Were the Robber Barons Heroes or Villains?

Robber Barons

We live in a capitalistic society. Our economic system is driven by the idea that any person can start a business and reap the rewards in the form of profit. At the end of the 19th and beginning of the 20th centuries, a group of entrepreneurs in the United States pushed the capitalistic system to its limits, making tremendous profits. Because of the extreme measures they sometimes used in their quest for profit, they were nicknamed the "Robber Barons." By today standards, it would be easy to point to these men and look only at their excesses. However, they did what many business owners today would have done. They exploited every opportunity to make a profit. We have laws precisely because people need boundaries on their behavior. The "Robber Barons" accomplished a great deal that was good, and our system of laws found ways to deal with the excesses.

One of the most famous of the "Robber Barons" was Andrew Carnegie. Carnegie's father came here from Scotland after he lost his land there. Andrew became a steel magnate. His facilities made much of the steel demanded by the rapid growth of the United States. This growth was far-reaching and literally moved in multiple directions: horizontally, in the form of railroads, with the demand for steel both to build the trains and to lay the tracks; and vertically, as architects developed the knowledge necessary to build the first skyscrapers. The entire country had a rapidly increasing need for steel, and Carnegie knew how to corner the market and provide this product efficiently. One of his strategies was to prevent unions from forming or to break them, with extreme measures if necessary (Delong, 1998). That alone would make him look like a villain today, but we have that perception today because Carnegie tested the limits.

However, the excesses of some of the other robber barons cannot be glibly explained away. While it can be argued that the first mega-corporations in the United States helped build the country in significant ways, some actions seem completely unconscionable. The financier J.P. Morgan fueled economic growth for the country. He also sold 5,000 defective rifles to the U.S. Army (Knowledge News). There is no explanation that can justify behavior, but it could be viewed as another example of how the country's laws needed to change to reflect changes in business brought on by the industrial revolution.

In business, Carnegie was a visionary who demonstrated new ways to think about business problems. While he manipulated the market in ways that are now illegal because of such practices, at the time, he realized that if he could stockpile material ahead of time, when it was needed, his large inventory would allow him to sell at a lower price (Delong, 1998). Within the boundaries of laws passed since then, this is what Wal-Mart and other large chains do today.

While Andrew Carnegie was cornering the iron and steel markets, John D. Rockefeller exploited the natural resource that would fuel the 20th century: oil. Rockefeller recognized that he could control the oil market best if he owned all the processes from drilling to refining to marketing, polishing the concept of vertical integration in a way that left no room for competitors (Knowledge News).

Delong describes all the robber barons of the time as corrupt. They manipulated financial markets, paid workers poorly, drove smaller companies into bankruptcy, and used bribes at all levels of government to maintain the state of an absence of laws that could check their behaviors. Jay Gould sold stocks to foreign investors, pocketing the money without issuing certificates.

Sometimes when people want to judge people as good or evil, the role of conflict in growth is overlooked. However, it could be argued that have strong unions today because they had to be strong to get a foothold in the face of industrialists such as Andrew Carnegie. While he ruthlessly put smaller companies out of business, he also took his collected wealth to subsidize libraries across the country and fund an organization working for international peace (Delong, 1998).

Selling stocks but not issuing the certificates was as wrong when Gould did it as it is today, and most people would agree that putting other companies out of business by manipulating prices, or using connections to prevent the smaller companies from getting needed supplies is wrong. Bribery of public officials was as wrong then as it was now. However, these men were also innovators. In spite of bribes and their great power, eventually the government was able to curb their excesses. In the process, industries learned how to run more efficiently, and these men's philanthropy did a great deal of good.