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Antitrust and the Public Good: Learning From TR's Playbook

March 15, 1998|Bruce J. Schulman | Bruce J. Schulman, an associate professor of history at Boston University, is the author of "From Cotton Belt to Sunbelt."

BOSTON — Bill Gates, the wealthiest American, rode into Washington recently. Appearing before the Senate Judiciary Committee, Gates expressed barely concealed contempt for the hopelessly unwired senators who had summoned him and the out-of-touch political establishment that presumed to regulate the knowledge revolution he and his fellow "nerds" have unleashed.

Gates' performance recalled a similar journey to Washington nearly a century ago. In 1902, President Theodore Roosevelt slapped an antitrust suit on J.P. Morgan, then the most powerful man in the nation. Morgan dominated banking, finance, steel and railroads. He assembled U.S. Steel, the world's first billion-dollar corporation and, like Gates, he did not kowtow to public officials. In fact, U.S. politicians had long deferred to Morgan; during the Depression of 1893, President Grover Cleveland traveled to Wall Street, silk top hat in hand, to beg Morgan to calm troubled financial markets.

When Roosevelt summoned him to Washington, Morgan answered with haughty disdain. The mogul told the president: "Have your man (meaning the attorney general of the United States) talk it over with my man (meaning his attorney), and they can work all this nonsense out." Morgan's conceit that he somehow equaled or even outranked the president of the United States so incensed Roosevelt that he wanted to physically boot the financier out of the White House. The Senate Judiciary Committee might have felt the same way two weeks ago.

Are Gates and his fellow cyber-billionaires latter-day robber barons, intent on building out of the creative combination of ones and zeros the same sort of economic empire that John D. Rockefeller and Andrew Carnegie constructed from oil and steel? Can the industrial America of U.S. Steel and Standard Oil teach us anything about the digital era of Microsoft and Sun Microsystems?

In many ways, Gates does parallel the great turn-of-the-century robber barons. First, Gates shares with his forebears an absolute disdain for government regulation. With his usual bemused Cheshire cat grin, Gates warned the Senate committee that government should not meddle in the computer business. Echoing Morgan's outrage at Roosevelt's "presumption," Gates and his backers asserted that bureaucrats and lawyers, lacking the technical sophistication and entrepreneurial zeal of the West Coast hacker aristocracy, should not even attempt to regulate the creative ferment of Seattle and Silicon Valley. A bunch of elderly senators and Beltway insiders, many of whom could not distinguish an Internet browser from a pair of trousers, rein in the nation's most dynamic and profitable industry?

Second, ruthless competitors though they were, U.S. captains of industry have always been energetic innovators, developing not only new products and technologies, but novel and more efficient business practices as well. Much as Gates exploits Microsoft's mastery of the operating-systems market to scare off competitors and dominate the lucrative applications business, Rockefeller leveraged his control of oil refining to extract concessions from transporters; branch out into distribution and retail, and corner the market on supplies of raw materials.

By forming those monster corporations, the 19th-century robber barons pioneered new management techniques, introducing innovations in accounting, purchasing and marketing. Similarly, Gates has changed the meaning of the term "desktop," placing computers in nearly every office and revolutionizing the ways Americans do business. His company perfected new approaches to product licensing, employee compensation and the workplace environment.

Without the industrial giants of the late 19th century, modern business administration and U.S. industrial supremacy would not have emerged. Without Microsoft, U.S. software engineers would not enjoy the standard platform that helped establish the United States as world leader in computer technology.

Third, both generations of robber barons not only accumulated vast fortunes, they gave them away. Accepting the challenge laid down by Ted Turner's billion-dollar pledge to the United Nations, Gates and other high-tech moguls have initiated a new wave of conspicuous philanthropy on the model of Carnegie, Rockefeller and Andrew Mellon. These great philanthropists built universities and libraries, concert halls and hospitals--and gave away far greater shares of their income than the current generation has disbursed so far.

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