Popular histories present the Boston Tea Party as a rebellion against taxes. Yet what the colonists objected to more than anything was the idea of an all-powerful corporate middleman regulating commerce. They viewed the 1773 protest in Boston Harbor as a victory for liberty and a blow against the British East India Company’s trade monopoly.
That corporation owed its dominance not to any proprietary advantage but to an exclusive British government charter. The artificial nature of this power was made clear soon after the Congress of the new United States signed a peace treaty with Britain. Six weeks later, the American ship Empress of China sailed from New York, bound for Canton. When the ship returned, its traders sold tea and porcelain on the open market. Without the active backing of the British state, the East India Company could not stop the sale—let alone determine who sold what, or where and how they sold it, in America.
But around the middle of the nineteenth century, Americans began to develop technologies that could not be broken into component pieces. This was especially true of the railroad and the telegraph. These expensive and complex networks were built across vast areas of land and required large teams of people to operate. This made the earlier solution to monopolies—dissolution—impossible. If Americans planned to take full advantage of these technological advances, they would have to regulate the actions of the corporations that controlled them.
Such corporations posed one overarching challenge: they charged some people more than others to get to market. They exploited their control over an essential service in order to extort money, and sometimes political favors. The system of “discriminations made between individuals . . . is the most serious evil connected with our present methods of railroad management,” the Yale professor Arthur T. Hadley explained in 1885. “Differences are made which are sufficient to cripple all smaller competitors. . . and concentrate industry in a few hands.”
Americans found the answer to this problem in common law. For centuries, the owners of ferries, stagecoaches, and inns had been required to serve all customers for the same price and in the order in which they arrived. In the late nineteenth century, versions of such “common carrier” rules were applied to the new middleman corporations.
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