Thursday, July 17, 2014

Jitneys were the Uber and Lyft Services 100 Years Ago

New news on the ride-sharing front. Uber, Lyft, and Sidecare are all making money and cutting into the commercial taxi trade (where government intervention is not attempting to shut them down). Good news for Mr., Mrs., and Miss consumer......but.....

In Washington D.C. the city council is proposing a new city rule that will require ride-sharing serves to charge at least five times what taxis charge. If you read the proposal it is very clear in its aim to make sure that ride-sharing businesses pose no competitive threat to the taxi business. So far the proposal has failed because of a ground swell of consumer opposition. (Seems to me someone once said "Eternal vigilance is the price of liberty" or something like that)

Chicago has passed rules for ride-sharing and here are just a few of them: Expensive licensing requirements, expensive liability insurance requirements, and prohibitions on pickups made at any airports.

Down in Miami all ride-sharing companies have been banned and the city is using police sting operations to catch Lyft drivers.

Well, looks like "crony socialism" is alive and well. The established businesses are using government to crack down on competition from these new, innovative, young whippersnappers who think that just because we have a free market in this country that they can jump in and start a new business anywhere they want. (I say "free market" with my tongue planted firmly in my cheek.)

Now least you think that this is something new for business and government to work together to scratch each others backs let me tell you about the 'jitney' services. You may not be old enough to remember "jitney" because it happened 100 years ago (1914 to be exact) and heck even I am not that old.

Well, back in July of 1914 in Los Angeles a man by the name of L.P. Draper picked up a passenger in his Ford Model T and drove him a short distance. He accepted a nickel because that was the streetcar fare at the time. That nickel was referred to as a "jitney nickel". By 1915 this spontaneous movement had spread from L.A. to Main. It was operating in 175 cities and it is estimated that 62,000 jitneys were in service. Most of the jitney drivers were unemployed and this allowed them to use their T-model to make money while looking for a "real" job.

Can you guess what happened next? No. Well here is the punch line. Opposition came from: business interests that did not like the increased street traffic, streetcar businesses that did not like the competition, and the cities themselves that did not like the jitney service because they relied on taxes from the private streetcar companies for revenue. Even the newspapers got into the discussion by running stories about jitney accidents and how “pestiferous” (their word, not mine) they were. Because of this outcry, government steped in (intervention) with new rules and regulations. Drivers could only drive a minimum amount of hours a day and they were not allowed to deviate from their routes to pick-up or drop-off riders. Some cities would not allow the jitney service to operate on major urban corridors or on streets serviced by streetcars. Also, in most places, drivers had to pay expensive licenses and bonding charges.

By 1918 the number of jitneys operating in the U.S. had dropped by 90% and a short time later had completely vanished from the landscape.

Well, that is one story of ride-sharing from 100 years ago. I wonder if I can find a ride-sharing story from the Roman empire where private chariots were used to give a "Lyft" to people?


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