Robber Barons or Pioneers in American Business?

The term “robber baron” is one that has been used for many years to describe American capitalists from the late 19th century who used questionable as well as less than ethical methods to attain their wealth. J.P. Morgan, John D. Rockefeller and Andrew Carnegie were all very wealthy Americans who have had this term used to describe them. The term can trace its origins back to medieval times. At the time, Geram lords would charge a toll to any ship which sailed on the Rhine. These lords charged this toll simply because they could and they offered no goods or service in return, the money simply went to make them richer. This pejorative name was given to many American industrialists and businessmen who were believed to only be interested in lining their pockets and cared little, if at all, for the average working man.

J.P. Morgan

An expert at industrial reorganization and an American financier, John Pierpont Morgan was a very prominent figure in the world before World War I. Among his many achievements, he reorganized many major railroads as well as consolidated General Electric, U.S. Steel and International Harvester. He was born in Hartford, Connecticut on April 17, 1837 to Junius Spencer Morgan who was a successful financier. He attended the English High School of Boston and later the University of Gottingen in Germany. His post-college career began as an accountant for Duncan, Sherman and Company. This company was the American representative of George Peabody and Company, a firm in London, England. Morgan's father owned a banking company in New York City, and J.P. became an agent for the company in 1861. He became a member of Dabney, Morgan and Company in 1864 and remained there until 1871, at which time he became a partner of Drexel, Morgan and Company. This business soon became the main source of U.S. government financing. In 1895, the company was reorganized and became known as J.P. Morgan and Company. The business became one of the world's most powerful banking institutions. Morgan had a lot of connections throughout the world, and was able to provide capital to quickly growing U.S. industrial corporations.

In 1885 he was involved in his first railroad reorganization and helped to arrange an agreement between the Pennsylvania Railroad and the New York Central Railroad. He wanted to minimize a rate war and competition between different railroads. Morgan reorganized another two major railroads in 1886 in order to stabilize their financial base. He became a board of director member for numerous railroads. When the financial panic hit in 1893, Morgan helped resurrect leading railroads including: Erie Railroad, Northern Pacific and Southern Railroad. Again he wanted to stabilize rates and discourage competition in the East. Morgan was able to gain control of a lot of the stock from the railroads which he had reorganized. This made him one of the most powerful railroad magnates in the world. By 1902 he controlled 5,000 miles of railroad. He formed a syndicate during the depression that resupplied the United States government's gold reserve which had become depleted. The syndicate provided $62,000,000 in gold to help with the Treasury crisis.

Next came industrial consolidations that reshaped the corporate structure of the American manufacturing sector. In 1891 Morgan helped arrange a merger between Thomas-Houston Electric Company and Edison General Electric which became known as General Electric. He financed the Federal Steel Company in 1898 and merged it with Carnegie Steel Company as well as other steel companies in 1901. United States Steel Corporation was the result of the mergers and became the first billion-dollar corporation in the world. A merger of numerous leading agricultural equipment manufacturers in 1902 led to the formation of International Harvester Company. Next came the formation of the International Merchant Marine which was comprised of transatlantic shipping lines. In 1907 when the stock market panic hit, he led a group of bankers who took huge government deposits and determined how best to utilize the money for financial relief. This helped to preserve the solvency of banks and corporations and helped to avoid a financial collapse. Having finished with industrial reorganization, Morgan proceeded to gain control of numerous leading banks and insurance companies. This led to some distrust by the federal government and hostility from reformers and muckrakers throughout the U.S. Morgan died on March 31, 1913 in Rome, Italy.

John D. Rockefeller

An extremely wealthy man who helped create the Standard Oil Company, John D. Rockefeller also donated large amounts of money to charities and churches. He was born on July 8, 1839 in Richmond, New York, to William and Eliza Rockefeller. His father frequently traveled so he was raised mainly by his mother, who taught him to work hard, save money and donate to charities. Rockefeller attended high school in Cleveland, Ohio and left in 1855. He attended a six-month business course at Felsom Mercantile College. He was able to complete the course in only three months, and later got a job with Hewett & Tuttle. It was a small company that produced shippers and commission merchants. Rockefeller was an assistant bookkeeper. He impressed his bosses at the company by arranging difficult transportation deals involving the movement of freight via lake boats, canals and railroads. He soon began to trade for his account.

In 1859 he began business on his own, forming a partnership with Maurice Clark who was a neighbor. Clark & Rockefeller became a successful business and expanded during the Civil War. In 1863 Rockefeller became part of the oil business. Oil refineries in Cleveland made the city a major refining center for the industry. Two of Clark's brothers, Samuel Andrews (who had oil refinery experience) and Rockefeller created Andrews, Clark & Company. Disagreements among the owners led Rockefeller to buy the Clarks' interest in the company and he and Andrews formed Rockefeller & Andrews. At only 24 years of age, Rockefeller leveraged the business and then expanded it. In 1866 Rockefeller's brother William joined the business and managed the New York City office as well as dealt with exporting. In 1870 the Standard Oil Company was formed by Rockefeller, William, Samuel Andrews, Stephen V. Harkness, O.B. Jennings and Henry M. Flagler.

By 1872 the Standard Oil Company had taken control of almost all Cleveland refining firms. In 1882 the properties of Standard Oil were all merged into the Standard Oil Trust. In 1896 Rockefeller changed course and replaced his leadership of the daily business of Standard Oil with a focus on philanthropy. From the middle of the 1890's until his death in 1937 his activities revolved around philanthropy. He had always donated money to his church and other charities, but he now decided to hire Reverend Frederick T. Gates to assist in the management of his philanthropy. In 1897 Rockefeller's son, John D. Rockefeller Jr., helped Gates and his father establish a series of important institutions in American philanthropy history. These institutions involved areas such as science, public health and medicine and still exist today. Rockefeller lived a long life and died on May 23, 1937 at 97 years of age. He is buried in Cleveland, Ohio.

Andrew Carnegie

Helping to create the steel industry, amassing great wealth and later proceeding to give much of his money away was the life of Andrew Carnegie. Born on November 25, 1835 in Dunfermline, Fife, Scotland, Carnegie was part of an impoverished family. They moved to the United States when he was 13 years old, and got a job as a bobbin boy in a cotton factory in Pittsburgh, Pennsylvania. He next was able to get a job tending a steam engine. The following year he worked as a messenger boy for the local telegraph office. In 1851 he moved up to the position of a telegraph operator. In 1853 he was able to attain a job for the Pennsylvania Railroad. He became the personal assistant and telegrapher for Thomas Scott who was a top official for the railroad. He learned a great deal about business and the railroad industry from this job. In only three years he was promoted to superintendent of the Pittsburgh Division of the railroad.

His wealth also grew through investments that paid off while working for the railroad, especially in the area of oil. In 1865 he left the railroad and found employment with the Keystone Bridge Company. Eventually he became fascinated with the steel industry and focused on a new steel refining process that Englishman Henry Bessemer utilized to convert large batches of iron into steel. He put a lot of money in the process, borrowed heavily and built a new steel plant in the Pittsburgh area. He proceeded to build steel plants over the years throughout the United States. The key to Carnegie's success in the steel industry is that he owned everything necessary for the various parts of the process. For example, he owned the materials, railroads, ships, and even coal fields. He had ownership over all aspects of the manufacturing process. Carnegie Steel Corporation became one of the largest business of its kind by 1889.

The business would not be without problems though. Carnegie preached for workers to have rights to unionize and to be able to protect their jobs, but he didn't practice what he preached. In 1892 the company wanted to lower the wages of the plant workers in Homestead, Pennsylvania. The workers already worked long hours for little pay. The employee's refusal to work began what was referred to as the Homestead Strike of 1892. The company hired guards to break up the union and intimidate strikers which erupted in violence. Many people were killed during the conflict. J.P. Morgan soon became a threat to the Carnegie Steel empire and Carnegie decided to sell his entire steel business to Morgan. At 65 years of age Carnegie decided to focus his remaining years on helping others. He wanted to help people to learn to help themselves. It is estimated that he assisted in opening over 2,800 public libraries. He also supported higher-learning institutions. He established the Carnegie Institute of Technology in Pittsburgh which is now called the Carnegie-Mellon University. In 1905 he created the Carnegie Foundation for the Advancement of Teaching. In 1910 he wanted to help establish peace in the world so he formed the Carnegie Endowment for International Peace. He passed away on August 11, 1919.