Robber Barons Research Paper

The American Businessman: Industrial Innovator or Robber Baron?

During the latter part of the nineteenth century, industries began to bloom across the United States. Local businesses and merchants gave way to larger corporations and industries. The head of these industries, such as the names of Rockefeller, Carnegie, and J.P. Morgan, were looked upon as robber barons by some, industrial innovators by others. A baron is "one having great wealth, power, and influence in a specified sphere of activity: an oil baron." Therefore the robber barons that these men were looked upon as were "one of the American industrial or financial magnates of the late 19th century who became wealthy by unethical means, such as questionable stock-market operations
and exploitation of labor" (Dictionary.com). Other people saw these highly intelligent men as industrial innovators, people, who "begin or introduce (something new) for or as if for the first time" in order to further develop the efficiency of the industries (Dictionary.com). Although the ways that these men acquired fame and wealth were immoral ways and ways of corruption, these men were industrial innovators who without them, this country would not be where it is today.

There were many reasons for why the public believed that these men, like Carnegie and Rockefeller, where corrupt robber barons. They believed that these men were in the business for the sole purpose of making money, and cared very little if not at all about the technological advances of the industry and the nation as a whole. Walt Whitman, a famous person of the time felt that "the official services of America, national state, and municipal, in all their branches and departments, except judiciary, are saturated in corruption, bribery, falsehood, mal-administration; and the judiciary is tainted...In business...the one sole object is, by any means, pecuniary gain...[M]oney-making is our sole magician's serpent, remaining today sole master of the field" (Quoted in The American Businessman: Industrial Innovator or Robber Baron, pg. 28). The sole purpose why these men practiced in immoral and unethical ways was to circumvent competition. "Competition was the bugbear of most business leaders of the day" (Bailey, pg. 537).

Andrew Carnegie, the steel king, created the entrepreneurial tactic of vertical integration.
This combined all the phases of manufacturing into one organization. This allowed him to control all phases of production. John D. Rockefeller, labeled as the oil baron, derived the technique of horizontal integration. Here, different businesses controlled different stages of production. Then they were all allied to monopolize a given market. In doing this, Rockefeller eliminated competitors. He set up trusts, which were combinations "of firms or corporations for the purpose of reducing competition and controlling prices throughout a business or an industry" (Dictionary.com). J.P. Morgan, the banker's banker, introduced still yet another way to eliminate competition. Through his use of interlocking directorates, he placed officers of his own banking organization on the boards of directors of rival
enterprises.

Although the practices of these men were unethical, they still helped industrialize the nation. But many people felt that that wasn't the reason why these men were doing what they were doing. The people felt that men like Carnegie and Rockefeller were in the business rather for personal gains, such as wealth, power, and fame. As Matthew Josephson, in his The Robber Barons: The Great American Capitalists 1861-1901, put it, "all this revolutionizing effort is braded with the motive of private gain on the part of the new captains of industry. To organize and exploit the resources of a nation upon a gigantic scale, to regiment its farmers and workers into harmonious corps of producers, and to do this only in the name of an uncontrolled appetite for private profit - here surely is the great inherent contradiction whence so much disaster, outrage, and misery has flowed" (Quoted in The American Businessman: Industrial Innovator or Robber Baron, pg. 33).

As corrupt and immoral as these men seemed, during the same time period that they were looked upon as robber barons, the thought of them being industrial innovators began to arise.
According to some business historians, "business leaders were not predatory money seekers. Indeed, in many cases they were talented individuals whose creative contributions to the economy - and to American society as a whole - were very great." Allan Nelvins said that "it was true that Rockefeller used methods that were of dubious moral character. On the other hand the kind of monopoly control attained by Standard Oil was a natural response to the anarchical cutthroat competition of the period and reflected the trend in all industrial nations toward consolidation. To Nelvins Rockefeller was not a robber baron; he was a great innovator who imposed upon American industry 'a more rational and efficient pattern.' Rockefeller's objective was not merely the accumulation of wealth; he and others like him were motivated by 'competitive achievement, self-expression, and the imposition of their wills on a given environment'" (The American Businessman: Industrial Innovator or Robber Baron, pg. 34). These men came into a disorganized economy and created organizations that played a vital role in making American the greatest industrial power in the world. If it were not for the advancements in steel, oil, textiles, chemicals, electricity, and automotive vehicles, our nation would not be where it stands
today.

Just as many people believed that these corrupt businessmen were robber barons, many regarded them as industrial innovators. One person would be that of Alfred D. Chandler. He believed that "entrepreneurs like Rockefeller and others were successful because they accurately analyzed the economic situation and responded in a creative manner. Their contributions played an important role in the dramatic growth of economy and the creation of an affluent society" (Quoted in The American Businessman: Industrial Innovator or Robber Baron, pg. 36). He suggested that people like Rockefeller did what they did in order to adapt to their surroundings and the new technology that was being introduced. As the economy changed, "dominance has passed from merchant to the wholesaler, from the wholesaler to the manufacturer, and from the manufacturer to the manager" (Chandler, pg. 78). As the economy grew, and society changed, so did the practices of business. This didn't make these men barons, but intelligent and successful innovators. To be able to adapt to what was happening around them, and to come up with new and creative innovations, that's what made them great and successful businessmen. Without them, this nation wouldn't be where it is today. When men like Rockefeller and Carnegie began to build up their businesses, they didn't do it for the money, but rather to produce goods more efficiently. "The initial task of the men who fashioned the first integrated giants at the beginning of this century was to build internal organizational structures that would assure the efficient coordination of the flow of goods through their enterprises and permit the rational allocation of the financial, human, and technological resources at their command" (Chandler, pg. 72). It is these reasons and many more why people such as Alfred D. Chandler regarded men like Carnegie and Rockefeller as intelligent and successful industrial innovators.

These men like John D. Rockefeller and Andrew Carnegie were not industrial innovators. They were egocentric robber barons who cared little for the economy and only for themselves. Their main purpose in business was to acquire wealth, power, and fame. They ways in which they acquired this were ways of corruption and scandal. Companies such as the railroad industry used "stock watering" to increase their profit. Men like Carnegie and Rockefeller created trusts, and pools. The term "stock watering" was first meant by making cattle thirsty by feeding them salt and then having them bloat themselves with water before they were weighed in for sale. "Using a variation of this technique, railroad stock promoters grossly inflated their claims about a given line's assets and profitability and sold stocks and bonds far in excess of the railroad's actual value" (Bailey, pg. 535). Because these men used unethical and immoral ways to reach the top of the industrial mountain, they should be considered robber barons. Their only goal in life was to obtain money and power. But with that power that they earned, it can also be said that they did some good for the country. Though it might've been unintentional, they still helped this nation get to where it is today. Through the use of philanthropy, they donated a lot of money to charities and other organizations and they made good quality products to help industrialize the nation. If making money was the only reason why these men made so much products, it can also be said that one more thing came out of it; the industrialization of the United States. There are two different sides to this argument; that the American businessman is either an industrial innovator or a robber baron. The truth of the matter is that this question can't be answered. No side outweighs the other. There are always going to be reasons for why they were robber barons and there are always going to be reasons for why they were industrial innovators. Only one sure thing can be said about the matter, that no matter how corrupt, no matter how unethical these men were, they helped this nation in such a way that it would not be anywhere near where it is today without them.