Robber Barons Who Help Society
The 1800s were a time of great business opportunities. During this time, the industries of steel, oil, and transportation expanded rapidly. Some of the major competitors in these enterprises, John D. Rockefeller, Andrew Carnegie, and Cornelius Vanderbilt set out into the world with nothing and continued on to monopolize entire industries. Though these monopolies helped them to gain a lot, the economy suffered in a major way. Since these men were earning so much money and taking many jobs, they left little opportunity for others to get jobs to support their families.
These three men used their great minds to advance themselves, and in the process they advanced the country. Cornelius Vanderbilt was the first of the three to create a monopoly. He became involved in boating and made many other boat owners realize that “the future of shipping belonged to steam rather than sail” (Klien 1). Until Vanderbilt had made the business of steamships so big, other people started to use steamships more than sailboats. This was a major step in the advancement of faster, cheaper transportation.
Vanderbilt was able to make millions even though he started with nothing. His story is a classic example of ‘rags to riches’. Such stories tend to be about a very poor person who works hard and becomes rich because of his effort. Vanderbilt began by borrowing money from his mother to start a business. When his business grew, he was able to pay his mother back and use the rest of his money to buy more steam driven boats. Within eight years, he cleared so much profit that he had a solid future ahead of him. After employing himself for all this time, he was hired by a man named Thomas Gibbons. Vanderbilt worked well for Gibbons and earned a great reputation. Cornelius created his own big business in 1829. Vanderbilt hired people to run his boats, sold his boats, and decided to “design larger, faster and more luxurious models” (Klien 2).
Cornelius Vanderbilt continued to create these boats for many years before he quit. The year after he resigned, he tried to return to work, but the men in charge would not let him. Vanderbilt became enraged and told them “You have undertaken to cheat me. I won’t sue you, for the law is too slow. I’ll ruin you” (Klien 2). He put more ships onto the same routes as the men who would not rehire him with lower rates. The men running his old company pleaded with him and gave him an offer to leave shipping if they paid him.
Once he left shipping, he moved on in the transportation industry. After monopolizing the shipping business, he began to monopolize the railroads. He started building and running railroads all across America. Even during a depression in the economy, he paid forty million dollars to add more train tracks. This advanced transportation even more because the money he spent made the first continuous four-track road in America.
During the middle of Vanderbilt’s life, another “better known capitalist and philanthropist” (Green 1) was born. His name was Andrew Carnegie. Carnegie had his first job at the age of thirteen while trying to support his family. Before Vanderbilt even got involved with the railroads, Carnegie had started to work within that business. By the time Carnegie turned twenty eight, he had made enough money to proclaim that he was rich. He retired from the railroads and chose to be a stock speculator, but he wanted to start his own business.
In 1872, he created the Carnegie Steel Company. He had seen the way that other companies had worked and realized that it was most desirable to minimize production costs and maximize productivity. Carnegie knew that he needed to obtain raw materials to manufacture steel in large quantities. Once he was able to mass produce his steel he noticed that he was able to lower costs so more people could buy his steel and he could make more money. When he bought the raw materials, he took over entire mines, running everybody else out of the business, leaving no opposition for him. With no competition around he was able to adjust prices however he wanted.
Soon after he created this method of running a business, “other business leaders adopted Carnegie’s management techniques” (Gale 1). The other businesses found this strategy so practical that they kept using it until it was finally made illegal to own a monopoly in 1890. The Sherman Anti-Trust Act may have stated that monopolies were illegal, but it left out the consequences for having one. Since there was no negative side to this, monopoly owners continued to run their businesses.
The tycoon that this law hurt the most was John D. Rockefeller. Rockefeller was another man who grew up with nothing. He started his first business when he was seven years old, and by the age of sixteen he quit school so he could work in Cleveland. Rockefeller and his business partner, Maurice Clark, decided to go into Pennsylvanian oil. They knew that since the railroad was coming to Cleveland that oil would be needed more and that the prices would go up. Rockefeller continued to believe in the future of oil company and bought out shares of his employees. Rockefeller and his employees created the Standard Oil Company which was “the largest refining company in the world” (Contemporary 1). He had the same business techniques as Vanderbilt and Carnegie. He would buy out the oil fields, barrel factories, oil-storage facilities, pipelines, and railroad tanker cars. After purchasing the refining of oil, he could sell the oil for any price that he wanted. Rockefeller used an expansion method called horizontal integration. Horizontal integration is when a company expands its business into different products that are similar to current lines. The business tycoon would make deals and bribe people to use his oil. He was not too concerned about anything, but “the biggest threat that Rockefeller faced to his sizeable kerosene business was Thomas Edison’s electric light bulb invention” (Marchetti 2). This source continues to explain that he even gave politicians money to bribe them not to use other products. (2)
Even though these men had their “reputations damaged by […] ruthless stock plays” (Gray 1), they still managed to help society. Rockefeller, Carnegie, and Vanderbilt all were major philanthropists. They all believed that they should give “millions of dollars to support the arts, churches, health, higher education, immigrants, and libraries” (Nasaw 1).
Cornelius Vanderbilt was not as big on philanthropy as Carnegie and Rockefeller, but he still donated much of his fortune to the poor and towards education. Andrew Carnegie also dedicated the rest of his days to caring for others and writing. He felt that “the rich have a moral obligation to give back to humanity” (Gale 1). Carnegie, like Rockefeller, created many schools and libraries. He focused on trying to educate the world.
Rockefeller was completely devoted to being a philanthropist. Not only did he begin the University of Chicago, Rockefeller University, the General Education Board, the Rockefeller Sanitary Commission, the Rockefeller Institute for Medical Research, and the Rockefeller Foundation, but he also began “a program of donation that would come to exceed five hundred-fifty million dollars” (Contemporary 2). He also “was active in church affairs for many years and was a generous financial supporter throughout” (History 2).
Altogether they hurt society a lot because people could no longer afford to take care of their families with prices rising and job opportunities being taken away. Yet at the same time, these three men were able to help us. Without the monopolies happening, we would never be where we are today. Our government would not know what a positive and negative effect that monopolies have on the economy, and they might still be legal. If they were still permissible and someone found out how to run a monopoly, the economy would be in major trouble because the government would not know how to handle the situation. Rockefeller, Carnegie, and Vanderbilt also advanced the United States in some of its biggest industries. These industries are strong enterprises in our economy.
Gale, Thompson. “Andrew Carnegie.” Science and Its Times, Vol. 5: 1800-1899.
January 23, 2008.
Green, Hardy. “Best Business Books of 2006; Power players, Wall Street Workings, and the
Internet’s Impact.” Business Week. January 23, 2008.
Gray, Christopher. “The Curious Travels of the Commodore.” The New York Times.
January 23, 2008.
Howard, Anne W. “The Life of a Pittsburgh Businessman and Philanthropist.”
Chronicle of Philanthropy. January 23, 2008.
“John D(avidson) Rockefeller, (Sr.).” January 23, 2008.
Klein, Maury. “The First Tycoon.” Forbes. January 23, 2008.
Marchetti, Michele. “Robber Baron or Revered Benefactor?” Books, Etc.
U-S-History.com. “Business and Industry John D. Rockefeller 1839-1937.”
February 11, 2008.