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Editor, The Wall Street Journal

200 Liberty Street

New York, NY 10281


To the Editor:


John Steele Gordon explains "Why Government Can't Run a Business" (May 20). I learned from the historian Burt Folsom one of the best examples of this truth – namely, Congress's mid-19th-century subsidization of Edward K. Collins' steamship company.


In 1847 Collins persuaded Congress to spend several million dollars to support his effort to build a fleet of luxurious steamships for carrying passengers to and from Europe. Constantly over budget – and frequently seeking and receiving more subsidies – Collins' ships were shoddy. Two of them sank, killing nearly 500 persons. When Congress finally wised up and stopped these subsidies, Collins' steamship business went bankrupt.


At the same time, Cornelius Vanderbilt constructed and operated his own steamships without subsidies. Compared to ships in the Collins fleet, Vanderbilt's vessels were much more sea-worthy, fuel-efficient, and profitable. The unsubsidized Commodore Vanderbilt out-competed the subsidized Edward Collins.


Sincerely,

Donald J. Boudreaux

Don Boudreaux is the Chairman of the Department of Economics at George Mason University and a Business & Media Institute adviser.