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View Full Version : We Could Use More ‘Robber Barons’



Taxcutter
03-07-2013, 01:23 PM
The so-called “robber barons” of the late 19th century were neither robbers nor barons.
Vanderbilt, Rockefeller, Carnegie et al, were certainly not nobility. All rose from the middle class by their own efforts. Carnegie worked for one of Vanderbilt’s competitors before latching on to the Bessemer process for making steel, going in hock down to his cufflinks and making it work.

http://www.econlib.org/library/Columns/y2013/Hendersonbarons.html

In every case the emerging moguls of industry gained market share by offering consumers either a lower price or a better product. Rockefeller’s “Standard” was kerosene refined to a high standard that did not have any dangerous volatiles in it. Volatiles (gasoline, naptha, etc) make kerosene lamps explode. With Rockefeller’s carefully-refined oil his customers did not have to worry about their lamps blowing up, so his customers proliferated and were quite loyal. Rockefeller prospered because he aligned his operations with what the consumer wanted.

All of these guys faced fierce competition. Carnegie has to out-compete Sheffield of England – the world’s pre-eminent steel maker at the time. As late as the Civil War, real steel (<0.5% carbon iron alloy) was a rarity in the US. If you go to the Gettysberg battlefield, of all those cannon they have parked there, almost all of them are bronze (“Napoleons”), cast iron (“Parrott guns”), or wrought iron (“ordnance rifles” or “Phoenix guns”), but at the far north of the battlefield stand four guns of a Confederate battery of imported Whitworth guns. These were true steel guns. The strength difference meant these guns could shoot father than any gun in the battle. You can tell them easily. They have fresh paint on them. Steel rusts more easily than cast or wrought iron and has to be cleaned and painted often. Carnegie’s old employer got run out of business by Vanderbilt so Carnegie went into partnership with Bessemer and began building steel mills in the US. The Bessemer process made steel quickly and with much less use of energy. Carnegie’s less expensive steel was stronger and more resilient than wrought or cast iron and became the sinew of America. Yet as Carnegie gained market share he did the opposite of what a true monopolist would do – he cut his prices.


As the link points out, consumers had no problems with the so-called ‘robber barons’ but less efficient competitors did. The reference in the link to the muckraker Ida Tarbell having an axe to grind with Rockefeller because his competition had ruined her spendthrift father was of interest.

It is also of interest that these guys made fortunes out-competing their contemporaries at a time that government did not protect favored competitors as they do today.

snali
03-10-2013, 09:09 PM
the examples you said were not robber barons but you forgot some of the lesser known titan of industry like jay Gould and Armour the meatpacking tycoon

Taxcutter
03-12-2013, 08:47 AM
Jay Gould mostly robbed Vanderbilt.

Where would meatpacking be without Armour?

Nobody says the alleged "robber barons" were angels, but they brought affordable products to the consumers.

Chris
03-12-2013, 10:47 AM
In August 1869, Gould and Fisk began to buy gold in an attempt to corner the market, hoping that the increase in the price of gold would increase the price of wheat such that western farmers would sell, causing a great amount of shipping of bread stuffs eastward, increasing freight business for the Erie railroad. During this time, Gould used contacts with President Ulysses S. Grant's brother-in-law, Abel Corbin, to try to influence the president and his Secretary General Horace Porter. These speculations in gold culminated in the panic of Black Friday, on September 24, 1869, when the premium over face value on a gold Double Eagle fell from 62% to 35%. Gould made a nominal profit from this operation, but lost it in the subsequent lawsuits.

http://en.wikipedia.org/wiki/Jay_Gould


Note the collusion with government? The myth of the robber barons is used to cover up government complicity.