Robber Barons

2 Key excerpts on "Robber Barons"

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  eBook - ePub

  Interpretations of American History, 6th Ed, Vol.

  Since 1877

  • Gerald N. Grob, George Athan Billias(Authors)
  • 2010(Publication Date)
  • Free Press

    (Publisher)

  Given these conditions it was not surprising that much of the historical scholarship of the 1930s took an antibusiness turn. Beard and Parrington had anticipated this development; their writings during the late 1920s echoed some of the critical literature of this era. Sinclair Lewis’s unforgettable portrait of Babbitt, while not wholly intended to debunk businessmen, contributed to a stereotype already widely held. The massive attack on the image of the American businessman, however, came in the Great Depression. During the 1930s the robber baron idea came to full bloom.

  In presenting a highly unfavorable portrait of the industrial tycoon most writers in this tradition were implicitly attacking an economic system that they thought had failed to live up to its promises and expectations. Oddly enough many—though not all—of the critical studies during the 1930s were written by nonacademic figures who were critical of capitalism rather than by academic historians. Thus Lewis Corey, a socialist, in his The House of Morgan (1930), detailed the techniques whereby a major banking and investment concern exercised near dictatorial control over corporations having assets well in excess of twenty billion dollars. His lesson was not lost upon his readers. It was Corey’s purpose to marshal as much evidence as possible to demonstrate the evil, selfish, and corrupting nature of industrial and finance capitalism. Other historical and literary writers, attracted by Marxian ideas, lent support to the growing body of critical studies of the American economic system.

  The book that did the most to fix in American historical scholarship the enduring stereotype of the late nineteenth-century industrialist, however, was Matthew Josephson’s brilliantly written The Robber Barons: The Great American Capitalists 1861-1901, which appeared in 1934. Fittingly enough, Josephson dedicated his book to Charles and Mary Beard, who themselves had interpreted American history in terms of a struggle between haves and have-nots, debtors and creditors, agrarians and industrialists, workers and capitalists. Josephson set the tone of his work in his introduction. “This book,” he began, “attempts the history of a small class of men who arose at the time of our Civil War and suddenly swept into power…. These men more or less knowingly played the leading roles in an age of industrial revolution…. Under their hands the renovation of our economic life proceeded relentlessly: large-scale production replaced the scattered, decentralized mode of production, industrial enterprises became more concentrated, more ‘efficient’ technically, and essentially ‘cooperative,’ where they had been purely individualistic and lamentably wasteful. But all this revolutionizing effort is branded with the motive of private gain on the part of the new captains of industry. To organize and exploit the resources of a nation upon a gigantic scale, to regiment its farmers and workers into harmonious corps of producers, and to do this only in the name of an uncontrolled appetite for private profit—here surely is the great inherent contradiction whence so much disaster, outrage, and misery has flowed.” Josephson conceded that the Robber Barons had many imposing achievements to their credit. On the other hand the debits far outweighed the credits. Ultimately, he concluded, the “extremes of management and stupidity would make themselves felt…. The alternations of prosperity and poverty would be more violent and mercurial, speculation and breakdown each more excessive; while the inherent contradictions within the society pressed with increasing intolerable force against the bonds of the old order.” The implications of Josephson’s ideas were obvious. The unfavorable portrait of the businessman has in muted form persisted as a theme in American historical writing.7

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  eBook - ePub

  An Introduction to Capitalism

  • Paul Swanson(Author)
  • 2012(Publication Date)
  • Routledge

    (Publisher)

  After the economic downturn from 1873 to 1878, and its attendant falling prices, the existing large firms were desperate to find a way to avoid ruinous competition. As an answer to their dilemma, Samuel Dodd, Standard Oil’s attorney, devised what was known as the trust agreement – a powerful form of the centralization of capital. In the agreement, owners of each member firm would deposit their stock in a trust in exchange for a share in the total combined profits. The trustees would then fix prices and allot output to each firm. While each firm would remain a separate entity, management would be coordinated, effectively centralizing capital. Eight trusts were established nationwide between 1882 and 1887, gaining anywhere from 50 percent to 98 percent of their respective markets. The most prominent of these was Standard Oil, led by John D. Rockefeller, who once said (perhaps apocryphally), “Competition is a sin.”

  The period of these trusts was short-lived, however, as the Sherman Antitrust Act was passed in 1890, outlawing “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.” As it turned out, this attempt to curtail the centralization of capital had little effect. Most of the trusts continued to exist (although not in the legal form of a trust) and new forms of centralized management, such as holding companies (essentially trusts by another name, but even more effective in controlling the market), were introduced to side-step the force of anti-monopoly laws.

  And to cap off this centralization of capital, from 1898 to 1902 there was an explosion of mergers in American business that transformed the economy yet again. Most of these combinations were horizontal consolidations where most, if not all, of the competitors in an industry were consolidated into one, giant enterprise. In these five years a total of 136 consolidations took place in the manufacturing sector, with many of the firms (such as American Can, DuPont, Eastman Kodak, and International Harvester, all of which remained large for many subsequent decades) gaining more than 70 percent of their respective markets.

  The main figures behind all of this centralization of capital, this drive to rise above competition and gain market power, were collectively known as “Robber Barons.” Using any means possible – both legal and illegal – they ruthlessly undermined their competitors, all the while trying to gain complete market control. Among them are some of the great family names in American history: Rockefeller, Carnegie, Vanderbilt, Duke, Fisk, and Stanford. In addition to controlling their respective industries, they amassed great personal fortunes and by 1900 there was a greater rate of billionaires than at any other time in US history. In fact, John D. Rockefeller (with Andrew Carnegie second, and William Vanderbilt fourth) is widely considered to be the wealthiest man in world history, having a net worth of approximately US$330 billion (in 2008$) at his peak. It is ironic that these families (particularly Rockefeller) founded many of the current major charitable organizations in the United States, given how they acquired their wealth. Perhaps it was a way to assuage their guilt, or more probably, there simply was no way an individual or family could possibly spend all of that money (which begs the question as to why they wanted it in the first place).

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