This post is an edited version of a paper I wrote as a submission to the FTC Sharing Economy Consultation process; in part because I really like the FTC process of consulting widely on matters of current competition and consumer protection and also because I had an issue I wanted to explore and needed an excuse to do so.
The issue I wanted to dig into was what appeared to be a footnote in history; the 1635 ban in London on the nascent coach-hire business (the predecessor of the taxi trade) at the behest of the Thames Watermen. Given the debates about how industry and regulators should respond to new technologies and firms characterised by the sharing and on-demand economies the banning of such an example, even an historical one, seemed worthy of further study.
This two part blog (apologies for its total length) is the result of that further digging. I am no professional historian and welcome comments and feedback; particularly any similar examples people know of. As usual these comments are very much my own and do not reflect the views and policies of those for whom I work or those with whom I talk.
The role of the emerging ‘sharing’ or ‘on-demand’ economy offers opportunities to many consumers and producers in ways that are apparently new and different to those offered to them under existing business models. The emergence of these nascent business models and the rapidity of their take-up by producers and consumers poses notable challenges to some existing producers. Of course, the speed of take-up also indicates that a significant number of producers have either adapted to the new business models, or entered the market because of these business models. It also signals that a large number of consumers feel comfortable with the widening of their menu of choices and the manner of delivery of those choices.
In responding to the questions posed and in an effort to explore the issues underpinning those questions I will attempt to approach the issues from three directions. Firstly, by mapping out the fundamentals of why regulation occurs in particular sectors, secondly, whether the emerging models of business activity readily yield to such a methodology and finally by applying historical examples from the emergence of competing transport models in particular in and around the River Thames in London.
The reason for this tripartite approach is to enable me to try to strip away some of the hyperbole and rancour around the emerging business models encapsulated in the ‘sharing’ and ‘on-demand’ economy and to do so using examples that illustrate previous struggles between business and regulatory models. As Marshall McLuhan put it ‘(w)e look at the present through a rear-view mirror. We march backwards into the future.[i]’ Embracing a viewing of the present and future regulatory balance in the sharing or on-demand economy through historically coated lenses will also help illustrate the adage, attributed to William Gibson in a number of iterations that ‘the future is already here; it is just not evenly distributed.[ii]’
One of the challenges in current analysis of the sharing and on-demand economy is the fact that a number of different business models appear to be running alongside each other. When this occurs it is quite usual to hear demands for a ‘level playing field’. These demands usually revolve around the fact that existing regulatory burdens on a sector facing disruptive challenge are often not evenly distributed. Indeed part of the aim of the new disruptive entrant is often to deliver the targets of regulation by way of alternative mechanisms such as online rating systems, GPS tracking and cashless payment systems.
The pain felt by those using the incumbent business model when dealing with new entrants operating different business models is often focused on the fact that existing regulatory burdens have arisen from a complex process of negotiation between regulated and regulator that delivers perceived benefits to both sides of the process. The physical provision of services, such as for-hire transport or hotels, has historically been one of the sectors that politicians, both local and national find congenial to impose tax or license fees on.
If we return to the historical development of transport services in London over the past 500 years we see that almost everyone has sought to present itself as capable of transferring money to the Treasury coffers in return for some form of exclusivity. Indeed, the discussions around the licensing of hackney coaches rather lead to a bidding war between the established operators and potential new entrants as to who could transfer the most monopoly rent to the Exchequer without impoverishing themselves!
The development of transport services in London during the early 17th century into the late 19th century provides an interesting example of how competing choices for consumers evolved alongside each other. It is tempting to consider the history of transport as some form of linear path along which old modes of travel are quickly supplanted by newer modes of travel, the latter quickly gaining acceptance and the former withering quickly away. However, the history of London transport systems gives a lie to this comfortable view and can put our current discussions into greater context.
The development of each of the modes of travel throws up useful pointers about how intra-modal and inter-modal competition can occur. It can also indicate the field of competition across which modes operated and the concerns that were expressed about developments that are now seen as entirely positive, but which at the time were controversial. This latter point allows us to reiterate the need to look at our current endowment of transport modes through the rear-view mirror of history and recognise that almost every aspect of existing modes we take for granted were the subject of often fierce dispute and negotiation involving firmly held views and well-argued positions on all sides.
Viewing the disputed development of the endowment we now have also allows us to ask a rather more fundamental question of that endowment; what if those opposed to alternative business models had succeeded in blocking them? What sort of impacts would this have had? And have we gained societally from the entry of newer business models?
As Pratt argued as far back as 1912 ‘Transport on the Thames constituted a vested interest of great concern to the watermen, who had hitherto regarded as their special prerogative the conveyance of Londoners along what was then London’s central thoroughfare; and the story of the way in which they met the competition of vehicular traffic in the streets is worth telling because it illustrates the fact that each successive improvement in locomotion and transport has had to face opposition from the representatives of established but threatened competition.[iii]’
The Company of Watermen were properly brought into existence by their regulation by the King in 1555. However, their existence, and indeed the market for cross-Thames transport pre-existed this time by many years. River crossings of the Thames have existed since Roman times, with the earliest bridge examples creating rapids with a four foot drop that often killed hardy travellers.
The first post Roman Bridge across the Thames lasted from 1176-1209 but burned down with significant loss of life caused by onlookers rushing to get a better view of the fire. The more ready use of ferries to cross the Thames and to travel East-West and vice versa clearly provided opportunities for overcharging and price gouging. In 1293 the Gravesend to London ferry regularly overcharged passengers by levying a fee of a full penny when it was supposed to be half that. A number of the ferrymen were summonsed and gave surety that they would not overcharge again on pain of a 40 shilling bond, which was a considerable sum of money. This did not stop them overcharging and by 1313 they were up before the assizes again. By 1300 the Putney ferry (commonly used by travellers to the West Country) was pulling in around 20 shillings a year. By the end of the 14th Century, one of the first quid-pro-quo agreements between the King and a transport provider had developed. The Watermen of Gravesend and Milton were given the monopoly of transporting people from there to London in return for the use of specified boats and fixed fares of 2 pence per head or the whole boat for four shillings. This monopoly was reaffirmed in 1401 in an effort to stop the London watermen travelling East to take their trade from them.
The importance of the Watermen in the early mobility of the Capital area meant that the regular complaints of overcharging by ferrymen was taken very seriously. Complaints of overcharging or exploitation of travellers led to King Henry VIII passing an Act in 1524 to regulate fares charged by Watermen on the Thames. The 1555 Company of Watermen Act mentioned above was the first attempt to outline rights and responsibility in the provision of water transport for the Thames and surrounding waterways. By 1585 Queen Elizabeth I had granted them a coat of arms with the motto ‘at commandment of our superiors’, which predated and predicted the ‘taxi-rank’ model by which many for-hire car systems are supposed to operate, whereby a next operator in line picks up the next passenger in line at their command. Barely forty years after their formation as a Company it was estimated in Stow’s Survey of London (1598) that around 40,000 people (mainly men) earned a living on or about the river. Within two hundred years that number had more than tripled with 10,250 employers, 122,320 persons employed[iv]. If one considers that the first reliable census of population occurred in 1801 which put Greater London with a population of 1,096,784 people it is possible to show just how important the River Thames was as a source of employment.
Part I: What sort of regulation are we dealing with for innovation?
There is a temptation in any discussion of reform processes or when reviewing existing regulatory structures to take the current dispensation as a given; to view the existing arrangements as somehow a neutral reflection of a neutral technocratic process that delivers evenly considered benefits to participants in a politically and socially beneficial manner. It is worth recapping how the emergence of regulation is viewed before seeing the degree to which our understanding applies in ‘sharing’ economy markets. In what may now be a fairly aged paper Joseph Stiglitz, and Peter and Jonathan Orszag rather neatly mapped out what ‘The Role of Government in a Digital Age’ (Commissioned by the Computer and Communications Industry Association[v]) might look like. The list of reasons for regulation included:
- ‘Failure of competition..
- Public goods…(I)n general, private markets will not supply public goods[vi] – or not supply them in sufficient quantities – and therefore the government has a role to play in providing them.
- Externalities. In general, the government has a role to play in correcting negative externalities or promoting positive externalities. Without government involvement, private markets will typically under-produce goods with positive externalities and over-produce goods with negative externalities.
- Incomplete markets. A fourth possible justification for government activity is incomplete markets. For example, imperfections in capital and insurance markets – such as the absence of insurance coverage for certain types of risks – may warrant government involvement. A classic example of an imperfect capital market is the inability to borrow against higher future earnings, which justifies a government role in providing loans or loan guarantees for post-secondary education expenses. In addition, certain types of goods or services may require large-scale co-ordination, which may be possible but difficult to achieve without governmental assistance.
- Information failures….information is in some ways a public good – and therefore this rationale for government is similar to the second rationale.
- Macroeconomic fluctuations. The government has a role to play in correcting macroeconomic imbalances, such as those that lead to periodic problems with high unemployment, inflation, or recession.
- Redistribution. Even if private markets produce goods and services efficiently, society may not like the distribution of income that results. The government may therefore have a role in redistributing income – for example, through a progressive tax system – to produce a more equal distribution of income.
- Merit goods. Finally, there may be cases in which individuals would make “bad” decisions if left to their own devices, and in which government paternalism is therefore warranted. For example, the government compels individuals to attend school or wear seat belts largely because it is concerned that people will not do “what’s best” in the absence of such mandates. The government may sometimes be justified in compelling individuals to consume “merit goods” (such as elementary education).’
The relatively neutral, or indeed positive, assessment of regulatory responses echoes Normative Analysis as a Positive Theory which argues that ‘regulation is supplied in response to the public’s demand for the correction of a market failure or for the correction of highly inequitable practices (for example, price discrimination or firms receiving windfall profits due to some change in industry conditions.) According to this theory, if a market is a natural monopoly, then the public will demand the industry be regulated because a first best solution is not achieved in the absence of regulation. Unfettered competition will result in either too many firms producing and/or price exceeding the socially optimal level. By regulating the industry, net welfare gains result and it is this potential for welfare gains that generates the public’s demand for regulation. In this way the public interest theory uses normative analysis (when should regulation occur) to produce a positive theory (when does regulation occur).[vii]‘
This approach is supported by the belief common in many sectors that efforts at regulation are often responses to significant failures of existing forms of regulation; a fire in a hotel can trigger demands for greater provision of safety equipment, the exposure of over-charging in taxi firms can lead to demands for more tightly controlled metering. The track record of regulations driven by a highly publicised failure is not a particularly good one. Famously in a UK context, a series of well publicised dog-bite attacks lead to the Dangerous Dogs Act that sought to outlaw certain breeds of dog[viii] and has since become shorthand among many in the legal community for laws pushed through hastily as a knee-jerk reaction to public anguish, the unintended effects of which have played out painfully over time.
Viscusi et al rather cynically argue that ‘regulation is originally put in place to correct a market failure but then is mismanaged by the regulatory agency.’ Stigler[ix] argued that interest groups will seek to maximise their income by seeking to persuade the state to use its monopoly of coercion to their benefit. Regulation is a key tool for interest groups to persuade the State to redistribute income from one group to another. Peltzman[x] advanced this argument in 1976 arguing that the individual who controls regulatory policy chooses policy to maximise their own political support; in deciding government policies, a politician will assess the size of the group that will gain from regulation and how much wealth should be transferred to them. This calculation will be made as part of a desire to be re-elected and thus involves calculations of political support (both in terms of votes and financing).
The Sitgler/Peltzman model tends to point to regulation being sub-optimal in advancing the wealth and social interest of the wider community. This is simply because the regulator will seek to maximise their own net benefit, rather than the maximum benefit possible. Trade-offs and middle ground will always be sought to maximise benefits minus losses.
The importance of the interest group in seeking gains from regulation was neatly summed up in the Annual Report of the US Council of Economic Advisers (1994); ‘(a)s recognised by both the framers of the Constitution and modern scholars of public choice, all political systems provide interest groups with an incentive for ‘rent seeking’ that is, manipulation of collective action for private benefit…[rent seeking] can lead government agencies to make decisions that benefit a particular interest group even though they are costly to society as a whole[xi]’, rent seeking being defined as ‘the resource-wasting activities of individuals in seeking transfers of wealth through the aegis of the state.[xii]’
The activity and relative strength of interest groups was neatly modelled by James Q Wilson[xiii] across a number of publications:
Wilson’s model of politics
|PERCEIVED BENEFITS||PERCEIVED COSTS|
|Concentrated||UNCERTAIN GOVERNMENT ACTIONInterest Group politics||GOVERNMENT ACTION
|Diffuse||GOVERNMENT ACTIONEntrepreneurial politics||UNCERTAIN GOVERNMENT ACTION
Where costs are concentrated on a particular group, but benefits are also concentrated on a particular group we tend to see interest group politics. Where the benefits of a policy are concentrated on one interest group, but the losses are spread out over a larger number, client politics tends to prevail. Where both costs and benefits are diffuse one finds almost the model of representative democracy that western civilisation is supposed to aspire to. Perhaps the most interesting area of the model is the area where benefits are diffuse, but costs are concentrated. Here we enter the realm of the entrepreneurial politician.
If we take the emergence of the sharing or on-demand economy as a model of political activity we tend to see areas of the economy where the benefits of existing regulations are generally paid for by a large number of people and the gains focused on a small number of people/institutions. However, there is a significant problem with a neat division of gains. Most of the most significant ‘disruptive’ innovators have entered markets where regulation is primarily local in nature. If we take taxi and hotel licensing as examples, the rent afforded to hotel and taxi operators by the local licensing system tends to deliver benefits both to the licensee (exclusivity, entry restrictions) and the licensor (fees, taxes, license sales). Under Wilson’s model the existing model of regulatory politics is likely to be a client politics model, where the local government and local incumbent industry both extract rent from the existing arrangement. However, for new entrants the model is much more likely to look like an entrepreneurial political model. Such a model would predict that the new entrants are likely to run a model of political engagement more akin to an NGO fighting a human rights battle than a ‘normal’ industry lobbying effort. The fact that such disruptors are heavily engaged with social media technologies and driven by smartphone technologies would tend to provide a perfect tool with which to engage with entrepreneurial campaigning.
Unlikely bedfellows in regulatory politics
One of the most interesting side-bars to regulation was put forward by Bruce Yandle in a 1983 article in Regulation Magazine, ‘Bootleggers and Baptists in the Theory of Regulation.[xiv]‘ Yandle starts from the premise that alliances can be formed around issues for totally contradictory reasons. Secondly, rhetoric can be just as important as simply campaign finance. Lobbying only succeeds when it combines the two. The original Bootlegger-Baptist alliance focused on the campaign to keep the prohibition of alcohol in 1930 Americas. Baptists supported prohibition as a moral effort to stop Americans succumbing to demon drink. Bootleggers, supported prohibition because it guaranteed them enormous profits. An almost literally unholy alliance formed to keep prohibition; Baptists providing the moral rhetoric to stir the spirit of the American electorate and bootleggers providing funds to ensure their market was not threatened.
Conclusions on the lessons from regulation
- Regulation in areas subject to significant entry by sharing and on-demand economy players is generally shaped around existing business models;
- Regulation shaped around incumbent business models tends to have been negotiated between the regulator and regulate;
- Such negotiations often involve the erection of barriers to protect incumbents in return for income generation or other social objectives;
- Systems of local regulation tend to resemble client politics models at worst and interest group politics models at best;
- Sharing and on-demand economy entrants tend to have to apply entrepreneurial politics, which often places them at odds with local regulators;
- Incumbents are often able to rally support from diverse interests against new entrants.
Part II: What can a study of history tell us about regulation of innovation?
Transport Licensing has not changed much
Our review of regulation above points to the differing views of the origin of regulation. In transport on and around the Thames the origins of regulation were diverse. On the one hand there were genuine concerns on pricing and overcharging, often enforced with violence, on the part of transport providers. The Watermen, and later hackney coach operators wanted to gain control of their market and impose order. This order allowed them to do two things; firstly guarantee a living income for their membership and secondly, to provide an early form of social insurance safety net for when either trade was down (most notably during ‘frost fairs’ when the Thames froze over completely) or when members fell ill or died. The exchequer was always on the lookout for activities it was able to tax to pay (usually) for wars and transport was one of the easier ones to fashion a levy of license for. Consumers were also looking for some form of assurance that their transport provider knew what they were doing (failure to do so regularly lead to death on the River) and would not overcharge or otherwise mistreat them; or at least could be brought up before some form of regulator if they did. Transport became, and remains, a point of the economy upon which the incentives of licensee and licensor converged, even when objectives differed among them.
The OECD[xv] in its seminal report on the regulation of the taxi industry argues that ‘supporting regulations’ for effective taxi regulation cover three main areas:
- Conduct regulation;
- Vehicle Standards; and,
- Driver standards.
The 1555 ‘Act Touching Watermen and Bargemen upon the River Thames’ was justified on a number of grounds that may be familiar to modern transport operators.
- A strong reason for action:
- ‘Divers and many misfortunes and mischances’;
- ‘Subjects have been ‘robbed and spoiled of their goods, and also drowned’;
- Conduct standards
- Performance standards of providers: ‘Rude, ignorant, unskilful number of watermen’;
- Driver standards:
- Entry restrictions: have to have at least 2 year’s experience and licensed by the 8 overseers and rulers – by writing and seal – on pain of one month imprisonment;
- Vehicle Standards:
- Vehicle size restrictions: ‘’a great number, and the most part of the wherries and boats, now occupied and used, and of late time made for rowing upon the said river, being made so little and small in portion, and so straight and narrow in the bottom…’ Vehicles must be ‘22 feet in length and four and half feet wide – or which shall not be substantially and well able and sufficient to carry two persons on one side tight – or will be seized and sold off with proceedings to the crown and complainant (half each);
- Vehicle registration: all Watermen’s names put on a register;
- Vehicle inspection: eight overseers can inspect any vessel at any time;
- The establishment of a regulator: yearly election of eight watermen ‘wise, discreet and best’ of watermen’;
- External control of pricing: set by Mayor and Aldermen (1559) overcharging will be fined by 40 shillings per offence plus imprisonment for 6 months.
The subsequent history of the Thames watermen is worthy of study in large part because it covers such a long period of economic and social history and in part because it concerns an area of the economy that is the current subject of considerable dispute. The watermen were, in many ways, the taxi drivers of their day. They were subject to licensing and pricing control, were required to undertake training and had a unique culture and tradition that shaped a good deal of modern London. They were party to a history that saw London emerge from the 16th Century into a world city with the development of road and rail transport, faster river transport, the building of bridges and the start of public transport. The way the watermen responded to those developments and challenges can help put some of our current issues of dispute into some sort of historical context, particularly when one considers that the bus and taxi industry of today was in part built on the destruction of the water-taxi industry that existed before them a fact the watermen knew very well at the time and did their best to battle.
Charting the history of the travails of the watermen also provides us with ample opportunities to ask a number of questions that should be asked of all attempts to stop innovation; would we be in a better place if this innovation is slowed or halted? Can we predict accurately what this innovation will lead to? Can we predict other innovations that might flow from this single innovation?
It is also worth remembering what Machiavelli pointed out with such clarity some time before the time period we are concerned with regarding the watermen: ‘(a)nd it ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them. Thus it happens that whenever those who are hostile have the opportunity to attack they do it like partisans, whilst the others defend lukewarmly, in such wise that the prince is endangered along with them.’ (The Prince, VI[xvi]).
Over the period from 1555 to the end of the 19th Century, our main period of concern, the watermen faced many challenges thrown up by innovation, technology and the pressures of competition. It is easy to categorise opponents of innovation as Luddites intent on violently smashing up new technologies. However, such a categorisation underplays the less noticeable activities of those opposed to innovation in putting barriers in the way of those seeking a change in the order of things. The history of the watermen clearly illustrates some of the general rules of regulation outlined above and also indicates just how persistent the opponents of change can be and how apt the quote from Machiavelli has proved over time.
Our survey of the watermen will try and bring together the lessons from their struggles over three centuries into four sections. Section one will look at their struggles against infrastructure project of various types; Section two will look at their struggles with direct forms of competition; Section three will look at the struggles they had with competition within their existing transport mode and finally a mop up Section will bring together some of the other issue raised by the efforts of the watermen, including the recognition that the Baptist and Bootlegger coalitions have as long a history as Baptists, though maybe not as long as bootleggers.
Is the sharing economy entirely new?
The current focus on the sharing or on-demand economy can get a little lost in the excitement of the ‘newness’ of the technology and the solutions that it provides. Looking at the history of a number of sectors, though, will indicate that the problems that the sharing economy attempts to deal with, most notably the more efficient utilisation of resources is in itself not a new problem. A reading of history can also illustrate how differing means of delivering the same service or product can emerge at different times and compete with each other over considerable periods of time.
The origins of the for-hire transport market in London illustrate just how different business models can emerge and operate alongside each other and how resource utilisation was a significant factor in the way the sector developed. One of the most significant concerns of the Thames watermen (the people carrying people by boat on the Thames), facing competition from the early taxi trade, was the challenge they faced from the equivalent of the sharing water economy of the 18th century. Watermen were barred from working on Sundays, although specific Sunday ferries were allowed. Given that Sunday was one of the few days on which many people were not working themselves there was a gap in the market for the provision of boats. This was, in part, filled by boat builders who rented out their spare boats to members of the public to enjoy on the Thames; a classic sharing economy activity.
As Humpherus puts it for 1797: ‘(t)he Company being unsuccessful in the Act of 1794 to obtain any restriction on boat builders letting out boats on Sundays, presented petitions to both House of Parliament about the 17th of August, 1797, and alleging various reasons against the same, particularly the desecration of the Sabbath by rowing matches, &c., rioting, quarrelling, fighting, and bloodshed frequently taking place, and the continued loss of lives by inexperienced parties navigating boats from not having a person in charge thereof.[xvii]’ The complaint to Parliament was couched in terms of public safety and public order rather than loss of income. The challenge of the sharing economy operated by the boat builders was a common complaint of the watermen, a complaint that never appears to have achieved any traction with politicians over the many years that they made it. The sharing economy in boats was quite considerable; ‘(i)n Maitland’s History of London, it is stated, that the number of boats working on the river, according to a return made on the 28th September 1734, amounted to 5,972, and of barges to 767; he also states that Mr Church, the clerk of the company, had assured him that there were about 1,000 boats in addition, kept for letting out, and also about 1,000 barges.[xviii]’ By such an estimate the rental, or sharing economy in boat letting was around a quarter of the total market.
The Watermen were also vexed over a considerable period of time that the Lightermen, licensed to carry goods, on occasion carried passengers as well, eating into their monopoly. The Lightermen carried passengers in large part because their boats were of a similar nature to those of the Watermen, and because they operated in the same geographic market. Carrying passengers on semi-laden boats would have made great economic sense, particularly as the Lightermen suffered economic decline earlier than the Watermen. The struggles the Watermen had with Lightermen attempting to utilise their resources more efficiently carried on for at least sixty years, in terms of formal complaints, though it is likely to have carried on for some time before it was officially complained about.
In 1641 the Watermen petitioned Parliament with a complaint that Lightermen were breaching the 1555 Act by carrying passengers; thus stealing their trade.[xix] The relative ease with which Lightermen could carry passengers meant that the problem did not cease upon this complaint, with the Lightermen being accused of ‘working unlawful engines and instruments’ in 1659 and 1660, before attempts were made to merge the two companies, splitting the Lightermen from the Woodmongers and merging them with the Watermen in 1700. The merger took over thirty years to negotiate.
The need to utilise resources efficiently drove innovation in the early coach markets in London and in fact the origins of for-hire coach transport lay in the need of coach owners to rent out their coaches to enable them to pay an exorbitant license fee!
As Warren points out in his ‘History of the London Cab Trade’; ‘(a)t this time any person owning a coach was required to pay to the Exchequer £50 per annum,…, which cost more than the coach itself. It was to recoup some of the high cost of owning a coach that their owners, mostly nobility, hired them out for others to drive[xx].’
Section I: Challenges to Infrastructure Projects
Challenges from infrastructure: opposition to bridges
London is renowned for its large number of beautiful bridges and thousands of people travel daily across them by foot, taxi, bus and bicycle.[xxi] The enormous utility provided to London by the bridges across the Thames masks the controversy that greeted every building proposal that was laid before Parliament. It is still a little hard to believe that for a long time London Bridge was the only permanent crossing that the Thames had.
As London grew the demand for more river crossings increased; and as proposals for bridges were put before Parliament, so the Watermen petitioned opposing them. For example in January of 1722 a bill was put before the House of Commons to build a bridge at Westminster. In response ‘a petition of several bargemen and watermen from Kingston, Richmond, Mortlake, Barnes and other places, on behalf of themselves and many thousands others, urging that the bridge if erected would be the ruin of many thousand families, pernicious to the navigation, as well as detrimental to the trade of London and Westminster, was presented to the House of Commons, praying to be heard by counsel against it, which was ordered accordingly…A petition from the court of Lord Mayor was also presented against the same…Petitions in opposition thereto were also presented during the proceedings, from the watermen of Queenhithe, Bermondsey, Deptford and other places; on the twenty-fifth of January counsel was heard on behalf of the company against the bill, and the same was adjourned for further consideration; but no further meeting seems to have taken place.[xxii]’
The Watermen were so concerned by the building of such a bridge that they ‘employed two mathematicians respecting such bridge, and the sum of ten guineas was afterwards voted them for their trouble. Several pamphlets were printed and circulated, containing reasons against the building of the bridge, urging among other things that it would be the ruin of watermen, by depriving them of a large amount of business in ferrying over passengers and garden stuff from Lambeth to the City of Westminster[xxiii].’
The same occurred in 1726 when a ‘proposal to build a bridge at Putney, which was rejected by Parliament in 1671, was again brought forward, and a petition presented to the House on the 21st of Feb, praying for leave to erect on there, or some convenient place between London Bridge and Kingston Bridge.[xxiv]’
The opposition to bridge building tended to follow a similar pattern. A proposal would be made, often by land owners on either side of the proposed site to erect a bridge. The Watermen would then oppose the bridge, often supported by the City of London who wished all economic activity to centre on their fiefdom. Parliament would debate the scheme, with petitions coming in from all sides. If the proposal made it through Parliament a group would be appointed to compensate watermen (in particular ferry operators) for loss of business. It was also common to require the bridge makers to install steps at either end, and on both sides, of the bridge to enable the watermen to carry on their trade. For example, when Vauxhall Bridge was built in 1809 payment of compensation was made and the provision that ‘there should be constructed at each end, and on each side of each end of the bridge, convenient stone stairs, and also plying places for the use of the watermen, &c., who were to have the free use of the same, which were to be kept in repair by the bridge company.[xxv]’ By 1850 there were over 100 setting down and picking up points on the river.
If we take the example of the Putney Bridge proposal in 1726 we can see that ‘It also provided that the bridge should not be built until full and ample satisfaction had been made, for all prejudice, loss or damage sustained by the owners, proprietors or lessees, of the horse and foot ferries, between Putney and Fulham, to be ascertained as therein mentioned[xxvi].’
The sums of money used to compensate watermen for their loss of earnings was often a considerable amount. Such negotiations and procedures could add considerable time as well as cost to proposals to build bridges. ‘On the 3rd April 1728, the Commissioners and Trustees appointed under the Act of twelfth George 1, chapter 36, for building a bridge at Putney, petitioned the House of Commons for additional powers, and for obtaining money for building the bridge, which was referred to a committee. The Committee reported to the House that the several estimates for the building amounted to £9566:10:0; that in the case of the Horse-ferry existing there, a jury had been empanelled according to the Act to ascertain the amount to recompense to be paid, and their verdict was for £9655:10:0, the jury had also estimated the injury to the watermen of Fulham and Putney, for their Sunday foot ferry at £62 per annum, and recommended the powers sought to be given; the Bill was accordingly introduced and the Royal assent given thereto on the 28th of May following.[xxvii]’
The cost of recompensing the watermen was actually greater than the cost of building the bridge and the ongoing costs to the bridge builders was not insignificant either. It should be noted that the sums handed over from the bridge tolls was to be used as a form of social security net ‘that several yearly sums of 31 pounds to Fulham and 31 pounds to Putney, ascertained by a jury should be paid for ever out of the tolls and revenues of such bridge, and be distributed amongst such poor watermen, poor widows of watermen, and poor children of watermen residing in those parishes, as their respective vestries should think fit.[xxviii]’
The eventual erection of the Putney Bridge still meant that there were only two bridges over the main body of the Thames; the new Putney Bridge and the very old (c600 years) London Bridge. Numerous efforts had been made to erect new bridges but at every turn the Watermen had organised to oppose such efforts: ‘(p)roposals had been made on several occasions to erect one at Westminster, but it had been successfully opposed. The erection of the bridge at Putney, caused the inhabitants of Lambeth and Westminster, who were desirous of obtaining similar accommodation, to petition in favour thereof, and schemes for forming the same from Whitehall, New Palace Yard, and the Horseferry were proposed. The court of the Watermen’s Company, anticipating great injury to watermen and lightermen generally, determined to oppose the Bill, and at a meeting on the third of February, a committee was appointed to attend the Parliament for the purpose.[xxix]’
With a cynical eye on history one can see that the main driver of opposition to bridges was the fact that incomes would drop as traffic was diverted from the boats to the bridge. However, the grounds on which the watermen opposed the building of bridges were not simply stated as pecuniary. It is not unreasonable to recognise that the watermen’s life was a hazardous one. London Bridge was notoriously difficult to navigate through with regular accidents and loss of life. The state of the art of bridge building, with large stone or wooden columns placed into the river at relatively short spans, meant that every bridge erected affected the ability of wind and human powered boats to successfully navigate the river; the creation of eddies and currents, the shifting of silt deposits and the creation of difficult to predict water speeds on what is a fairly fast moving tidal river were areas of legitimate concern for the watermen. This was reflected in the terms under which they would oppose the building of Westminster Bridge, for example ‘(a)mong the various reasons printed and circulated against the bridge, were the following;
- The new bridge will prejudice the navigation of the river – by retarding the flux of the tides – by increasing the shallows and the sandbanks;
- By creating new ones in the river everywhere, within the compass of the flux of the tide;
- By the danger and delay which it will create to the conveyance of goods and passengers, more especially in and about the new bridge;
- Danger to the wherries or smaller boats;
- Danger to the larger barges which are unwieldy, heavy loaded and not easily governed either by sail, rudder or poles;
- By the fall of the waters there, whether upon the flux or re-flux of the tide;
- By the eddies which will thereby be created;
- By the shallows and sandbanks which will be cast up thereabout;
- Delay even to wherries or small boats, more especially to larger vessels, which must not longer pass that way by night, nor in the day time but at high water, nor then without danger of falling upon the piers of the proposed bridge, especially in high winds;
- The rise of the price of all provisions, brought down from the western parts, and danger of loss of valuable cargoes, and the decrease of watermen, so useful to the sea service, whether private or public service.[xxx]’
The opposition, while clearly under-pinned by an economic self-interest, was couched in much broader terms, terms which both made the case appear more reasonable and the presenter less self-interested. The threat to life and limb of working on the river is evidenced by the estimate in 1768 ‘that there were drowned at London Bridge, about fifty people upon an average every year, …prime of watermen, bargemen and seamen.[xxxi]’
Opposition to Westminster Bridge was repeated when efforts were made to erect a bridge at Blackfriars in 1755. ‘Blackfriars bridge: a committee was appointed by the Court of Lord Mayor etc. to inquire into and report whether the construction of a new bridge might in anywise prejudice the navigation of the river, who reported ‘that it would greatly obstruct the same and be very prejudicial to the commerce of the city’; and on the report being considered by that court on the fifteenth of January, they determined by a majority of twenty-six, not to agree with such report.[xxxii]’
When the Bill to push ahead with the bridge was presented to the Commons in 1756 ’petitions were presented in favour of the counter plan of improving London Bridge; on the ninth of February a petition from the rulers, &c, was presented against it, alleging that it would obstruct the navigation, and highly prejudice the members of the company, by totally destroying the Sunday ferries between Westminster Bridge and London Bridge, (the average receipts for the last four years being four hundred and nine pounds and ten shillings.[xxxiii])’ It is interesting to note that the opposition to a new bridge contained a campaign to improve the existing bridge rather than provide competition for it by the provision of another.
Despite opposition a ‘new temporary bridge was opened as a bridle way, to the no small mortification of the watermen, ‘who cannot help complaining of this precipitate expedient, to deprive them of their bread at this hard time; many of us say the old men may be dead before the stone bridge can be finished, and it is hard to starve us to death before our time by a wooden one[xxxiv].’ A stone bridge was opened in 1769.
The delicate balancing act needed for dealing with the watermen was indicated by the fact that many trades were affected by changes in technology or terms of trade at the time. On May 17th 1765 ‘alarming riots took place amongst the silk weavers from the great distress among them, they were ultimately dispersed by the military, after severe fighting, the pavement having been pulled up for attacking the soldiers; a threat was used that the riots would be renewed, and that the watermen would join them, who were probably also in great distress, caused by the number of watermen returned to the river since the declaration of peace.[xxxv]’ The peculiar problem faced by the watermen was that they were required to provide a quota of competent sailors to serve aboard the ships of the Royal Navy. At any one time around a third of the Thames watermen were serving in the Navy which meant that when peace occasionally broke out on the seas the number of returning watermen would significantly add to the number of those seeking business on the river.
The opposition to bridge building did not lessen over time. ‘On the 13th of February 1818, a petition was presented for forming the proposed bridge at Rotherhithe, which was afterwards read a first time on the sixteenth of March. On the third of April, a petition of the wherrymen of Elephant Stairs was presented against the bill, or for the grant of such indemnity the house might think fit; and on the sixth of April, nine petitions of free watermen and lightermen, plying at Kidney Stairs, King Stairs, Pageants Stairs, Stone stairs, Mill Stairs, Execution Dock stairs, Prince’s Stairs, Globe stairs and Cuckold’s Point stairs, were presented to the same purport. No arrangements having been made by the rulers with the promoters, as to compensation for Sunday ferries, on the ninth of April the rulers determined to present a petition against the bill if necessary.[xxxvi]’
Challenges from infrastructure: opposition to dock building
While the opposition of the watermen to the building of bridges was a steady occurrence throughout the period from the 16th to 19th Century, the enormous growth of London as a Port in the 19th Century presented a peculiar problem for them. Towards the end of the 18th Century and into the early years of the 19th Century there were a large number of proposals to build new dock complexes in and around the East End of London. The result would be to divert a good deal of shipping from the River into the docks and offload goods in more centralised hubs rather than onto lighters to then move goods onto their destination.
As with the bridges the Watermen (and Lightermen who were of more importance in this area of lobbying) demanded compensation for loss of business from the new dock complexes. Humpherus outlines one case from 1806 that indicates the scale of the claims made for compensation: ‘the sum demanded as compensation (without reckoning the purchase of land and houses, which cost the London dock proprietors especially, an enormous sum,) was nearly four millions sterling, but of this only 673,382 were paid, all the rest were disallowed. The government also bought up the legal quays for four hundred and eighty six thousand, eight seven pounds.[xxxvii]’
The sums claimed by the watermen were the equivalent of around £300mn and that paid to watermen equates to around £50mn in current UK pounds. What is quite telling is the admission that ‘(t)he result of the opposition was that many of the master lightermen received large sums for the loss of their business, which took place for some time, as will be seen in 1808 and 1809. The accommodation afforded by the docks, afterwards gave a fresh impetus to business, and the early losses of lightermen were recovered.[xxxviii]’ The lightermen were compensated handsomely for the loss of income they claimed would come from the arrival of docks, but the enormous increase in commerce created by the docks lead to them working even more than before they claimed compensation.
The enormous complex at St Katherine’s Docks, adjacent to Tower Bridge and which is now a dock for pleasure craft and the location of a luxury flats and office blocks had a slightly tortured origin. The initial proposal to build the docks in 1824, was opposed by ‘a petition from the watermen of Irongate stairs, and of the St Catherine’s ferries, being freewatermen and residents of the parish, and on the twenty-sixth two petitions of watermen of Alderman Parson’s stairs and of watermen &c., of St Catherine’s stairs ferry, were presented against the same. On the twenty-ninth, a petition from Lord Cholmley, of Euston Hall, Lincolnshire, and of the watermen of Tower Stairs, was presented against it, as well as one from the fellowship porters; the bill was opposed on the second reading, and carried by seventy-four votes against fifty-five[xxxix].’
The failure of the Bill was much celebrated with ‘the precinct of St Katherine presented a scene of great gaiety, originating from the rejoicings of the inhabitants at the withdrawal of the bill for the formation of St Katherine’s dock, the house of every street, lane and alley were illuminated[xl].’ Unfortunately for the watermen the celebrations were short-lived. By 1825 the Bill supporting the building of St Katherine’s docks had passed.
Challenges from infrastructure: tunnels beneath the Thames
One of the more obscure and unusual parts of the existing inner London train network, the East London Line, started life as a project to build a tunnel for coach and foot traffic in the early part of the 19th Century. As a result the tunnels and infrastructure of the line are unique on the train network. The evolution of the Thames Tunnel is an interesting side note to the history of innovation and emerging business models.
The original plan for the Thames Tunnel, on which work commenced in 1825, was for a tunnel for foot and coach traffic from Rotherhithe to Wapping[xli], one of the narrower stretches of the Thames. The tunnel builders had to immediately compensate the waterman and ferry operators that their tunnel may affect. As Humpherus puts it: ‘(t)he works were commenced in 1825, under the auspices of that eminent engineer, Mr Brunel, who was to be paid ten thousand pounds, and one thousand pounds per annum during the progress of the works, six hundred feet were completed, when on the eighteenth of May 1827, and again on the twelfth of Jan 1828, irruptions of water took place, with loss of life, stopping the works. In 1835 the works were resumed, and the tunnel finished and opened for foot passengers on the twenty fifth of March 1843, but was closed in 1871, and formed into a railway, called the East London Railway.[xlii]’
The tunnel was eventually taken into the Tube network, then transferred to the Overground network and now serves a much more vibrant part of London boosted by the redevelopment of the docks complexes on either side of the Thames. The concerns the watermen had with the tunnel stealing coach and passenger traffic were to some extent borne out, though in an entirely different manner to the one that had imagined.
Challenges from infrastructure: the campaign against piers
One of the most contentious innovations against which the Watermen campaigned in the early 19th Century was the erection of piers. The piers were needed by the larger steam boats to enable them to quickly and safely load and unload passengers in comfort. With hindsight it is difficult to imagine that the peers we use to alight on ferry boats or pleasure craft would be the subject of controversy; they so clearly represent a more comfortable way to get on and off rivercraft than the alternatives. However, until the proposal, all passengers and goods had to be loaded and unloaded onto smaller wherries and boats operated by the watermen.
The first attempt to build such a pier in London, in 1828 was brought to the attention of the company of Watermen; ‘a deputation of watermen attended from Tower stairs, and stated an application was about to be made by the Steamboat Pier company, to erect a pier between Brewer’s quay and Tower stairs, with an underground communication with it, for passengers and goods to the steamboats, when the court determined to watch and, if necessary, to oppose the same.[xliii]’
One of the most controversial pier battles occurred at Gravesend, the terminus for established long distance ferry routes. The first effort to build a pier, in 1830, was opposed by the Watermen ‘upon the humane consideration and that it would deprive the watermen of their occupation, in conveying passengers between the packets and landing place, and several meetings took place on the subject.[xliv]’
The opposition to a Gravesend pier lead to an ingenious move by a Mr Pitcher, who constructed ‘a landing jetty on his land at Northfleet, about a mile from the landing place at Gravesend, where passengers could land and embark without boats. It was opened on the tenth of July, and about 40,000 persons used the jetty and walked to and from Gravesend, up to the end of the season.[xlv]’
The response of the watermen of Gravesend was twofold: to form themselves into a ‘club’ or form of local trade union, to oppose the building of the Gravesend Pier and secondly, to sue Mr Pitcher to close his Pier; ‘(a) committee of watermen was appointed to indict the pier, as it prevented their employment and also saved the boat hire and toll passing from the steamboat to the shore.[xlvi]’
The proposal to build a pier at Gravesend was passed on 22nd June 1833, despite the opposition of the watermen who ‘in a mass attacked the pier, the toll house on the quay was much damaged, the iron railing by which the quay was enclosed was destroyed, the piles of the jetty cut through, and part of the platform torn up and turned adrift in the river, they were only stopped by a military force arriving from Tilbury, when the mayor read the riot act.[xlvii]’
Undeterred ‘(a)nother temporary pier was provided at the premises of Mr Starbuck, in West St Gravesend, for the accommodation of the public, until the pier should be built, which was opened by the Mayor on eighth of July. Measures were taken for the protection of the peace, in addition to the Thames Police from London and a corps of riflemen, two hundred special constables were sworn in, but the ceremony passed off without any further attempt from the watermen, who were evidently in a great state of excitement.[xlviii]’
As soon as the piers were built, the number of passengers travelling increased enormously. In 1833 there were almost 300,000 passengers to and from Gravesend on the steam boats, a figure that was to more than double to 670,542 by 1835, and 1,141,285 by 1842.
While many watermen found employment on the Pier itself and fewer piloting the steam boats, the steamboats put an end to the existing long distance ferry operations. As Humpherus put is by 1835: ‘(t)he preference given by the public to steam packets between London and Gravesend, led to the extinction of sailing boats in the long ferry. They had maintained a hopeless struggle for some years, and as some of them dropped off, the little employment to be found was divided among reduced numbers, but the last of them, the Duke of York, was withdrawn this year.[xlix]’
Challenges from infrastructure: opposition to playhouse relocation
For many visitors to London a visit to the riverside Globe Theatre[l] is part of their itinerary. The location of the Globe, near to the river edge, is in large part due to the fact that, in the absence of more than one bridge until the 18th Century, the only way to ferry passengers from the more populated Northern shore of the Thames to the South was by ferry or wherry. The earliest audiences at the playhouse, and others, would almost certainly have been conveyed by watermen. The Globe was not the only playhouse on the banks of the Thames. Theatres and other entertainments on the South side of the River, including the notorious 18th Century Pleasure Gardens at Vauxhall, have a long history.
As Humpherus points out for 1586 ‘(t)he watermen of London and Westminster found considerable employment in ferrying persons to and from the playhouse, &c. at Bankside.[li]’ What is less well known is the role the watermen played in limiting the growth of theatres away from the river; ‘several attempts were made to introduce similar places of amusement into the City of London, but they were strenuously opposed by the watermen and their friends, as being against their interests. The Lord Mayor and Aldermen were also opposed to their introduction.[lii]’ 1613 saw a petition moved by the watermen to stop theatre players moving from Bankside to the City of London to put on a play. As Humpherus they ‘took great interest in opposing playhouses, then existing only on bankside, being licensed in London or Middlesex, or within four miles of London on the North side of the Thames, as it deprived Watermen of their fares across the river.[liii]’ Rival petitions were heard before the King with the watermen pointing to their military service and loyalty to the Crown against the desire of the players to put on plays North of the river.
The theatres at the time provided employment for watermen returning from war ferrying passengers to and fro; ‘the theatres at Bankside, consisting of the Globe (the scene of Shakespeare’s exertions as an actor, and where most of his last pieces were performed,) the Rose and the Swan, with other private theatricals, besides the bear-baiting, caused a large amount of business in ferrying citizens over the Thames, the passage over London Bridge (then the only bridge) being tedious and inconvenient, but the players left the Bankside and commenced playing in London and Middlesex, which deprived the watermen of a great source of employment, and caused considerable dissatisfaction among them, and numerous meetings took place, and ultimately it was determined to oppose the players.[liv]’
[iii]Pratt, Edwin A. 1912. ‘A history of Inland Transport and Communications’. Newton Abbott. P58.
[iv] P416. Vol 1. Henry Humpherus. Reprinted 1981. History of the Origin and Purposes of the Company of Watermen and Lightermen of the River Thames, with Historical Notes. EP Microfilm Limited. Hereinafter Humpherus.
[vi] Public goods defined as having ‘two critical properties: First, no additional costs are involved in providing the good to an additional person (formally, the good has zero marginal costs and is referred to as being “nonrivalrous”). Second, it is impossible to exclude individuals from benefiting from the good (formally, the good is “nonexcludable”). A classic example of a public good is national defence: Defending 270 million people does not necessarily cost more than defending 260 million people, and it is generally not possible to exclude anyone from the benefit of national defence.’
[vii] W. Kip Viscusi, John M. Vernon, Joseph E. Harrington. 2005. Economics of Regulation and Antitrust – P377
[viii] Baldwin, Robert, Hood, Christopher and Rothstein, Henry (2000) Assessing the Dangerous Dogs Act: when does a regulatory law fail? Public Law (Summer). pp. 282-305. ISSN 0033-3565
[ix] Stigler; the theory of economic regulation…..
[x] Peltzman. Toward a more general theory of regulation -journal of law and economics 19 Aug 1976 211-40)
[xi] Edward E Zajac Political Economy of Fairness. 1995. MIT Press.
[xii] Buchanan, Tollison, and Tullock, 1980 ix
[xiii] James Q. Wilson. 1973. Political Organizations. Basic Books. NY; James Q. Wilson, ed. 1980. The Politics of Regulation. Basic Books. NY; James Q. Wilson. 1989. American Government, 4th ed. DC Heath.
[xiv] Bruce Yandle.”Bootleggers and Baptists: The Education of a Regulatory Economist.” Regulation 7, no. 3 (1983): p12; Adam Smith and Bruce Yandle. 2014 Bootleggers and Baptists: How Economic Forces and Moral Persuasion Interact to Shape Regulatory Politics. Cato Institute.
[xv] Competition Committee. DAF/COMP(2007) Organisation for Economic Co-operation and Development. 11-Sep-2008. Taxi Services Regulation and Competition.
[xvi] For an interesting take on the link between Machiavelli and innovation policy see Benoît Godin. The Politics of Innovation: Machiavelli and Political Innovation, or, How to Stabilize a Changing World. Project on the Intellectual History of Innovation Working Paper No. 17 2014 http://www.csiic.ca/PDF/WorkingPaper17.pdf
[xvii] Vol II. P425. Humpherus.
[xviii] P151. Vol II. Humpherus.
[xix] Lords MSS, 3 May 1641, rulers’ petn, annex, fos. 4, 5.
[xx] P16. Philip Warren. 1995. The History of the London Cab Trade: from 1600 to the Present Day. Taxi Trade Promotions Ltd, London.
[xxi] For a detailed history of London’s Bridge see Peter Matthews. 2008. London’s Bridges. Shire Publications.
[xxii] Vol 2 p 117. Humpherus.
[xxiv] Vol II p125. Humpherus.
[xxv] P74/75. Vol III. Humpherus.
[xxvi] Vol II. P126. Humpherus.
[xxvii] Vol II. P129. Humpherus.
[xxviii] Vol II. P130. Humpherus.
[xxix] Vol II. p154/155. Humpherus.
[xxx] Vol II. P155/6. Humpherus.
[xxxi] Vol II. P273. Humpherus.
[xxxii] Vol II. P225. Humpherus.
[xxxiii] Vol II. P230/231. Humpherus.
[xxxiv] Vol II. P265. Humpherus.
[xxxv] Vol II. P265. Humpherus.
[xxxvi] P150. Vol III. Humpherus.
[xxxvii] P29. Vol III. Humpherus
[xxxviii] P29. Vol III. Humpherus
[xxxix] P185. Vol III. Humpherus.
[xl] P186. Vol III. Humpherus.
[xlii] P187/188. Vol III. Humpherus.
[xliii] P237. Vol III. Humpherus.
[xliv] P248. Vol III. Humpherus.
[xlv] P253/254. Vol III. Humpherus.
[xlvi] P254. Vol III. Humpherus.
[xlvii] P279. Vol III. Humpherus.
[xlviii] P279. Vol III. Humpherus.
[xlix] P284. Vol III. Humpherus.
[li] P138. Vol I. Humpherus.
[liii] P176/177. Vol I. Humpherus.