capture by authorities who sought to arrest him and confiscate his vessel. To the delight of the passengers who loved his lower-priced service, he used every possible trick or subterfuge to avoid capture. He hid near the gangplank, then scurried off when police officers boarded so their papers could not be served. He constructed a secret closet in which to hide, so when law officers boarded him in the bay they found only a young woman steering the boat, whom they questioned to the taunts and derision of the other passengers.
The upshot was that in 1824, the Supreme Court