One robber baron’s gamble on railroads
smithsonianmag.com
smithsonianmag.com
> "As a result, the rise of the railroads inspired entirely new forms of corporate securities and governance. They also yielded stupendous levels of fraud and chicanery, wrote business historian Alfred D. Chandler Jr. in his 1965 book, The Railroads: The Nation’s First Big Business. Railroad owners often made more money on construction, land and mineral rights than they did on operating the tracks themselves."
To elaborate:
- The people who ran the railroads would also own the companies constructing the railroads. They would charge ridiculous fees and profit at the expense of shareholders and creditors when they inevitably went bankrupt. In the Credit Mobilier case, tens of millions of (1860) dollars in government money given to the Union Pacific ended up in the hands of the construction company Credit Mobilier because construction costs were inflated by a factor of 2. Of course, some congressmen also secretly had stakes in Credit Mobilier. The looting at the Union Pacific puts PDVSA to shame!
- Land grant gamesmanship: "Land grants to railroads were made in broad belts along the proposed route. Within these belts the railroads were allowed to choose alternate mile-square sections in checkerboard fashion. But until they determined the precise location of their tracks and decided which sections were the choicest selections, the railroads withheld all the land from other users"
- The fact that the people running the railroads were often promoters and had none of their own money at stake resulted in highly inefficient routes being built. They didn't care because they got paid either way, and in fact preferred more construction even if it made the company less profitable.
- Routinely diluting investors to nothing.
- Bankruptcy plans that favored shareholders and directors over creditors (JP Morgan's restructuring plan for the Erie).
The "Erie War" is a combination of a lot of these that is just insane: https://en.wikipedia.org/wiki/Erie_War
It's also worth noting that while there were plenty of opportunists and promoters there were people who were interested in actually building economical railroads like Vanderbilt and the lesser known Ned Harriman.
Also lots of interesting parallels to how privatization in post Soviet states unfolded. Arguably, in the long run (in both cases), the more "rational" operators who weren't just looting and bankrupting ended up with control of the major assets. Though you could also say that in the case of Russia guys like Deripaska got their start from looting.
The Washington State ferry system runs at stupendous levels of losses.
For example, the diesel ferry boats are aging out. The idea is to replace them with electric ferries. Any sane organization would just go buy an electric ferry boat. But not Washington, oh noooo. They have to design their own special electric ferry boat. It gets worse. The boats also must be built in the state, to make the local unions happy. This means that the boat builder gets to charge monopoly prices, which are in the stratosphere.
It's even worse than the local light rail system, where special rail cars had to be "custom designed for the Pacific Northwest" (whatever that means), and so naturally had to cost a fortune.
Nobody was ever able to explain why the PNW needed custom rail cars, and the local media would never even ask the question. Would standard rail cars melt in the rain? Nobody knows.
Regular rail cars don't last a long time under PNW conditions.
Like almost all “our city is Very Special” arguments for buying vastly overpriced custom crap, this argument is absolute bunk.
Move back a little bet, and the problem goes away. Seattle is not rusting away. The light rail tracks are not adjacent to the seashore. I never noticed a particular corrosion problem living in Seattle. The city buses aren't corroding away, either.
It's the railroad version of "artisanal"
Long-haul travel moved via ships, barges, or canals, with a cost advantage of roughly 20:1 over a horse and wagon. In particular, the Erie Canal was absolutely instrumental in opening up the interior of the US, connecting the Hudson River and East Coast to the Mississippi-Ohio-Missouri-Red river systems. A single horse could draw a barge of 20--40 tonnes, vs. a maximum of about one tonne on a cart or carriage. Significant political resistance to railroads came from canal operators.
The Mississippi river itself was effectively the first inland highway of the US, serving as a transportation corridor from Canada to the Gulf of Mexico, from Ohio to Montana, from Virginia (west of the Continental divide) to Texas and Oklahoma Territory.
What railroads could not offer was "last mile" delivery, for which horse-drawn drayage was the only viable option through the first decade of the 20th century. Trains increased demand for, and use of, horses, until automobiles ultimately displaced the latter.
It's possible that investors hadn't drawn this connection in the 1870s, but the reality was that rail and horses reinforced one another.
Big issue with rail is there are huge network effects are impossible to price in pure market. Which is why except for the US and Britain most countries built state owned rail. Britain and the US eventually nationalized or quasi nationalize rail. And attempts at privatization seem to fail.
https://www.filfre.net/2022/01/a-web-around-the-world-part-2...
https://www.filfre.net/2022/02/a-web-around-the-world-part-3...
Eventually, I would expect the amortized costs of a rail network to beat river barges, but that would take a significant time.
Writings I've seen basically say transportation systems fail under the free market eventually.
They just have lots and lots of old infrastructure that they can use and they don't need to share their rail with passenger travel, and their only responsibility is making a profit so they can cut anything away that isn't profitable.
Of course that then just leads to more traffic and trucks on the road. So far worse for the nation as a whole.
Heavy regulation is the usual culprit.
The reality is in most of the world, including all the places with the best railway infrastructure the government is managing or tightly controlling the rail road.
When I see cities of millions in the US not even have a railroad you really have to ask yourself if the perceived inefficiency of government can make things better anyway.
If the government ran the Sahara, within five years there'd be a shortage of sand.
Government can be stupid and wasteful, but they cannot even dream of being more wasteful than a competitive market.
[1]: https://www.bbc.com/future/article/20191108-why-the-world-is...
Guess what? It's also the only part of Amtrak that's ever made a profit.
It's also the only part of the US with that amount of population density. Nobody is going to ride passenger rail through an empty desert in northern Nevada regardless of who owns the tracks.
But then because Amtrak nevertheless operates a line there and subsidizes it with fares from places they actually should be operating, they can't even compete in the North East Corridor where they own the tracks. Metro North has more ridership in a subset of the northeast than Amtrak has nationwide, as well as lower prices and more frequent service.
And Amtrak operates in several places where there is very little other options for people, so operating at a loss at time is perfectly reasonable for a public service. US rail is the least subsidized form of transit.
And the point about Metro North, guess what if the freight railroad owned all those tracks then that would be possible either.
Is there though? Here are the cities with at least 500,000 population on the line between Chicago and Sacramento: Denver. That's it. Omaha has just under 500,000 people. It's over 2000 miles of farmland and desert.
> And Amtrak operates in several places where there is very little other options for people, so operating at a loss at time is perfectly reasonable for a public service.
The people who live in western states have cars. Amtrak is useless because it goes to Chicago but not to the grocery store, which is why they have cars, but their cars can go to Chicago too. Or to the airport, because Chicago is a thousand miles from them.
> And the point about Metro North, guess what if the freight railroad owned all those tracks then that would be possible either.
Sure it would, because you could build entirely parallel tracks there exclusively for passenger rail and it would still be profitable because it's a high population density area where passenger rail actually makes sense.
I was speaking as 'in between in terms of population density' not literally in between geographically.
> The people who live in western states have cars.
They have cars because they have to have cars because there is no alternative. That's the whole point, you need public transit so people don't need to own cars.
And guess what, the poor don't actually have to have cars. And guess what, cars still require lots of government infrastructure that's really costly.
A city to city transit system needs to be integrated with a regional and a local transit system.
I live in a city with 70k people and there is regular service to many villages and cities with 30k people or less.
I recommend you read the blog pedestrianobservations.com, he has a lot of knowledge about transport systems and cost. You can read about his recommendations for US travel including high speed rail there:
https://pedestrianobservations.com/2021/03/22/high-speed-rai...
> it would still be profitable because it's a high population density area where passenger rail actually makes sense.
Passenger rail even in population dense regions is hard to make profitable, specially if you want to have high frequency and allow service from early morning to late night. If you had to build new infrastructure form the ground up its hard to justify.
Thinking about profitability first is just a generally bad idea when talking about infrastructure.
But that's the problem really. Once you get away from the coasts the population density really does fall off a cliff.
> They have cars because they have to have cars because there is no alternative. That's the whole point, you need public transit so people don't need to own cars.
Nobody is building public transit in a farm town. The people there don't even live in the town, they live on their farms and go into the town in their trucks to buy groceries and supplies.
> And guess what, the poor don't actually have to have cars.
If they live in farm country they do.
> And guess what, cars still require lots of government infrastructure that's really costly.
Roads in rural areas are a sunk cost. You need the roads for trucks and there is no incremental cost to using them for cars because there isn't going to be enough traffic to cause congestion regardless.
> A city to city transit system needs to be integrated with a regional and a local transit system.
A city to city transit system is going to have one or two train stops in each city. The city government knows where they are.
> I live in a city with 70k people and there is regular service to many villages and cities with 30k people or less.
How close together are these cities? 30 miles or 300?
> You can read about his recommendations for US travel including high speed rail there:
That map is kind of silly. If you're going to build high speed rail in the eastern US you build it parallel to I-95 from Boston to Miami and I-80 from New York to Chicago, and then they intersect in New York, the largest metro area in the US. Why does he have a separate line going through Springfield and Buffalo? And he has lines intersect in Albany?
Then he's trying to connect a bunch of mid-sized cities in the midwest with non-functional mass transit systems because they're too spread out, where you would get off the train and have nowhere to go.
It's trying to be clever and make it complicated. Two lines parallel to the two highways and you get 90% of the benefit for 30% of the cost.
(It's also adorable that he wants to put high speed rail through Detroit. Come on, guys, think about local culture for a second when you're evaluating prospective adoption.)
And this is kind of my point. You have some sensible kernel of an idea, like hey let's do high speed rail between the biggest cities on the East Coast, and then it turns into this over-complicated boondoggle.
> Passenger rail even in population dense regions is hard to make profitable, specially if you want to have high frequency and allow service from early morning to late night. If you had to build new infrastructure form the ground up its hard to justify.
Offering more frequent service for longer hours makes it easier to build new infrastructure because you have more trains to amortize it over.
You can make something arbitrarily unprofitable by adding unprofitable lines until they consume all of the money from the profitable ones. That's not the same thing as being hard to make profitable.
> Thinking about profitability first is just a generally bad idea when talking about infrastructure.
It's not so much profitability as cost effectiveness. Spending money to build or operate a rail line to the middle of nowhere that nobody is going to use is wasteful and unnecessary. But Amtrak does this.
There are literally many multi million and multi-100k cities away from the coast.
And trains don't need to be connected, its totally reasonable to have train network that mostly covers one area.
> If they live in farm country they do.
But most people don't actually live in 'farm country'. So its completely irrelevant.
I'm gone go with the guy who is a professional transit expert over your opinion.
They're not near each other.
If you draw a 100 mile radius around New York City, inside it you find Yonkers, Stamford, Bridgeport, New Haven, Waterbury, Newark, Jersey City, Paterson, Elizabeth, Edison, Woodbridge, Lakewood, Allentown and Philadelphia. Each of which is a city of at least 100k people. Philadelphia is 1.5M.
If you draw a 100 mile radius around St. Louis, which he's got on his map, you've got... Springfield, IL just at the far edge of the radius with just over 100k people, and that's it.
There is one midwestern US city with a population in the multi-millions, it's Chicago, it's the one I suggested as the terminus of the rail line, and it's still on the coast... of the Great Lakes.
> And trains don't need to be connected, its totally reasonable to have train network that mostly covers one area.
Oh sure, high speed rail along the California coast could make sense even if it's only in California. Though then it's only in California and doesn't require any federal involvement.
High speed rail in Indianapolis though?
> But most people don't actually live in 'farm country'. So its completely irrelevant.
Most of the central United States by area is farm country. It's the thing you have to traverse, laying hundreds or thousands of miles of tracks through, if you want to try to connect a handful of medium-sized midwestern cities.
The fact that not a lot of people live there (i.e. it has a low population density) is a big part of the problem.
> I'm gone go with the guy who is a professional transit expert over your opinion.
Your transit expert is a mathematician with a Wordpress site. Math is neat, but it's also the thing that leads to hubris when the equations are missing a variable you were ignoring because it's the same in coastal cities all over but not in midwestern states where the cities are both smaller and farther apart and the largest employers are the automakers whose employees see your transit solution as a threat to their livelihood and are not going to use it.
It's a classic central planning fallacy. You have some numbers in a spreadsheet but haven't gone to the place you're drawing lines over on a map.
Japan, for example, has a similar problem with the bullet train. There are plenty of sleepy towns that would make little sense to stop at between Tokyo and Osaka.
They still have about 15 stops on that line anyway, and you have to take the slowest bullet trains to get there. But the stops have totally changed life in these cities.
Perhaps there's a similar case to be made for Northern Nevada?
There isn't.
Tokyo is ~300 miles from Osaka. If you go 300 miles from Sacramento, you're not in Osaka, population 2.7 million, you're in Winnemucca, population under 9000. The first meaningful destination on the far side of California is Salt Lake City, population ~200,000, 650 miles away in a different time zone. And that is not a big city, it's just the only thing anywhere near there.
To get to a proper metropolitan area you're going to Denver, more than 1100 miles from where you started. It's too far away.
As a result attempts to do such things at the federal level in the US fall to corruption and inefficiency in ways that don't happen to the same extent in smaller countries.
The population of Pennsylvania is larger than the population of Sweden. More people live in Minnesota than Ireland. California has about the same number of people as Canada. The things done by the governments of Sweden and Ireland and Canada were meant to be done by the governments of Pennsylvania and Minnesota and California.
But people keep trying to do them at the level of the United States Federal Government, which has grown into the world's largest bureaucracy by several metrics and regularly demonstrates its inability to operate with competence or efficiency. Comparisons to what happens in some individual EU member state do not apply, and you all are invited to not make the same mistake by attempting to do such things at the level of the EU.
Factually speaking the US federal spending is comparable to that of other nations. Its larger then that of Switzerland for example.
You can't seriously argue that the federal government can't control the overall rail network, when they control the medical sector.
And then the whole point falls flat on it face, when you realize that both China and India are improving their rail sector very quickly. India a democracy even more decentralized then the US have moved to almost 100% electric freight transport and have massively upgraded their network in recent years.
The simple reality is, the way US history has played out, simply saying 'the federal government' shouldn't do X makes no sense when the reality is Minnesota will never act like Ireland in things like transportation policy. The federal government has long ago taken power, at point the federal government paid 80% of the cost of building new highways.
Even if you want more control by the states, do actually push railways forward, you need central government leadership to bring states together and start to change the approach. The states would be willing to do more if it was aligned with a federal program.
It's not that they can't attempt to do it, it's that they can't do it efficiently. The US has some of the highest healthcare costs in the world.
> And then the whole point falls flat on it face, when you realize that both China and India are improving their rail sector very quickly.
India's population density is 1200% that of the US. To make a rail network unprofitable with that much population density would require actual malice. It's the same reason Amtrak turns a profit in the northeast.
> Even if you want more control by the states, do actually push railways forward, you need central government leadership to bring states together and start to change the approach. The states would be willing to do more if it was aligned with a federal program.
The real problem here is the attempt to treat it like a single country, as if masses of people are going to want to take a train from Miami to San Francisco. It's too much distance, people who want to go there are going to fly.
Where trains work are mostly in the places they already are. High density metro areas like New York and DC, which already have them.
There are some that don't. Houston could use a functioning subway system. But that doesn't require federal involvement. It's even more of a matter for the city than the state. The people there apparently don't want it -- oil country and they like their cars. But they're the ones who have to sit in traffic.
You’re right, the fact that America’s government-run single-payer healthcare system is so expensive is proof that the US government can’t do things efficiently. If only we let efficient private companies handle health insurance instead.
Oh wait…
> The real problem here is the attempt to treat it like a single country, as if masses of people are going to want to take a train from Miami to San Francisco. It's too much distance, people who want to go there are going to fly.
No serious person things Miami-SF is a viable high speed rail route. But the thing is, cities in the US are not evenly distributed—they are regionally clustered. Thus there are substantial regional HSR networks that do pencil out, even if the fantasy coast-to-coast ones do not.[0] The math behind this is pretty straightforward and has a lot to do with network effects which many here should be familiar with.[1][2]
[0] https://pedestrianobservations.com/2021/03/22/high-speed-rai...
[1] https://pedestrianobservations.com/2020/02/13/metcalfes-law-...
[2] https://pedestrianobservations.com/2020/12/20/metcalfes-law-...
The claim was that the federal government does a competent job of regulating US healthcare. But US healthcare costs more than both public and private systems in any other country, so clearly they've messed it up pretty bad. And the high costs have quite a lot to do with the FDA, the tax code, the patent system, medical licensing boards and malpractice lawsuits, none of which is a private company.
> But the thing is, cities in the US are not evenly distributed—they are regionally clustered. Thus there are substantial regional HSR networks that do pencil out, even if the fantasy coast-to-coast ones do not.
Rail networks make sense in the North East Corridor or the coastal areas generally.
But meanwhile Amtrak is operating passenger rail through deserts and farmland, and overcharging passengers in other areas to do it.
This one's under construction right now, for example: https://en.wikipedia.org/wiki/Rail_Baltica
They are very profitable doing a small number of things. But an increase amount of actual transport needs has been moving to trucks (on federal subsided highways).
Given that those railroads have almost no competition from personal transit and that the US as a country is perfect for railroading, the overall market share the railroads have is astonishing small.
And the borders between the 4 monopolies causes lots of problems.
If a central authority took control and stopped with the attitude of cut everything out that isn't highly profitable, the US could leverage its rail road infrastructure far better. And would save money from fewer truck on the road (and the inherent green house effect).
The railroads profits alone could finance a nation wide rail electrification program.
Much delay, neglect of oversight, scope creep, fraud, misaligned interests and lack of drive. I had no idea Wikipedia could tell such good stories!
“As a result, the rise of the railroads inspired entirely new forms of corporate securities and governance. They also yielded stupendous levels of fraud and chicanery, wrote business historian Alfred D. Chandler Jr. in his 1965 book, The Railroads: The Nation’s First Big Business”
1. Decentralized currency
2. Immutable ledger
3. Transparent transactions
4. Streamlined transactions (no T+2 or T+1 settlement)
5. Borderless transactions (between people in other countries)
6. Microtransactions (transactions a tiny fraction of a cent)
7. Smart contracts
These are innovations, the question is do they solve real world problems without creating more? For example, decentralization is great until you lose your keys or the government wants to shut down money laundering.
I have yet to see a real world benefit from blockchain / cryptocurrency technology. web3 is the closest to reality but I feel like it goes against human nature and the concept of decision fatigue. I don't want Netflix to prompt me, "Want to watch the next episode for 4 cents?"
Neither does netflix. Vast amounts of under-used subscriptions paid at a full rate would suddenly get a huge discount. At the other end they wouldn't be getting much more revenue out of those that watch more than average because they'd likely cut down.
There must be plenty of ways of making a microtransaction in ways customers don't mind, many of those haven't been invented yet. I have no idea why blockchain is necessary for microtransactions nor why we all have to pay a microtransaction sized spending tax to the owners of the payment systems every time we spend our money now. Will blockchain fix this? I have my doubts about blockchain but damn, someone should. It seems popular amongst the powerful that they can cancel someone's ability to raise funds on the basis of an accusation alone. Most people hate that idea as stated, except for "$that_guy who I've just heard of and is clearly a creep so that's fine." Who is it today? How did that work out in the past? Maybe it will be more like justice this time than before? Who knows?
I've been a big proponent of crypto over the years and think its pretty cool technology. I just can't think of any problem it solves that isn't better solved by some other solution.
The usual rebuttal to crypto is that something else is cheaper, faster, more safe, more convenient. And within the crypto space itself, the worst actors have sold themselves on being cheaper, faster, more safe, more convenient. And then, much like the early railroads, they exploit anyone who buys in, and do nothing to deliver on the principled part of the tech.
Well, you do this for a while, and it does seem like it's scams everywhere. But the bull cycle creates a round of scattershot investments in the core tech. Some of them become survivors and succeed at some kind of pro-social function, if only in proof-of-concept. We can even extend this cycle back to the pre-Bitcoin electronic cash ventures. Bitcoin proof-of-concepted the idea that it was actually possible. Of course now it's a chain inhabited by laser-eyed prospective future masters of the universe. But the people working on the tech have largely moved on from it.
Crypto's real allure as a tech is not that it has to be good at the things that are already good(as much as that tends to be the inclination), it has to be not bad at the things that are presently hopeless and normalized as unsolvable nature-of-man type problems. And it has to be roughly as boring as a train running on time.
No prompt needed - just as your electricity company doesn't prompt you before you watch TV either. You trust the rate to be reasonable and you just get billed for it.
This pricing model is the consumer's ideal pricing model for most things - pay close to what it actually costs at a reasonable rate - because that's the most efficient and keeps decision fatigue minimal. We just don't have it for everything because the industry hasn't matured yet.
Railroads, scams aside, were extremely important for the economy for at least 50 years after this scam.
Same with crypto? Really? And NFTs, too?
In twenty years the use of public blockchains in everyday finance and trade will be mundane. Former crypto skeptics will explain that their earlier complaints pertained only to the crazy things happening in 2020, not the boring & ordinary things that crypto is used for in 2040. And meanwhile, nearly everything "financial" involving counter-parties will happen on-chain.
Why? Because public blockchains eliminate counter-party risk for a large number of transactions, provide unparalleled transparency, and give anyone with an internet connection access to global financial markets, enfranchising billions of people who are otherwise locked out due to unsatisfactory local conditions. Blockchain tech will make developed economies more efficient, and will accelerate development world-wide.
If you don't agree that public blockchains actually do anything useful, then you'll probably object to the railroad analogy. But if you see value in blockchains, then there are clear parallels:
• Initial cost of the build-out being funded by early investors who might not be around to realize the long-term benefits of the technology.
• Speculative energy attracting scammers alongside legitimate operators.
• Long-term benefits not being obvious after the first wave of investment dies down.
• The true value of the technology only being realized when network effects are fully realized, years after the technology's introduction.
Saying this doesn’t make it self evident. What exact counter party risk is eliminated by blockchain technology? I know there’s alot of hype around the public ledger, but what transparency does it provide beyond that? It’s not like I audit the entire trail of any arbitrary transactions, which is usually where things like that come into play.
What about fraud?
Also, how’s blockchain better than existing and ongoing open banking projects? They’re enfranchising people today. Look at all the good micro loans have done in developing nations for instance
Some specific examples currently available:
• Atomic swaps, where traded assets are immediately moved between accounts upon execution of the trade, eliminate the possibility that settlement will not complete.
• Real-time commerce, where merchants accept payments in a format that can immediately be turned around and spent, without waiting for reimbursement from third-party networks.
• Loans backed by on-chain collateral, such that default triggers immediate transfer of collateral, eliminates the risk that collateral may not be obtainable upon default, or that the value of collateral may fall too far before the loan is liquidated.
> It’s not like I audit the entire trail of any arbitrary transactions, which is usually where things like that come into play.
Open databases can be digested and analyzed by open-source tools, and by trusted independent third-parties. Closed databases cannot be analyzed by anyone except for the database owner and government authorities. Some government authorities are trustworthy, others are under-resourced, incompetent or corrupt. Even if you personally won't read the full history, you benefit from other people being able to do so.
> Also, how’s blockchain better than existing and ongoing open banking projects? They’re enfranchising people today.
Problems can have multiple good solutions! Still, open API access is different from open access to underlying data and algorithms. Open APIs and blockchains can co-exist and benefit from each other.
> What about fraud?
Fraud is a complex topic. The traditional financial system has seen lots of fraud over the years (think about what we witnessed in 2008). Credit card fraud is also a rampant problem that is only managed by large financial firms heavily surveilling payment networks.
There are fraud vectors that blockchain networks are more susceptible to—just like there are other fraud vectors that blockchain networks are less susceptible to than traditional financial systems.
In my view, the greatest fraud risk in crypto comes from the issuance of tokens that are questionable in some way—a risk that I think can be eliminated if strong controls are implemented regarding the issuance of tokens on-chain.
Cash already does that and so does my chip n pin card.
There's an advertisement showing in the UK that lampoons crypto. A bloke buys some onions from a stall (ie direct sale from field to consumer) and he is asked which crypto he will use to pay with. The putative buyer says he has a fiver (cash).
Blockchain transactions require time to work. The ledger has to be updated correctly by agreement with the rest of the network to work and that takes time. I can do a tap to pay and my phone beeps within a very few seconds to note a transaction.
Does the merchant who accepts your chip n pin payment receive the funds in their account immediately after they accept your payment? In the US, merchants have to pay fees and/or interest to get same-day access to that money—because such access effectively functions as an advance on receivables. In most countries, same-day settlement is completely unavailable.
Cash isn't much better. Can a store owner pay for inventory with cash? Maybe some inventory, but most things need to be paid for electronically. Can a retailer process payroll using cash? Turning cash into electronic money is a hassle and a security nightmare. Armored cars exist for a reason, and they aren't free.
Crypto payments can be spent immediately upon receipt. No settlement delay, no need for armored cars.
> There's an advertisement showing in the UK that lampoons crypto. A bloke buys some onions from a stall (ie direct sale from field to consumer) and he is asked which crypto he will use to pay with. The putative buyer says he has a fiver (cash).
Funny. What is the advertisement selling?
> Blockchain transactions require time to work. The ledger has to be updated correctly by agreement with the rest of the network to work and that takes time. I can do a tap to pay and my phone beeps within a very few seconds to note a transaction.
This comment reminds me of the Kodak executives who thought there would never be a market for the digital camera the company had invented, because its resolution was so much lower than that of film.
Your information is out-of-date. Bitcoin is slow. Next-gen crypto is fast. Personally, I'm partial to the lightning network, which finalizes payments in seconds.
Yes they do. I also get notified about a Chip n PIN transaction or an account to account transfer before I've turned around and walked off (I hear my phone beep).
The advert is for onions ... OK for a mobile phone company.
> In twenty years the use of public blockchains in everyday finance and trade will be mundane. Former crypto skeptics will explain that their earlier complaints pertained only to the crazy things happening in 2020, not the boring & ordinary things that crypto is used for in 2040.
While this is certainly possible, it is not assured. We KNOW that railroads ended up being very important; we can, at best, guess that crypto will be as important for our financial systems.
I am also skeptical of White if he is implying that access to capital was a central limiting factor in the Civil War; a more focused problem was that by far the largest industrial complex in the South was located in Baltimore, Maryland. Since neither opponent, whatever its funding, was in a position to be building new cities during the conflict, the de jure loss of its largest city limited the Confederacy's production of war materiel. In fact in a counterfactual USA where the robber baron Gilded Age had been the first Renaissance of a seceded CSA, I can imagine that a lot of the period's economic development and chicanery which occurred in Philadelphia, New York and New Jersey would have been located in Maryland and of course Virginia.
> Cooke had donated millions of dollars to Grant’s winning re-election bid for the presidency in 1872. Before that, Cooke had grown immensely wealthy by building an investment network that sold more than $1.6 billion in Civil War bonds to small-time investors across the North. Grant had lauded him for ensuring the Union’s successful campaign against the Confederacy, which had far less capital.
> Cooke later harnessed his pioneering direct-to-consumer investment concept to offload bonds in a scheme selling the latest technology—railroads—to the next generation of individual investors. “It was like selling to crypto investors today,” says historian Richard White, author of Railroaded: The Transcontinentals and the Making of Modern America. “These investors were basically living off of the promises of famous people they had trusted before.”
Railroads are a physical device for logistical transportation. This has a very obvious value prop.
Crypto is an "alternative" "financial" "system", which is missing the key components of regulation and trust that back all functioning financial systems.
Hard to draw the parallel for me.
I thought that those are supposed to be the key components of crypto. You trust that it is regulated by mathematics, the market, and infrastructure, rather than relying on fiat.
The 1873 Depression started with the Vienna Stock Exchange. Article completely fails to mention Oakes Ames, the Lincoln-recruited boss of the Union Pacific Railroad, which precipated the Crédit Mobilier scandal (i.e. charging the US $94M for the $50M railroad.)
Today a monument to Ames and his brother still exists on the empty open plains of southern Wyoming: a 60x60x60-foot granite pyramid, 20 miles from Laramie. The UP board hired 85 men to build it in 1875; President Hayes attended the dedication ceremony.
Not the somewhat later broadcast operation.
Gordon says. “We get crashes on Wall Street about every 20 years, because that’s how long it takes people to forget what happened the last time. A generation of new guys think they’re as smart as they come, and then it turns out that they’re human, like the rest of us.”
this is like saying that electricity was like crypto.
Railroads had an undeniable economic value. So did all the optical fiber that was laid during the dot-com boom. Eventually it got used.
https://www.cnet.com/tech/mobile/is-fiber-optic-construction...
I have fiber to my house now. Crypto, on the other hand, is more like 8-track tape. Or laser disks.
There was a nearly 20 year period, from the mid-1960s through the mid-1980s, where 8-track tapes were an option, and for much of that, the option for portable recorded music in automobiles, until displaced first by the compact cassette tape (introduced at about the same time, but lagging 8-track through the early-to-mid 1980s), and later the CDROM. The lifespan of 8-track in automobile sound systems isn't much different from that of the CDROM, roughly 1990--2010, when it was in turn supersceded by iPod and iPhone connections.
Similarly, LaserDisc (not LaserDisk or Laser Disk as we've both been writing) afforded tremendously superior video and audio quality as compared with VHS or BetaMax video tape. It also had a considerable lifetime, from its introduction in 1978 through the mid-1990s, ultimately being replaced by the DVD after its introduction in 1995.
Again: both formats provided useful function at the time and were not simply vehicles for fraud and crime as cryptocurrency overwhelmingly seems to be. Yes, both suffered from technical and/or market limitations, but that doesn't negate the actual utility delivered.
I never had either one. I have ridden on trains, though /s
Incidentally, is there any ranking, ordering, or classification of technologies you'd apply or derive from this? E.g., what unites and/or divides trains, 8-track, LaserDisc, and/or cryptocurrencies, or other technologies you'd care to add?
(Something of a side interest, but you're getting close to it.)
There IS the phenomenon of Survivor Bias, which I've mentioned before. "Oh, look! They're making fun of me! But they made fun of Einstein, too!"
How about all the people they made fun of and who've been forgotten? The people who deserved to be made fun of?
(I have my own framework, but like to see what other people come up with without prompting or suggestion.)
The "they laughed at Einstein" meme really wasn't what I was looking for.
The meme was just about Survivor Bias, which people tend to suffer from when taking examples from history.
If you're interested: <https://news.ycombinator.com/item?id=34853768> <https://news.ycombinator.com/item?id=21867978>.
On survivorship: technology often functions as Wittgenstein's Ladder. Even failed branches are often critical in arriving at successful ones.
Magnetic tape and LaserDisc both informed subsequent / parallel storage technologies: digital tape, spinning rust, and optical storage (CD, DVD, BluRay, etc.), as well as they hybrid magneto-optical format (somewhat dead now, but significant at the time).