Now that the Robber Barons have been introduced and explored, we can begin to look at the environment and conditions in which they grew, and how the political, economic, and ideological climate shaped them, gave them opportunities, allowed them to grow, prosper, and flourish. After the Civil War, in the late 19th-century, the dominant belief at the time was Manifest Destiny, which states that it was the destiny of the people to expand westward, into now-empty Native American lands, as manifest by God. As a result, a mass migration occurred, with both immigrants and settlers moving to occupy the West, supplying the nation with plenty of workers with empty hands. Furthermore, there was lots of open, unexplored, unclaimed land. These two conditions—lots of land and lots of people—made industrialization possible; hence, the Second Industrial Revolution. Land was provided by the government, on which laborers who immigrated would work, given steel by Carnegie, and funded by Morgan. Problems occurred, however, when rampant corruption spread throughout these railroads, which were needed. Railroads were all the craze, because industrialization provided the materials, because the Civil War meant peace and Reconstruction, because people needed to travel, and because goods needed to be imported and exported. The Transcontinental Railroad was commissioned for this reason. Stretching West to East, it combined the Central Pacific line, owned by Leland Stanford, and the Union Pacific. Most of the workers who built it were immigrants, either Irish or Chinese, who underwent a lot of cruelty, suffering, and injustice, forced to overwork, in the hot sun, in extreme terrain, costing far too many innocent lives.
In terms of ideology, what allowed the Robber Barons to rise to supremacy was laissez-faire capitalism, a system that promotes individualistic entrepreneurship without interference from the government. To summarize, this economic system, created in the 18th-century, during the Enlightenment, expounded on famously by Adam Smith and John Stuart Mill, said that any individual could create their own business, and they would be free to do whatever they wanted with it, and the government could neither get in the way of it nor direct it in any way, creating a free, competitive market. The reason the Robber Barons could grow so quickly was because the government could not restrict their growth. Using whatever tactics they had, they could gain more money, more property, more business. Unfortunately, laissez-faire capitalism in 19th-century America was inherently self-destructive: “Laissez-faire in the 1900’s tended to kill off competition…. And when monopoly dominated the scene, the concentration of power in the hands of the few threatened the liberty and freedom of the many.” Even though capitalism is based on free competition, laissez-faire, paradoxically, limited competition, ultimately creating monopolies.
This effect was compounded by the popular belief in Social Darwinism, which became widespread after Darwin’s publications that were given a social twist by fellow scientist Herbert Spencer. According to Social Darwinism, competition was inherent to all societies across all organisms, and in each society there was a Spencerian “survival of the fittest”; society is always in conflict, and it always the strongest, the smartest, the most acute, who not only does, but should, come out on top. If one is stronger than his peers, then he deserves to win at the expense of the loser, fair and square—nothing personal, just business, in other words. Predictably, this was applied to the economy, such that whoever’s business was carried out most efficiently gained all the business, squashing his competition without any conceivable threats. Those who were successful became unstoppable titans, people whose riches made them powerful.
Now, the rise of big business, expectedly, was not positive, and many people, especially the farmers and workers, tried to revolt. Workers formed unions in order to halt business and get fair treatment. These unions were obliterated by the big businesses and monopolies, which stomped on them with their big boots. These unions tried to plea with the Government, all in vain, though. Upset with their unfair treatment and pay, many protests broke out, most notably the Grange Protests of the 1870’s. While more can be said about these protests, it is enough to say that they were largely unsuccessful, resulting in even more casualties. To demonstrate the plight of the workers, we can look at Carnegie’s business: His workers earned $10 for 84-hour weeks, despite the business earning roughly $2 million a year. Much as entrepreneurs came to Morgan for loans to start up their own businesses, Rockefeller, Carnegie, and other successful industrialists needed money to start their businesses. This purpose was fulfilled by the Government, which granted land grants left and right, applying protection tariffs to each business, so that they could grow, just like how a plant requires water and sunshine to sprout. Consequently, businesses, aided with the Government’s money, were able to get started; and yet, the protection tariffs—taxes put on imports to improve the interstate economy—were only in place to get the companies off the ground. Nothing was done, though, once the companies started. The inertia was over, and the companies started accelerating exponentially, without any brakes, and the tariffs only sped them up. It was as though the Government gave the businesses training wheels, but forgot to take them off. Thus, big businesses popped up throughout the country with unrestrained control, supported by government subsidies—financial aid.
All of these factors in the U.S. led to increased concentration of wealth. It is estimated that in 1865, there were only 19 millionaires, but fast-forwarding 35 years to the turn of the century, there were thousands of them! Big business overshadowed small business, virtually wiping it off the surface of the country. Monopolies owned the market, giving way to oligopolies. In the market, a monopoly is a single seller that has all the business to itself, and its name literally means “one seller.” Standard Oil, for example, was a monopoly inasmuch as it controlled and dominated the oil business, and its tendency to buy out competitors meant it had the oil business to itself. Oligopoly, on the other hand, its name meaning “few sellers,” refers to a market in which a few companies control the market, limiting competition—essentially the result of laissez-faire. An example of this is the fact that ⅔ of the railroads in the U.S. in 1900 were owned by only 7 companies. These 7 companies owned even smaller companies, meaning the bigger ones, the “mother companies,” the conglomerates, the ones that own the subsidiaries, formed an oligopoly. The rise of monopolies and oligopolies meant a concentration of wealth, and concentration of wealth translates into the concentration of power. Recall the quote from above: “[W]hen monopoly dominated the scene, the concentration of power in the hands of the few threatened the liberty and freedom of the many.” In recent years, movements like “Occupy Wall Street” have tried to combat the notorious “1%,” the wealthy elite that “rule the world”; and while this may be a conspiracy, it is not hard to understand the rationale from where it comes.
Moreover, this concentration of wealth led to an even greater, more abstract force: The “Gospel,” or good word, “of Wealth.” If we go back to the founding of the nation, then we find in Alexander Hamilton and James Madison the beginnings of this movement. Both men believed that power deserved to be in the hands of the rich, elite few. Those who were successful with money proved to be better in management and organization than those who were not, they argued. A nation, they reasoned, needed this kind of leadership and initiative— not that ensured by the masses. They were cynical of hoi polloi, the commoners, the people. Carnegie, we discussed, popularized this view when he expressed that he foresaw a future in which America was a wealthy, industrial nation. He tried to make an example out of himself, giving future generations a guideline by which to become rich, and to use their riches to better civilization, by donating, by helping those in need. Obviously, this is a different, more optimistic message than that of Hamilton or Madison. Carnegie’s “Gospel of Wealth” implored the masses to rise up, to become rich, and to use this opulence to become “lovers of men,” philanthropists. As with most good things, though, the “Gospel of Wealth” over time became corrupted, perverted, bastardized, popularized, dumbed-down—to a gross materialism and consumerism:
And so, the schools, the churches, the popular literature taught that to be rich was a sign of superiority, to be poor a sign of personal failure, and that the only way upward for a poor person was to climb into the ranks of the rich by extraordinary effort and extraordinary luck.
Fittingly, in 1899, economist Thorstein Veblen published his famous The Theory of the Leisure Class, in which he outlined his theory of “conspicuous consumption,” according to which the new wealthy class would senselessly buy expensive things so as to distinguish themselves from the poorer classes, a way of saying, “I’m richer than you are, and for that I am better.” The capitalistic-hedonistic-materialism of the 21st-century, in which the Pursuit of Happiness really means the Pursuit of Wealth, arose initially during the Gilded Age, and has only gotten worse over time, as more and more money became concentrated. We believe and convince ourselves that “happiness = $,” and that, more foolishly, money can buy happiness. Success is nowadays defined by how much money we have, how business is running. Millions of dollars are spent on millions of books aimed at entrepreneurs, self-help books that promise us a money-filled, problem-free life if we “follow these simple principles,” which are fail-proof methods pertaining to becoming successful, get-rich-quick schemes passed off as good literature and common-sense thinking. How we live in an age of illusions and fancies! To quote George Carlin: “That’s why they call it the American Dream, because you have to be asleep to believe it.”
The next area of focus in understanding the Gilded Age economy is the Government’s reaction, specifically in the context of regulatory laws. The Interstate Commerce Act of 1887 was passed by Grover Cleveland, formally creating the Interstate Commerce Commission (I.C.C.), whose objective it was to regulate railroad business, and see to it that they not engage in anything corrupt. From the start, it was doomed for failure, as it was passed more as a publicity stunt than as a serious regulation. For years, frustrated protesters demanded Congress take action against big business, and to make them happy, Cleveland passed the Act. It worked: The people were happy because it appeared to them that the Government was taking an interest in their affairs and helping them out. In reality, it was just a cover, and the I.C.C. was just a useless puppet, a nominal regulation, and it did nothing useful, unable to enforce its rules. The I.C.C. became a laughing stock, and all the senators and politicians knew it.
But big corporations were more real than any of them knew, so in 1890, Benjamin Harrison passed the legendary Sherman Antitrust Act of 1890. The first article of the Act goes like this: “Every contract, combination in the form of trust or otherwise, or conspiracy, in the restraint of trade or commerce among the several States, or with foreign nations is hereby declared to be illegal.” Legislature is eminent for its ambiguity, and the Sherman Antitrust Act is but an example of this. The most troublesome phrase, as noted by many, is “in the restraint of trade or commerce,” which would cause a lot of ruckus in future cases, having to be hashed out in further detail in specific circumstances. What the Antitrust Act basically protects against are monopolies and horizontal integration. The Act was designed to target companies like Standard Oil, which, forming trusts, were able to bypass laws that prohibited competition. By making illegal such methods, the Government hoped to disassemble these massive conglomerates. However, as we have seen, this did not work, considering Rockefeller was clever and took advantage of the Holding Company Act in New Jersey, thereby obviating the Antitrust Act. In all truth, the Act actually backfired, strengthening monopolies, instead of weakening them. Foolishly, the Government cornered the big companies, and they, being cornered animals, lashed out, coming back at them stronger, more viciously, with a vendetta. The industrialists struck back, forming oligopolies, as mentioned in the fact that only 7 companies owned over half the railroads in the U.S. Because horizontal integration was outlawed, corporations were forced to adopt vertical integration, which worked to their behoof, increasing business. In order to disambiguate the Sherman Act, the Court introduced two important concepts: The “rule of reason” and “per se.” According to the former, a trust that restrained business “unreasonably”—that is, excessively or unfairly—was illegal. And according to the latter, a trust that engaged in activities against the Constitution were illegal per se, i.e., in themselves, without further reason. Yet another shortcoming of the Antitrust Act was that it was used against workers’ unions—correct: The law made to protect workers’ rights against big companies was used against workers in favor of big companies. Unions, the Court said, disrupted trade, and were classified as a “restraint” in commerce, so they were targeted by the Court. This widened the rift between the privileged and the underprivileged.
Next, we will look at a series of important Supreme Court cases that shaped the course of antitrust laws and businesses. The first case is Munn v. Illinois (1876), in which the Court, pestered incessantly by the Grange Movement, made up of farmers, looked into grain elevators—warehouses or storages for grain—and found that they were charging the farmers exorbitantly. Although the companies argued that they had the right to charge their own rates since they were private properties, the Court argued otherwise, requiring that private companies that served the public interest, like grain elevators, had no right to enforce their own rates, leading to the Court setting a maximum charge on grain. For once, there was a victory for the people against the big businesses. It was short-lived. A decade later, in 1886, the Wabash v. Illinois case changed the flow of the tide, in favor of the companies. Now the Supreme Court ruled that states could not regulate charged rates, that this was the job of the Federal Government. In essence, the Supreme Court went bipolar, completely overturning its earlier ruling in Munn, supporting the opposite side. The Court was just getting started; Zinn writes that in 1886 alone, about 230 proposed laws regarding corporate regulation were rejected by the Supreme Court. Then, in 1895, as a result of Pollock v. Farmers’ Loan & Trust Company, Congress’ ability to tax higher incomes was deemed unconstitutional. Effectively, the Supreme Court had thus far prohibited not just state governments, but the Federal Government itself, from regulating private commercial interest. No fixed rates, no income taxes, could legally be imposed. It did not stop there. United States v. E.C. Knights Company (1895) declared that E.C. Knights, a sugar-refining company that owned 90% of sugar production—which is surely unreasonable—was not, in fact, a monopoly at all, to the extent that manufacturing does not equal commerce. This refers to the Sherman Antitrust Act, which prohibits “restraint of … commerce.” Technically, E.C. Knights was not selling sugar to anyone; it was merely making the sugar, despite taking up pretty much the entire market in so doing. To further support this, the Supreme Court added that the Federal Government’s concern is with interstate business, the locals with intrastate (within the state). Because the manufacturing was intrastate, and because E.C. Knights never sold sugar interstate, it was outside the domain of the Federal Government; and seeing as the local governments had no power over monopolies, they, too, were utterly useless against it. One reason the big businesses managed to get cleared by the Supreme Court was due to the recent passing of the 14th Amendment. This addition to the Constitution protected persons from having their property taken away from them without a fair trial. What had this to do with anything? Well, corporations were regarded as “persons” in legal terms; therefore, corporations could not have property taken away from them without a fair trial. “Supposedly, the [14th] Amendment had been passed to protect Negro rights,” Zinn writes, “but of the Fourteenth Amendment cases brought before the Supreme Court between 1890 and 1910, nineteen dealt with the Negro, 288 dealt with corporations.” In other words, corporations were given priority over real persons, specifically blacks, who, it was implied hereby, were even lesser people than corporations. A business was considered more human than a black. Finally, in 1898, the last nail was put in the I.C.C.’s coffin, with Smyth v. Ames (1898), known also as the Maximum Freight Rate Case. It was here established that the I.C.C., like both the Federal and state governments, could not fix rates on railroads. Why did neither Congress nor the Supreme Court try to intervene on behalf of the people? The simple explanation is that “what is good for the economy, is good for the country.” Simply put, they believed, and rightly to an extent, that a good economy is necessary for a successful nation. On the other hand, neither of the two branches was totally pure, and both were venal at times, liable to be bribed, which is not to say that they always were, of course. Obviously, local governments are not as powerful as the Federal Government, so they could not enforce their laws, and the states, too, were often bribed because they were corrupt, leading to a lack of action. As soon as the Standard Oil Trust arose, many more followed, including the American Telephone & Telegraph Company, A.K.A. AT&T. But it was not until Theodore Roosevelt became President that the Government decided to face head-on big business. For example, the most notable confrontation was in 1911, with the prominent case Standard Oil Company of New Jersey v. United States, the result of which left Standard Oil, that indomitable monopoly, diffused over the country, into separate, smaller, competing companies. It was carried out because Standard Oil was established to be a monopoly, too powerful for the market; yet one has to ask, How come it was not recognized as a monopoly earlier, when the Sherman Antitrust Act was passed?
The most important takeaway, of course, is that history is alive, and that the Robber Barons are not just a thing of the past, but alive and well today, just under a new guise—that of technology. Nowadays, in the world of U.S. media, there is an uncontrollable concentration of power and wealth. If you want to read more about oligopoly and concentration of power in the media, then you can read my other blog here. To summarize, in the 21st-century, only 5 or 6 companies in America own all media networks. Compare this to the railroads in 1900, of which ⅔ were owned by 7 companies—not much has changed in a hundred years. And just as Rockefeller, Carnegie, and Morgan dominated the business world as godlike entrepreneurs, so today there are tech titans, such as Jeff Bezos (1964- ), owner of Amazon, worth $143.1 billion; Warren Buffett (1930- ), creator of Berkshire Hathaway, a holding company like Standard Oil in the 1890’s, worth $84.7 billion; Bill Gates (1955- ), owner of Microsoft, worth $93.3 billion; and Mark Zuckerberg, the youngest of them, inventor of Facebook, worth $77.6 billion. It very difficult, indeed, to find accurate, reliable sources regarding the wealth of the Robber Barons of the Gilded Age, especially regarding what their wealth would be worth today, taking inflation into account. What can reliably be said, though, is that, if they were alive today, they would be at the top of the list stated above. Even their worth back then is hard to come by, although figures put Rockefeller at around $2 billion in his day (which would be in the hundreds of billions today), Carnegie $350 million, and Morgan $118.3 million. The latter, markedly, was less wealthy than either of his contemporaries, causing Rockefeller to lament Morgan’s rather low net worth. Going back to the current age, all the billionaires in the world have a collective $6 trillion, it is said. Modern billionaires, fearing protests like those of the Grangers’ over a century ago, turn to philanthropy, worrying over their image, how they are perceived, so they donate to earn good graces, something of which Gates and Bezos are guilty. There are two ways of evaluating this: From one perspective, it is immoral, because they are donating out of guilt, in order to preserve their image, whereas they would not have donated otherwise; and from another, it is still a noble, virtuous thing, to be charitable, because donating is donating, regardless of its motive.
Rockefeller’s Standard Oil, Carnegie’s Steel Company, and Morgan’s Bank have been paralleled by the dominant tech businesses like Google, Amazon, Facebook, Apple, and Microsoft, which stand tall, casting a shadow on the corporate world, indestructible giants, influencers of the world, caterers to the people. And just like the old businesses, which were tainted by tales of abuse and inequality, these new tech industries have their fair share of injustices, such as Apple’s factories in Foxconn and Pegatron, where workers suffer from overworking; and Amazon, recently, has come under fire for its terrible work conditions, which boast hot temperatures, high expectations, miles upon miles of walking, and low wages. More comparisons can be made between Gould and Fisk and the notorious Wall Street scandal of Stratton Oakmont, Inc. (1989-96), dramatized in the movie The Wolf on Wall Street, which depicts Jordan Belfort’s attempt to use a corrupt investment business in order to amass a great wealth using a “pump-and-dump method,” similar to Gould’s watered, highly inflated, stocks. The 21st-century, in short, is no more different than either the late 19th– or early 20th-centuries, in that both saw the rise of new industries that came to establish themselves as the de facto leaders of business, whose careers would not be challenged, by way of their clever, inventive methods that got them to the top, the top from which they could look out at the rest of the world, comfortable upon their stacks of money, free from the petty, everyday problems of the canaille.
In conclusion, as with the Sophists of 5th-century Greece, the Robber Barons of the Second Industrial Revolution ought to be studied carefully, disinterestedly, for history always has at least two sides. On the one hand, the Robber Barons were exploitative, mischievous scammers who operated through disingenuous methods, ruining local businesses, in a fight for who could come out on top, cold-blooded, calculative, greed- and money-driven, who only begrudgingly donated to the poor masses. They did not deserve their wealth because they earned it dishonorably, through vices rather than virtues. By buying out the competition, they hogged the market, not allowing anyone else to compete, like a childhood bully on the playground who blocks the slide for his own use. Yet conversely, the Robber Barons, or captains of industry, were entrepreneurs in the truest sense of the word, individuals who believed in themselves, believed in a better future, and used their newly earned wealth to work toward that future, through donations and philanthropy, advertised by the well-meaning Gospel of Wealth. People like Carnegie showed that social mobility was possible, that anyone, no matter from where they came, could achieve their dreams, becoming rich and successful. The captains of industry transformed the U.S. into an industrial superpower, able to compete with the stronger, older European nations. Samuel Eliot Morison appropriately titled a section of his chapter on the industrialists “Hamilton wins,” in reference to the fact that it was Hamilton who envisioned an industrial America, as opposed to Jefferson’s wish for an agrarian republic. Thanks to the Robber Barons, the U.S. became what it is today. Again, we must take all the facts into account. While the industrialists are very much responsible for the standards of living we enjoy today and for making America a force to be reckoned with, they also had their moral faults. Harry S. Truman had this to say: “No one ever considered Carnegie’s libraries steeped in the blood of the Homestead steelworkers, but they are. We do not remember that the Rockefeller Foundation is founded on the dead miners of the Colorado Fuel and Iron Company and a dozen other performances.” A populist speaker by the name of Mary Elizabeth Lease gave a popular, oft-quoted speech around 1890 in which she denounced the power of the industrialists, whose wealth gave them power over the Senate, and it is reminiscent of the Occupy Wall Street Movement. Her very relevant words are not foreign to us moderns’ ears: “Wall Street owns the country. It is no longer a government of the people, by the people, and for the people, but a government of Wall Street, by Wall Street, and for Wall Street.” And so, conclusively, whether or not the Robber Barons were good or bad cannot be decided objectively, because in the end, we cannot change what they did or how they did it, and it is due to their actions that we are where we are today.
 Dulles, The United States Since 1865, p. 64
 Zinn, A People’s History of the United States, p. 256
 Zinn, op. cit., p. 255
 Qtd. in Brinkley, History of the United States, p. 266
For further reading:
The United States: The History of a Republic 2nd ed. by Richard Hofstadter (1967)
The Oxford History of the American People Vol. 3 by Samuel Eliot Morison (1972)
The Historians’ History of the United States Vol. 2 by Andrew S. Berky (1966)
The Growth of the American Republic Vol. 2 by Samuel Eliot Morison (1955)
A History of American Life and Thought by Nelson Manfred Blake (1963)
America: A Narrative History8th ed. by George Brown Tindall (2010)
A Patriot’s History of the United States by Larry Schweikart (2004)
A People’s History of the United States by Howard Zinn (1995)
Don’t Know Much About History by Kenneth C. Davis (2003)
The United States Since 1865 by Foster Rhea Dulles (1959)
History of the United States by Douglas Brinkley (1998)