The "robber barons" were industrial and financial tycoons of the late nineteenth century. They included banker and financier John Pierpont Morgan (1837–1913); oil industrialist John D. Rockefeller (1839–1937); steel mogul Andrew Carnegie (1835–1919); financiers James J. Hill (1838–1916), James Fisk (1834–1872), and Jay Gould (1836–1892); and rail magnates Cornelius Vanderbilt (1794–1877) and Collis Huntington (1821–1900). Hailed by some for expanding and modernizing the capitalist system, lauded by others for their philanthropic contributions to the arts and education, these businessmen were viewed by many more as opportunistic, exploitative, and unethical.
Many factors converged to make the robber baron businessman possible: the country was rich in natural resources, including iron, coal, and oil; technological advances steadily improved manufacturing machinery and processes; population growth, fed by an influx of immigrants, provided a steady workforce that was often willing to work for a low wage; the government turned over the building and operation of the nation's railways to private interests; and, adhering to the philosophy of laissez faire (non-interference in the private sector), the government also provided a favorable environment in which to conduct business. Shrewd businessmen turned these factors to their advantage, amassing great empires. They reinvested profits into their businesses and their fortunes grew. The robber barons (especially the railroad men and the financiers who gained control of rail companies through stock buy-outs) hired lobbyists to work on their behalf to gain corporation subsidies, land grants, and even tax relief at both the federal and state levels. They converted their business prowess into political might. In Washington, D.C., politicians grew tired of the advantage-seeking representatives of the nation's business leaders. Reform-minded progressives complained that the robber barons lived in opulent luxury while their workers barely eked out a living.
After a decades-long domination of the robber barons over the U.S. economy, changes around the turn of the century worked to curb their influence. In 1890 the federal government passed the Sherman Anti-Trust Act which made trusts illegal (trusts are combinations of firms or corporations formed to limit competition and monopolize a market). Workers continued to organize in labor unions with which corporations were increasingly compelled to negotiate. The Interstate Commerce Commission (ICC) was established in 1887 to prevent abusive practices. In 1913 the Sixteenth Amendment was ratified, allowing the federal government to collect a graduated income tax. Though many American businessmen and women would make great fortunes in the twentieth century, by the end of the 1920s the era of the robber barons had drawn to a close.
The robber barons (especially the railroad men and the financiers who gained control of rail companies through stock buy-outs) hired lobbyists to work on their behalf to gain corporation subsidies, land grants, and even tax relief at both the federal and state levels. They converted their business prowess into political might.
ROBBER BARONS. At the turn of the twentieth century, crusading journalists and other critics scornfully labeled the leading business titans of the age, the "Robber Barons." The term grew from the overwhelming power these industrial giants wielded over many aspects of society and the resentment those suffering under their yoke felt. Disgust with the power of corporate America and individuals like Andrew Carnegie, John D. Rockefeller, and J. P. Morgan led to the growth of the Progressive movement and to reform efforts, including antitrust legislation, and investigative journalism, or muckraking.
Robber Barons were vilified for using the capitalist system to exploit workers, form anti-competitive trusts, and place the accumulation of wealth above all else. The belief that the rich could use whatever means necessary to increase their riches seemed to counter the ideals upon which the United States was founded. Muckraking journalists such as Ida Tarbell, who wrote about the abuses of Rockefeller's Standard Oil, reinforced the idea that the Robber Barons were a destructive force, a group of soulless industrialists willing to circumvent laws to achieve supremacy.
Although the exact origin of the term is unknown, Edwin L. Godkin, an editor of The Nation used the term in 1869, while during the same time period Senator Carl Schurz of Missouri used it in a speech. The term became a permanent part of the nation's lexicon after Matthew Josephson's The Robber Barons (1934) gained wide readership, particularly among historians. Josephson wrote his book in reaction to the generally business-friendly works of the pre–Great Depression 1920s, which painted the Robber Barons as benevolent leaders. Josephson viewed the Robber Barons as unscrupulous pirates fighting to control the nation's economy.
The 1940s and 1950s witnessed a revival of the view of business leaders as industrial statesmen, which reflected the image of America's post–World War II economic, military, and cultural hegemony. A new school of historians wrote about these leaders as exemplary figures. Works in this vein include John D. Rockefeller: The Heroic Age of American Enterprise (1940) by Allan Nevins and Triumph of American Capitalism (1942) by Louis M. Hacker. In the same vein, but not quite as fawning, are two national prizewinning works: Morgan: American Financier (1999) by Jean Strouse and Titan: The Life of John D. Rockefeller, Sr. (1998) by Ron Chernow.
In the early twenty-first century, the public once again looked back on the Robber Barons much more favorably than they were viewed in their own times. Morgan and Rockefeller, for example, acquired tremendous wealth, but also donated large sums to philanthropic and cultural causes, and both had an innate sense of the social responsibility that came with great prosperity. Both worked diligently throughout their later years to become civic patron saints, believing that donating money would soften the legacy of their business actions.
The Robber Barons also benefited from the generally favorable light many high-profile chief executives enjoyed during the early twenty-first century. Comparisons of Morgan and Rockefeller to Microsoft's Bill Gates or Berkshire Hathaway's Warren Buffett were not filled with scorn, but a sense of admiration and respect. In addition, the resurgence of the biography as America's favorite source of historical information helped soften the sharp edges of many Robber Barons. In recent years, most of the Robber Barons have been the subject of big general history biographies that have been predominantly favorable.
Chernow, Ron. Titan: The Life of John D. Rockefeller, Sr. New York: Random House, 1998.
Josephson, Matthew. The Robber Barons: The Great American Capitalists, 1861–1901. New York: Harcourt, 1934. Reprint, New York: Harvest, 1962.
Porter, Glenn. The Rise of Big Business, 1860–1920. 2d ed. Arlington Heights, Ill.: Harlan Davidson, 1992.
Strouse, Jean. Morgan: American Financier. New York: Random House, 1999.
The term “robber barons” dates back to the twelfth and thirteenth centuries, when it described the feudal lords of land who used corruption to increase their wealth and power. Feudalism was a class system of medieval Europe. Only those in the upper class could own land; citizens of the lower classes could live on and work the land as long as they pledged their loyalty and services to the feudal landlords. The term was revived in the late nineteenth century to describe a handful of industrialists who used questionable means to build up personal fortunes. Today, these men would be billionaires; they had seemingly unlimited amounts of money and were not afraid to let people know it. These business owners used modern strategies such as vertical integration (the involvement of a business in all aspects of the production of a product) to increase their wealth and put competitors out of business.
Cornelius Vanderbilt (1794–1877) is considered to have been the first robber baron. He quit school at age eleven to help his father make money to support the family. At sixteen, the native of New York bought a sailing ship for $100 and began a ferry service from Staten Island to New York City. Vanderbilt eventually established a line of steamboats and became a millionaire before the age of fifty. His net worth increased to $11 million before his sixtieth birthday. In 1857, Vanderbilt invested in the New York & Harlem Railroad. Within six years, he was the company's president. By 1875, the railroad king merged several lines so that his empire served the entire country. Vanderbilt was known to be loud, hardheaded, and somewhat crude. He rarely gave away his money, and when he died in 1877 his $100 million estate was left to William Vanderbilt (1821–1885), one of his thirteen children.
Another robber baron was Andrew Carnegie (1835–1919), a Scottish immigrant who created unimaginable wealth in the American steel industry . Another believer in vertical integration, Carnegie overworked and underpaid his employees, a practice that kept his operating costs to a minimum. He was able to supply his product at a cost less than that of his competitors. As a result, he became one of the world's wealthiest men when he sold his company to U.S. Steel in 1901 for $250 million. Unlike some of his infamous colleagues, Carnegie gave away much of his money to build thousands of library buildings as well as the well-known Carnegie Hall in New York City. He also donated to colleges and universities to set up scholarships. When Carnegie died at the age of eighty-three, he had given away most of his wealth.
Also among the robber barons was John D. Rockefeller (1839–1937), the man responsible for the establishment of the Standard Oil Company and the U.S. petroleum industry. Rockefeller built his first oil refinery in 1863. By 1877, he controlled 90 percent of the U.S. oil industry. His business became so large that he found it difficult to manage. Rockefeller's response was to form the first trust (an organization of several businesses in the same industry). By banding together, the trust can control the production and distribution of a product or service, thereby limiting competition. (See Monopolies and Trusts .)
Many consider Jay Gould (1836–1892) to have been the prototype (original example) of the robber baron. Viewed in some circles as more corrupt than Carnegie, Rockefeller, and Vanderbilt combined, Gould became a railroad financier who engaged in a battle with Vanderbilt over the Erie Railroad. As soon as Vanderbilt bought stock in the railroad, Gould issued more, illegally. When he was arrested for this act, Gould bribed the New York state legislature to change the laws. By 1872, he was the director of seventeen major railroads and the president of five others. Most of Gould's success was the result of dishonest behavior and corruption. When he died at fifty-seven, his fortune was worth $77 million.