Introduction to the Robber Barons

Robber Barons played a large role in the American Revolution from the late 1800s through the early 1900s.  Also labeled as the Captains of Industry, these entrepreneurs took advantage of the working class and built multimillion dollar (in today’s economy equal to multibillion dollar) companies which led America through the Great Depression.  Among these industrialists were Andrew Carnegie, Leland Stanford, Collis Huntington, Jay Gould, James J. Hill, and John D. Rockefeller along with many more.  They all clutched onto a great sense of perseverance when it came to the ‘all mighty dollar’ and were well-heeled with skills of leadership that far past those of the average citizen.  Some people still saw them as an immoral, corrupt group full of greed and self manifestation.  Some bribery did occur along with pitiable, in some cases illegal, working conditions not suitable for any individual including child labor which was common in almost all major industries, offering low pay and minimal benefits.  Although without these visionaries, America would not be what it is today.  Had they not pushed the common person to their limits and sucked dry all of the exploitation one could bear, labor unions would not have come into existence. This success and broad economic development they brought into today’s economy was unforgettable and served as a foundation that led to the working life of today’s society, allowing for growth of a less poverty stricken nation.


By Stephen Robinson

Andrew Carnegie

                Andrew Carnegie's (1835-1919) life is one of America’s most famous true rags to riches story.  He was one of the first to establish an American steel industry from 1873 to 1901. He developed educational institutions with his great fortune to help continue to teach people of his country. His success and great ambition assisted the US toward becoming one of the greatest industrial nations in the world.                
                Carnegie was born on November 25, 1835, in Dunfermline, Scotland.   Carnegie was the son of William and Margaret Morrison Carnegie. His father made a modest living as a home linen weaver.   Because machine looms were replacing skilled cottage workers, Carnegie's father was put out of business. In 1848, Andrew Carnegie and his family moved to the United States to Allegheny City, where his father got a job for working $1.20 week. With the death of his father in 1855, freed Andrew's desire to help his family, and allowed him to educate himself and learn craftsmanship.   From the age 14 to 18, Andrew Carnegie had jobs ranging from being a messenger boy to being a secretary, making about 35$ a month, and was soon raised to $50. In 1873, Carnegie established a steel rail company, as a limited partnership. During the Depression, Carnegie kept persistent in his work.  Using his own funds and the help of banks, Carnegie created his first steel furnace.  By 1878 he was making $1.25 million in profits by cutting prices, driving out competitors, and faltering partners.
                In the 1880s, Carnegie's purchase of majority stock in H. C. Frick Company, with coal lands and coking ovens in Connellsville as his most important acquisitions. In 1867, Carnegie moved to New York to be closer to the marketing center for steel products, while his new partner, Frick, chairman of the Carnegie Company, stayed in Pittsburgh as the general manager. Carnegie's planned expansion movements, management of funds, chemical control, and modernization of plants while Frick, as working director, rationalized the mass production of programs. Carnegie's wealth continued to grow even past the Homestead of 1889 and the war.  Because of the ruthless growing competition such as J.P. Morgan and the Moore brothers of Chicago, Carnegie’s interest began to change towards books, music, learning, and education.  He began his concentration in education by creating the first free public libraries.  Later, he founded the Carnegie Institute of Pittsburg, which blossomed other schools such as the Carnegie Institute of Technology, Mellon Technology, Carnegie Institution of Washington, and the Famous Carnegie Hall of New York.
                Despite his wealth, Carnegie has not forgotten his heritage or concern for social justice.  He believed in good talent, productive workers, and profit sharing. Before his death Carnegie donated more than $350 million dollars to public foundations.  He was dedicated to peace initiatives throughout the world because of his hatred for war.  He was labeled a robber baron by critics because he did not increase wages to his employees, even though he had large fortunes.  He believed extra spending was wasteful.  Regardless of his critics, Carnegie helped lead America to global power.


By Shelita Warren


References:
Carnegie, Andrew. "Gospel of Wealth" (1888, 1998)
Livesay, Harold C. (1999). Andrew Carnegie and the Rise of Big Business, 2nd Edition.

J.P. Morgan

                 

                A “rags to riches” story, J.P. Morgan was not. The son of a successful banker, Morgan enjoyed the lap of luxury his entire life. Cautiously guided by his father, Morgan learned early on the inner makings of a successful businessman.  J.P. Morgan’s first move to financial prominence began in 1871 when he opened a partnership with Anthony Drexel, forming Drexel, Morgan, and Company. Morgan’s conservative financial nature helped the firm survive economic downturns with ease. These financial downturns affected various industries, mainly railroads. It was Morgan’s belief that by forming large publicly owned corporations, the economy could be stabilized.

                By combining prosperity and power, major companies could be merged into one industry. The first step in this process started when Morgan reorganized the railroads into one centralized system. By 1900, Morgan owned one-sixth of the nation's railroads and had constructed a system in which all six major railroads ran on a systematic network from New York City. Another instance of Morgan’s great undertakings occurred in the electrical industry. Early on, Morgan poured hoards of money in the funding of Thomas Edison’s experiments to create electricity and bring it to commercial use. Morgan underwrote the merging of Edison Electric with six other companies. After electricity has become a public commodity, Morgan sought to gain control of the industry. Morgan successfully merged Thomas-Houston and Edison Electric Company to form the General Electric Trust in 1892. General Electric became one of the world’s leading electrical monopolies. By investing heavily in such a fledgling industry, Morgan showed how modern of a businessman he really was. Morgan foresaw the importance of electricity and the advantage that impressive neon signs were serve in the future. Probably Morgan’s greatest business feat came in the steel industry. In 1901, Morgan successfully negotiated a merger with Charles Schwab in which he bought out the steel shares of Andrew Carnegie for $480 million. By doing so, Morgan was able to create United States Steel, the world’s first billion-dollar corporation. Due to this era of extreme consolidation of companies into large corporations, Morgan was able to assure the reliance of the economy on Wall Street and ultimately his finances. This extreme merging of companies into large conglomerates greatly changed the face of the economy.

                 By the early 1900’s, Morgan controlled 70 percent of the steel industry, one fifth of companies on the Stock Exchange, the three largest insurance companies, and various other banks besides his own. Morgan single handedly had changed the economy from competing manufacturers into large corporate monopolies. Small businesses had no chance at competing and order to succeed, people had to hope to obtain jobs at these corporations. The American government even relied on the finances of Morgan at times as well. During the Panic of 1907, Morgan organized a plan that secured international lines of credit in order to purchase stock in plummeting stocks of healthy corporations. Most namely, it was okayed by President Roosevelt for Morgan to purchase $30 million from his chief competitor, TCI steel. The deal stabilized the Panic and ultimately led to the notion of a stabilizing force in the economy. The end result was the creation of the Federal Reserve Bank.

                Morgan was known around the not only for his financial successes but also for his contributions to society. Due to his wealth, Morgan was able to purchase ancient art relics of which included an original Guttenberg Bible and Babylonian tablets. Morgan helped in the creation of the Metropolitan Museum of Art and the Museum of Natural History in New York City. Morgan also served as one of fifteen social vice-presidents in the Hudson-Fulton Celebration Commission of 1909, which was a gift to the citizens of New York City.

                J.P. Morgan’s business acquisitions and accumulation of wealth can still be seen even in today’s economy. Corporations still dominate the American economy and his bank, J.P. Morgan Chase, still remains the largest in the nation. To some, Morgan was the embodiment of successful business practices. To others, he was a money-hungry tycoon, hell-bent on capitalizing those in lesser financial positions. J.P. Morgan’s significance on the financial industry and American economy will never be forgotten.



By Kyle Darling


References:

Kessner, Thomas. Capital City: New York City and the Men Behind America's Rise to Economic Dominance, 1860-1900 (New York: Simon & Schuster, 2003), 207.

Gordon, John Steele. "The Magnitude of J.P. Morgan.” American Heritage Magazine Vol, 40(1989)

Jackson,Kenneth T. The Encyclopedia of New York City (New Haven, Ct.: Yale University Press, 1995), 627

James Hill - "The Empire Builder"

               At the age of 18, James Jerome Hill leaves Canada for good, eventually arriving in St. Paul Minnesota in 1856.  He uses his knowledge gained through 9 years of formal education to hold down his first two jobs as a Bookkeeper for a  Steamboat company, and freight transfer supervisor for a wholesale grocer. Hill innovated the shipping industry in several ways: He created weather proof transfer bays with a railway going alongside a river for easy, weatherproof shipping transfers from railway to waterway.  He was well known for tracking down lost shipments, caused by the complexity of shipping routes. Hill was very smart, and in 1870 he began diversifying his business to other areas, such as Steamboats.  In 1872, his Steamboat business on the Red River merged with another, creating an essential monopoly in the immediate region. During this time Hill had also expanded his wood fuel business into the Coal industry, and in 1874, after seven years in the Coal business, Hill had expanded it dramatically.

                Using his control of both the fuel and transportation businesses, he not only became extremely wealthy, he was vital in the creation of the Northwestern Fuel Co. in 1877.  This alliance of interests made Minneapolis and St. Paul, also known as The Twin Cities, into one of the biggest fuel distribution centers in the world.  Using his money and influence from his banking, fuel, transportation, and steamboat businesses, Hill then entered into the Railroad industry.  In 1877, 39 year old Hill forms  a group of partners, including Norman Kittson, from the Steamboat business, Donald Smith, George Stephen, and John S Kennedy.  These five members were known as "The Associates" and together they bought the St. Paul and Pacific Railroad, and greatly expanded it throughout Montana, Wisconsin, Minnesota and North Dakota.  In the 1890's Hill eventually expands his railway all the way to Seattle, Washington, making it a transcontinental railroad.  During the Panic of 1893, Hill's management skills not only prevented his companies from going out of business, but he managed to turn a profit where others could not even stay solvent. In 1900, with the help of J.P Morgan, Hill acquired the Northern Pacific Railroad. 

                Hill's last expansion included the Colorado and Southern railway lines the run to Galveston Texas, and he also created the Spokane, Portland, and Seattle Railroad.  By the time of Hill's death in 1916, he was worth over $53,000,000 dollars, which today is equivalent to about $1,250,000,000. His legacy as a Robber Baron will be known for a long time, and his railways stand as proof of his influence and the expanse of his power through the break of the 20th century.


By Chris Carlton


References:
Stewart H. Holbrook, The Story of American Railroads (New York: Crown Publishers, 1947) 174.