Captains of Industry or Robber Barons? - Mac OS X Server

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Captains of
Industry or
Robber
Barons?

U.S.HISTORY.ORG

CHAPTER 1

Captains of
Industry or

Robber
Barons?

SECTION 1 The Golden Spike: Does it really symbolize the completion of the
transcontinental railroad?
Introduction: The Gilded
Age From the ashes of the American Civil War sprung an economic
powerhouse.
SECTION REVIEW
1. Identify or define the following: Captains of Industry, The factories built by the Union to defeat the Confederacy were
not shut down at the war's end. Now that the fighting was done,
Robber Barons, Graft these factories were converted to peacetime purposes. Although
2. What were the differences in referring to the Industrial industry had existed prior to the war, agriculture had represented
the most significant portion of the American economy.
Giants as “Captains of Industry” or as “Robber Barons?”
After the war, beginning with the railroads, small businesses grew
larger and larger. By the century's end, the nation's economy was
dominated by a few, very powerful individuals. In 1850, most
Americans worked for themselves. By 1900, most Americans
worked for an employer.

The growth was astounding. From the end of Reconstruction in
1877 to the disastrous Panic of 1893, the American economy
nearly doubled in size. New technologies and new ways of
organizing business led a few individuals to the top. The
competition was ruthless. Those who could not provide the best
product at the cheapest price were simply driven into bankruptcy
or were bought up by hungry, successful industrialists.

The cartoon reads "One sees his (Uncle Sam's) finish unless good
government retakes the ship"

2

The so-called CAPTAINS OF INDUSTRY became household What role did the government play in this trend? Basically, it was
names: John D. Rockefeller of Standard Oil, Andrew Carnegie of pro-business. Congress, the Presidents, and the Courts looked
Carnegie Steel, and J. Pierpont Morgan, the powerful banker who favorably on this new growth. But leadership was generally
controlled a great many industries. They brought forth great lacking on the political level. GRAFT, political corruption, spread
technological and industrial advances, and made themselves like a plague through the city, state, and national governments.
some of the wealthiest people to have ever lived. Many referred Greedy legislators and "forgettable" Presidents dominated the
to these industrial “giants” as ROBBER BARONS. Their tactics, political scene.
which included: establishing monopolies, exploiting their workers
with unfair pay and working conditions, and bribing government True leadership, for better or for worse, resided among the
officials, were not always fair, but there were few laws regulating magnates who dominated the Gilded Age.
business conduct at that time.
Links on the Web
The "Molly Maguires" were a band of 19th century Irish immigrant
laborers who struggled to survive in American industry. They Millionaire's Row
organized labor unions and were not averse to violence, as this
"coffin notice," delivered to three bosses, suggests. In less than 25 years, America's brand-new millionaires like
Vanderbilt, Astor and Carnegie turned New York City's Fifth
Industrial Strength Avenue from a rutted, dirt road into a magnificent street lined with
palatial homes.
Nevertheless, the American economy grew and grew. By 1914,
the small nation once seen as a playground for European empires Chicago World’s Fair
had now surpassed them all. The United States had become the
largest industrial nation in the world. As 27 million visitors proved, Chicago was THE place to be in
1893 when America hosted the World's Columbian Exposition.
However, the prosperity of America did not reach everyone. Amid The extravagant celebration of American culture and society
the fabulous wealth of the new economic elite was tremendous lasted 6 months. Tour it here!
poverty. How did some manage to be so successful while others
struggled to put food on the table? Americans wrestled with this 3
great question as new attitudes toward wealth began to emerge.

SECTION 2 The transcontinental railway was completed with a jubilant
celebration on May 10, 1869, when the rails connecting the
Binding the Nation By Rail Central Pacific and Union Pacific Railroads were joined at
Promontory, Utah.
SECTION REVIEW
1. Identify or define the following: Gilded Age, The Locomotive was not an invention of the GILDED AGE, an era
of serious social problems hidden by a thin layer of gold. Indeed
Transcontinental Railroad, Union Pacific, Central Pacific, Americans had traveled by rail in the decades that preceded the
Promontory Point, Railroad Tycoons, Interstate Civil War. But such travel was risky.
Commerce Commission.
2. What benefits would a transcontinental railroad provide to Carlos Callejo
the people of the East? to the people of the West?
3. What led to the creation of the Interstate Commerce This mural in El Paso County, TX, honors the thousands of
Commission? Chinese workers who helped build the Southern Pacific Railroad
and other transcontinental railroad systems.

Passengers often sat in the same room as a wood burner and
had to be watchful of wayward sparks landing on their clothing.
Braking systems were not always trustworthy. Several engines
even exploded while trying to reach a destination.

Traveling also represented a tremendous investment in time. Rail
passengers often had to change trains frequently because the
width between tracks varied from company to company. Such a
journey could be uncomfortable, boring, and dangerous.

Give Me a Brake

After the Civil War many rail problems were solved. George
Westinghouse invented the air brake and trains could stop more

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reliably as a result. Railroad firms agreed on a standard width Union Pacific workers, many of whom were Irish and Chinese
between tracks to reduce transfers. The Pullman Car Company immigrants, started at Omaha, Nebraska, and hammered their
produced sleeper cars and dining cars to make travel more way westward. From Sacramento, California, the Central Pacific
comfortable. made its way eastward with the assistance of thousands of
Chinese immigrants.
The Transcontinental Railroad
Those working on the railroad gave their sweat and sometimes
Map of Transcontinental Railroad Lines, 1880s their lives blasting through the often unforgiving terrain. Other
dangers that workers faced were disease, searing summer heat,
Soon after the railroad made its appearance in the U.S. in the freezing temperatures in the mountains, Native American raids
1830s, Americans dreamed of linking the Atlantic and Pacific and the lawlessness and violence of pioneer towns.
Oceans by rail. A TRANSCONTINENTAL RAILROAD would
allow for settlement of the west, open new markets for eastern The Golden Spike
manufacturers, and bring relief to overcrowded eastern cities.
The government declared that the two lines would merge at
Some even believed that it was divinely intended that Americans PROMONTORY POINT near Ogden, Utah. On May 10, 1869,
should control the whole of the continental U.S. In 1845, a Leland Stanford, representing the Central Pacific Railroad, was
Democratic journalist named John L. O'Sullivan coined the provided the honor to hammer a golden spike into the ground
phrase "Manifest Destiny." that marked the completion of the coast-to-coast line.
Celebrations erupted across the land. Even the Liberty Bell tolled
Steaming locomotives would hasten western settlement, spread once again to commemorate the occasion.
democratic values, and increase the size of the United States
(Arizona, Oklahoma, New Mexico etc., were not yet states, only Soon, other transcontinental lines were constructed and travel
Territories). Western settlement was a paramount national across the continent became worlds simpler, less expensive, and
interest. As such, the federal government awarded the contract much faster, than by the old Conestoga wagon.
to link the coasts by rail to two companies, the UNION PACIFIC
and the CENTRAL PACIFIC. On the Right Track

I've Been Working on the Railroad The engineering achievement was monumental. The costs of the
operation to railroads were enormous. Tens of thousands of

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workers had to be paid, sheltered, and fed. Tons of steel and rates above a certain level. Consequently, the public suffered.
wood were required. Finally, in 1887, Congress responded to public outcry by creating
the INTERSTATE COMMERCE COMMISSION to watch over the
However, the economic incentives to railroads were enormous. rail industry. This was the nation's first Regulatory Agency. Due to
The government offered generous loans to companies who were poor wording in its enabling legislation, the ICC was largely
willing to assume the risk. The greatest reward was land. For ignored until the early 20th century.
each mile of track laid by the Central and Union Pacific Railroads,
the companies received 640 acres of public land. In other rail But the public also reaped great benefits. Eastern businessmen
projects, state governments often kicked in additional acres for a could now sell their goods to California citizens. As a result of
growing number of rail companies. improved transportation all Americans had access to more goods
at a cheaper price. The westward movement was greatly
The Interstate Commerce Commission accelerated. Those seeking a new start in life could much more
easily "go west."
All in all, the railroads received nearly 200 million acres of land
from the U.S. government for fulfilling contracts. Directors of No industrial revolution can occur without a transport web. The
some railroads made fortunes. Foremost among the RAILROAD nation was now bound together by this enormous network and its
TYCOONS were Cornelius Vanderbilt, James J. Hill (from St. citizens were ready to reap the rewards.
Paul, MN), and Jay Gould.
Links on the Web
But freight railroad abuses grew rampant. Money lined the
pockets of greedy public officials who awarded generous terms Central Pacific Railroad Photographic History Museum
to the railroads. Railroad companies set their own shipping rates.
This website provides a wonderful collection of historic
Sometimes it was more expensive for a small farmer to ship photographs and artwork related to the building of the
goods to a nearby town than to a faraway city. Because the transcontinental railroad. Browse through more than a dozen
companies kept their rates secret, one farmer could be charged articles reporting on the event to Americans of the mid-19th
more than another for the same freight transport. century. Great reading and illustrations to match!

To reduce competition, railroad companies established pools. 6
These were informal arrangements between companies to keep

Early Railroads The U.S. transcontinental railroad was completed when a golden
spike was driven at Promontory Summit, Utah, linking East and
This look at early railroads from the American Studies program at West on May 10, 1869. Or was it? This site claims not. See why.
the University of Virginia includes many images of early
railroading, when it was more of a novelty than a useful transport Interstate Commerce Commission
system. Trace the evolution of locomotives and discover just how
far today's engineers have come. A brief history of the Interstate Commerce Commission, the first
regulatory agency in U.S. history. Learn how an agency intended
History of Railroads and Maps to protect the public was enfeebled by vague wording in its own
enabling legislation. From the folks at Infoplease.
The building of railroads even affected the way maps were drawn
and surveys were conducted. This look at the relationship Chinese Laborers in the West
between maps and railroad is from the Library of Congress and
offers many historic maps along with in-depth text. From the links Thousands of Chinese workers began immigrating to the western
at the top, click on "Land Grants" to learn how speculators United States in the 1850s. While many industries sorely needed
distorted maps when advertising railroad lands for sale to the more laborers, some resented the new immigrants and came to
public. blame them for later economic downturns. Economic hardship,
prejudice and violence made life difficult for Chinese immigrants.
Leland Stanford This web page follows their journey and contains a great
collection of photographs.
President of the Union Pacific railroad, California governor and
senator and endower of Stanford University. One of the "big four" Time Zones Needed
visionaries behind the building of the transcontinental railroad.
Discover how Stanford built California's Central Pacific railroad Before the railroads everyone knew the time of day. Noon was
with his private funds and political influence. All aboard for a when the sun was directly overhead. But each town setting its
fascinating biography from pbs.org. own time that meant that trains crossing Wisconsin passed
through 38 different time zones! A New York school principal had
Transcontinental Coverup? a solution.

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SECTION 3 "What a Funny Little Government!" Cartoonist Horace Taylor
pokes fun at John D. Rockefeller in this cartoon which appeared
The New Tycoons: John D. in The Verdict, a partisan magazine of the day.
Rockefeller
He was America's first billionaire.
SECTION REVIEW
In a pure sense, the goal of any capitalist is to make money. And
SECTION REVIEW JOHN D. ROCKEFELLER could serve as the poster child for
1. Identify or define the following: John D. Rockefeller, capitalism. Overcoming humble beginnings, Rockefeller had the
vision and the drive to become the richest person in America.
Edwin Drake, Rebates, Trust, Standard Oil Company,
Philanthropist. At the turn of the century, when the average worker earned $8 to
2. In your opinion was Rockefeller a Captain of Industry or a $10 per week, Rockefeller was worth millions.
Robber Baron? Why?
Robber Baron or Captain of Industry?

John D. Rockefeller (1839-1937)

What was his secret? Is he to be placed on a pedestal for others
as a "Captain of Industry?" Or should he be demonized as a
"robber baron." A Robber Baron, by definition, was an American
capitalist at the turn of the 19th century who enriched himself
upon the sweat of others, exploited natural resources, or
possessed unfair government influence.

Whatever conclusions can be drawn, Rockefeller's impact on the
American economy demands recognition.

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Rockefeller was born in 1839 in Moravia, a small town in western to candlemakers and another byproduct petroleum jelly to
New York. His father practiced herbal medicine, professing to medical supply companies. He even sold off other "waste" as
cure patients with remedies he had created from plants in the paving materials for roads. He shipped so many goods that
area. John's mother instilled a devout Baptist faith in the boy, a railroad companies drooled over the prospect of getting his
belief system he took to his grave. After being graduated from business.
high school in 1855, the family sent him to a Cleveland business
school. Rockefeller demanded REBATES, or discounted rates, from the
railroads. He used all these methods to reduce the price of oil to
Young John Rockefeller entered the workforce on the bottom his consumers. His profits soared and his competitors were
rung of the ladder as a clerk in a Cleveland shipping firm. Always crushed one by one. Rockefeller forced smaller companies to
thrifty, he saved enough money to start his own business in surrender their stock to his control.
produce sales. When the Civil War came, the demand for his
goods increased dramatically, and Rockefeller found himself Standard Oil — a Trust-worthy Company?
amassing a small fortune.
John D. Rockefeller had to perform a delicate balancing act to
He took advantage of the loophole in the Union draft law by maintain his reputation as a philanthropist while living the live of a
purchasing a substitute to avoid military service. When EDWIN wealthy businessman.
DRAKE discovered oil in 1859 in Titusville, Pennsylvania,
Rockefeller saw the future. He slowly sold off his other interests This sort of arrangement is called a trust. A TRUST is a
and became convinced that refining oil would bring him great combination of firms formed by legal agreement. Trusts often
wealth. reduce fair business competition. As a result of Rockefeller's
shrewd business practices, his large corporation, the STANDARD
Waste Not... OIL COMPANY, became the largest business in the land.

Rockefeller introduced techniques that totally reshaped the Oil As the new century dawned, Rockefeller's investments
Industry. In the mid-19th century, the chief demand was for mushroomed. With the advent of the automobile, gasoline
kerosene. In the refining process, there are many by-products replaced kerosene as the number one petroleum product.
when crude oil is converted to kerosene. What others saw as Rockefeller was a bona fide billionaire. Critics charged that his
waste, Rockefeller saw as gold. He sold one byproduct paraffin labor practices were unfair. Employees pointed out that he could

9

have paid his workers a fairer wage and settled for being a half- oil industry, trusts and monopolies, and Rockefeller's business
billionaire. practices, peppered throughout with quotations, excerpts from
documents and agreements, letters, etc. It's a great place to
By the time of his death in 1937, Rockefeller had become a start.
PHILANTHROPIST, giving away nearly half of his fortune to help
society and mankind. Churches, medical foundations, John D. Rockefeller was well known as a philanthropist. From
universities, and centers for the arts received hefty sums of oil hookworm eradication efforts to help for the hungry, the
money. Whether he was driven by good will, conscience, or his Rockefeller Foundation has worked to solve many of the world's
devout faith in God is unknown. Regardless, he became a hero to and the country's ills.
many enterprising Americans.

Links on the Web

Rockefeller Foundation

Andrew Carnegie's essay, "Gospel of Wealth" (1889) struck a
chord in John D. Rockefeller and strengthened his resolve to
support worthy causes. Several major philanthropic institutions
resulted. In 1913, the last, the Rockefeller Foundation, which has
given away over $2 billion in grants, was chartered. This official
website of the Foundation explains its various programs.

Strategies of John D. Rockefeller and the Standard Oil Company
1863-1911

The author of this website is a 25-year-old Swiss entrepreneur
who lives on Lake Geneva and has prepared an excellent,
although biased, resource. Here you will find information on the

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SECTION 4 By the time he died in 1919, Carnegie had given away
$350,695,653. At his death, the last $30,000,000 was likewise
The New Tycoons: Andrew given away to foundations, charities and to pensioners.

SECTION REVIEW Oil was not the only commodity in great demand during the
1. Identify or define the following: Andrew Carnegie, Gilded Age. The nation also needed steel.

Bessemer Process, Horizontal Integration, Vertical The railroads needed Steel for their rails and cars, the navy
Integration, Carnegie Steel Company. needed steel for its new naval fleet, and cities needed steel to
2. In your opinion, was Carnegie a Captain of Industry or build skyscrapers. Every factory in America needed steel for their
Robber Baron? Why? physical plant and machinery. Andrew Carnegie saw this demand
and seized the moment.

Humble Roots

Like John Rockefeller, ANDREW CARNEGIE was not born into
wealth. When he was 13, his family came to the United States
from Scotland and settled in Allegheny, Pennsylvania, a small
town near Pittsburgh. His first job was in a cotton mill, where he
earned $1.20 per week.

His talents were soon recognized and Carnegie found himself
promoted to the bookkeeping side of the business. An avid
reader, Carnegie spent his Saturdays in the homes of wealthy
citizens who were gracious enough to allow him access to their
private libraries. After becoming a telegrapher for a short while,
he met the head of a railroad company who asked his services as
a personal secretary.

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Millionaire Andrew Carnegie spoke against irresponsibility of the All these tactics made the Carnegie Steel Company a multi-
wealthy and sharply criticized ostentatious living. million dollar corporation. In 1901, he sold his interests to J.P.
Morgan, who paid him 500 million dollars to create U.S. Steel.
During the Civil War, this man,Thomas Scott, was sent to
Washington to operate transportation for the Union Army. Giving Back
Carnegie spent his war days helping the soldiers get where they
needed to be and by helping the wounded get to hospitals. By Retirement did not take him out of the public sphere. Before his
this time, he had amassed a small sum of money, which he death he donated more than $350 million dollars to public
quickly invested. Soon iron and steel caught his attention, and he foundations. Remembering the difficulty of finding suitable books
was on his way to creating the largest steel company in the as a youth, he helped build three thousand libraries. He built
world. schools such as Carnegie-Mellon University and gave his money
for artistic pursuits such as Carnegie Hall in New York.
Vertical Integration: Moving on Up
Andrew Carnegie was also dedicated to peace initiatives
Carnegie became a tycoon because of shrewd business tactics. throughout the world because of his passionate hatred for war.
Rockefeller often bought other oil companies to eliminate Like Rockefeller, critics labeled him a robber baron who could
competition. This is a process known as HORIZONTAL have used his vast fortunes to increase the wages of his
INTEGRATION. Carnegie also created a VERTICAL employees. Carnegie believed that such spending was wasteful
COMBINATION, an idea first implemented by Gustavus Swift. He and temporary, but foundations would last forever. Regardless,
bought railroad companies and iron mines. If he owned the rails he helped build an empire that led the United States to world
and the mines, he could reduce his costs and produce cheaper power status.
steel.
Links on the Web
Carnegie was a good judge of talent. His assistant, Henry Clay
Frick, helped manage the CARNEGIE STEEL COMPANY on its Documentary video: Andrew Carnegie: Richest Man in the World
way to success. Carnegie also wanted productive workers. He Youtube link: http://youtu.be/76S2rYEb6y8 Two hour biography
wanted them to feel that they had a vested interest in company from American Experience.
prosperity so he initiated a profit-sharing plan.
Andrew Carnegie: A Tribute

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The Carnegie Library of Pittsburgh has prepared this online Henry Bessemer, Man of Steel
tribute to its benefactor and namesake. The text article contains
inline hypertext links to cartoons and other information about Mr. Henry Bessemer invented the process that Carnegie used to
Carnegie. But most interesting is the wav file of Carnegie produce steel. Visit this site to learn more about Bessemer and
speaking, providing his listeners with a quotation from his his achievements in many areas. You will also find some links to
"Gospel of Wealth" denouncing an ostentatious lifestyle. The sites related to steel manufacture.
statement is in stark contrast to the way most captains of
industry, including Carnegie himself, actually lived. History of Carnegie Mellon University

Carnegie Corporation of New York This page offers a brief history of the university which Andrew
Carnegie founded in 1900 and which quickly became one of the
Andrew Carnegie's philanthropy continues to grow as the years top universities in America.
pass. The original endowment in 1911 to the Carnegie
Corporation of New York of $135 million was worth over $1.55 The Richest Man in the World: Andrew Carnegie
billion in early 1999 despite the millions of dollars given away
each year. This corporation was created to provide grants to A great resource, this companion website to the PBS
benefit the public. Read the page entitled "The Corporation's documentary on Andrew Carnegie has a timeline, multi-part
Program" to learn how the grantmaking foundation operates, biography, background info on the Gilded Age era, and in-depth
then browse the site to see what grants have been awarded looks at "union-busting" to maintain corporate profits on the one
recently. Do you have a crackerjack idea that needs funding? hand and philanthropy on the other. And for those who can't get
Check out the page on grant restrictions and proposals. enough, there's the "Millionaire's Screen Saver" available for
download.
Carnegie Hall
The Wisdom of Andrew Carnegie
This is the official site of Carnegie Hall in New York City, one of
the foremost concert halls in the world. Find out about the current Here is a webpage of quotations attributed to Andrew Carnegie
season of performances, or follow the "Carnegie then and now" which reflect his philosophy of business and life.
link for a look at the hall's history. The timeline is well illustrated.
Click on the dates in the top frame to progress through the years. 13

SECTION 5 J.P. Morgan invested in everything from Thomas Edison's electric
company to railroads and steel companies to insurance firms.
The New Tycoons:
J. Piermont Morgan Child of Privilege

SECTION REVIEW Not all of the tycoons of the Gilded Age were rags-to-riches
1. Identify or define the following: J. Piermont Morgan, U.S. stories. J. PIERPONT MORGAN was born into a family of great
wealth. His father had already made a name for himself in the
Steel, Entrepreneurs, Monopoly. banking industry. With Morgan's family resources, he enjoyed the
2. In your opinion, was Morgan a Captain of Industry or a finest business education money could buy.

Robber Baron? Why? He did not scratch and claw his way to the top of any corporate
ladder. His father arranged for an executive track position at one
of New York's finest banks. Regardless of his family's
advantages, Morgan had a great mind of his own. He set out to
conquer the financial world, and conquer it he did.

Morgan the Banker

Morgan's first business ventures were in banking. By 1860, he
had already established his own foreign exchange office. He
knew the power of investment. Not content to control just the
banking industry, he bought many smaller ventures to make
money.

During the Civil War, he paid the legally allowed fee to purchase a
substitute soldier and evaded military service. Morgan made
handsome profits by providing war materials. One of his
enterprises sold defective rifles to the Union army. Upon later

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investigations, he was declared ignorant of the poor quality of his Trouble with the Government
guns and was cleared of all charges.
For all his accomplishments, he was harshly criticized. The first
After the war, he set out to corner the nation's financial markets. decade of the twentieth century brought challenges to Morgan
When the Panic of 1873 rocked the nation's economy, Morgan from the government. His Northern Securities Railroad company
protected himself wisely and emerged in the aftermath as the was deemed illegal under federal Antitrust Law, the first such
king of American finance. action by the national government. He was investigated by
Congress for his control of the financial markets. Even U.S. Steel
J.P. Morgan was one of the organizers of the World Fair held in was forced to relinquish its MONOPOLY.
Chicago in 1893.
Things you don't see everyday: A cancelled check for three
Despite his label as a robber baron, Morgan felt his investments million dollars from J.P. Morgan to the Northern Pacific Syndicate.
benefited America. His railroad dealings helped consolidate many
smaller, mismanaged firms, resulting in shorter trips and more Jaded by the criticism, Morgan moved to Europe, where he lived
dependable service. Two times during financial panics he allowed his final days. He was a favorite target of intellectuals who
the federal government to purchase his vast gold supplies to stop claimed that such tycoons robbed the poor of their deserved
the spiral of deflation. wealth. He was a hero to enterprising financiers across the land
who dreamed of following his example. That is, of course, unless
He owned a bridge company and a tubing company. His most they were destroyed by his shrewd, fierce tactics.
renowned purchase was in 1901, when he bought the Carnegie
Steel Company for $500 million to create U.S. STEEL. Within ten LInks on the Web
years U.S. Steel was worth over a billion dollars.
Alan Greenspan on Banking History
Morgan's actions marked a shift in thinking among American
industrialists. He proved that it was not necessary to be a builder Chairman of the Federal Reserve Board, Alan Greenspan,
to be successful. Smart investment and efficient consolidation presents a concise view of the history of banking in the United
could yield massive profits. Young ENTREPRENEURS shifted States in this speech he delivered in 1998. You'll find nothing but
their goals to banking in the hopes of mirroring Morgan's
success.

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