The So Called Robber Barons

We go to late 19th Century America and look at the Captains of Industry.  Were they exploitative villains or builders of America's future?  

Transcript

Copy Transcript Copied

The So-Called Robber Barons: The 2nd dumbest term from 19th-century history

August 2026

“In a real sense, modern America was launched in the era considered by this book, for the nation, though sorely tried by the stresses, changed dramatically…the pioneer form of large-scale enterprise was a powerful and disruptive institution, one that influenced the course of American history deeply.”

Glenn Porter, The Rise of Big Business 1860-1920

In addition to the inaccurate term “Gilded Age,” there exists another progressive trope: the “Robber Barons.” Figures such as Cornelius Vanderbilt, John D. Rockefeller, Andrew Carnegie, Henry Frick, J.P. Morgan, and others reshaped the American economy and left enduring marks on society, politics, and culture. There is little doubt that their rise and the fortunes they achieved created admiration, resentment, reform movements, and enduring debate.  There should also be no contention that these men were the primary organizers of American industry.  Each led not just to hegemony in domestic industry but also to the long-term superiority of American industry over the world’s.  It was this foundation that enabled success not only in navigating the Great Depression but also in winning two world wars and one Cold War.  

The term “Robber Barons” draws from medieval European history, in which feudal lords extorted tolls and seized goods from travelers passing through their domains. Applied to late nineteenth-century industrialists, the label implied predatory behavior: ruthless business practices, monopoly building, exploitation of workers, and the bending of government institutions to serve private interests. However, the so-called Gilded Age was also a time of enormous economic opportunity. Following the Civil War, the United States expanded westward, embraced new technologies such as railroads and electricity, and experienced massive immigration. Investors poured money into steel mills, mines, oil refineries, and transportation networks. In this environment, men of extraordinary ambition and intellect seized unprecedented opportunities. 

Whether deemed “robbers” or “captains of industry,” they embodied the dynamic, often chaotic energy of industrial capitalism. One of the issues with this terminology is that two entirely different classes of new super-wealthy were lumped together.  Going forward, I will use the term “industrialists” because the term “Robber Barons” is inaccurate.  You can assail or laud these industrialists, but “robbers?”  You can debate the legal manipulations, but it was not as if these people armed themselves, pointed guns at their fellow Americans, and said: “pay up.”  Not even suggestively as progressives might contend.  They operated within the legal parameters of the time.  However, they also built out the industrial base that ensured American economic superiority, and Americans enjoyed all the benefits that flowed from it for the subsequent 140 years.  

As noted, there were two classes of industrialists: those who built things from scratch and others who profited not only from the build-out of industry but also from the massive wealth creation itself.  Moreover, just as industry represented something different from agriculture, so did massive wealth accrue through either industrial development or the simple manipulation of the financial system. 

Wealth for the first 4800 years existed either through robbery and plunder or through ownership of land developed for food production, commerce, or mining.  Moreover, in this regard, one of the industrialists whom we will meet, John D Rockefeller, might be said to have earned his wealth from land.  However, it was not owning the oil but the processing, the refining, of oil into a sellable commodity wherein the true aspect of his wealth emanated.  

The first major arena in which America’s new industrial elites rose to prominence was the railroad industry. Cornelius Vanderbilt became one of the earliest and most influential figures by consolidating chaotic regional rail lines into a more coherent system. Through aggressive competition, rate manipulation, and mergers, Vanderbilt created a transportation empire that set the template for future industrial consolidation. Like so many of the industrialists, Vanderbilt rose from nothing.  The son of an impoverished farmer and boatman, Vanderbilt quit school at age 11 to work on the waterfront. He purchased his first boat at 18 and worked as a ferryman bringing passengers from New Jersey to New York. Later in his career, he created a fleet of steamships that dominated traffic on the Hudson River and then on the Eastern Seaboard. In the 1850s, he began his foray into railroads, creating a large network.  

Railroads revolutionized the American economy: they linked factories to markets, stimulated steel production, fostered urbanization, and allowed national corporations to emerge. However, they also became notorious for corruption, price gouging, land speculation, and political influence. The Credit Mobilier scandal, which took place during and beyond the Ulysses S. Grant Administration, for example, revealed how railroad insiders siphoned off federal subsidies through fraudulent construction companies while bribing members of Congress to protect their schemes.

Did Vanderbilt delve into underhanded schemes to achieve his ends?  Yes.  However, did he have to compete nearly every step of his career? Also true.  He competed with Robert Fulton, the original developer of the Steamboat. He competed with Daniel Drew and the  Hudson River Steamboat Association.  He competed with Joseph White and Charles Morgan and, most notably, lost to Jay Gould and James Fisk for control of the Erie Railroad.  However, did he invent the potato chip? It is unlikely, though he did offer them as concessions on his steamships, leading to a small cash cow. 

Perhaps no figure symbolizes the Robber Baron archetype more than John D. Rockefeller, founder of Standard Oil. Rockefeller transformed an unstable, competitive oil-refining industry into one of the most efficient and profitable enterprises in history. Through meticulous cost control, secret railroad rebates, strategic acquisitions, and vertical integration, he gained control of up to 90 percent of the nation’s refining capacity. And yet that term robber.  

The concept of a railroad as a common carrier, charging equal rates to all involved, was not built into a statute but was assumed by all involved.  Railroads were not the same as a government-built highway, a bridge, or a canal.  The later introduction of the Interstate Commerce Commission Act changed this, but it became apparent after Standard was built out.  Rockefeller was not breaking the law but breaking precedent.  The railroads were stock corporations operating for profit, not public utilities. 

The concept of collusion is also misused.  The oil producers, in their competition, often offered their products at below-cost levels.  Without a Rockefeller, most of these concerns would have eventually gone bust.  By consolidating transportation, he controlled distribution, enabling him to dictate prices.  If three farmers all selling their crops at below cost are forced to meet certain prices by the truck that brings their produce to market, at a profit for the trucking company, but also one for them, who is harmed?  Well, the consumer, one might say.  Except between 1870 and 1885, the price of refined kerosene dropped from 26 cents to 8 cents per gallon. In the same period, the Standard Oil Company reduced the [refining] costs per gallon from almost 3 cents in 1870 to 0.452 cents in 1885. Clearly, the firm was hyper-efficient, and its efficiency was being translated to the consumer in the form of lower prices for a much-improved, now standardized product, and to the firm in the form of additional profits.

If anyone was getting robbed, it was the original producers in the Titusville, Pennsylvania, oil patch, who, through their wastefulness and unprofitable operations, would have ruined the industry and eventually harmed consumers.  

There are several myths around Rockefeller reliant on the exploits of certain critics, most prominently Ida Tarbell.  In many regards, Tarbell is the stand-in for later progressive historians wishing to assail capitalism in the name of greater regulation.  These figures accused Standard Oil of coercive buyouts, predatory pricing, and monopolistic domination. 

Ida Tarbell’s landmark exposé in McClure’s Magazine detailed the company’s ruthless tactics and fueled the progressive movement to regulate monopolies.  Tarbell’s narratives fit too well into the wealth-inequality, trust-domination ethos popular among progressive historians, so she has achieved fame beyond that of a normal writer.  She was the archetype of the celebrity journalist fearlessly writing truth to power.  A figure later represented by Edward Murrow, Bob Woodward, and any reporter on 60 Minutes.  

Tarbell and her many cheerleaders ignored Standard Oil, claiming it brought order to a chaotic market, lowered prices for consumers, and vastly improved product quality. Like many industrialists, Rockefeller’s legacy can be seen as a mixture of ruthlessness and progress—an embodiment of the complex forces shaping American capitalism. 

What is also missed in the narrative of Standard Oil is that between its peak in 1890, when it controlled nearly 90% of refining capacity, and its breakup 23 years later, its share of refining had steadily decreased.  Also, the breakup was what truly made Rockefeller’s fortune, as the breakup prices doubled the value of the standard entities and thus Rockefeller’s wealth.  It is not as if Tarbell was some objective journalist—her father, a failed oil-industry businessman, was the opposite of Rockefeller. Like thousands of others, he was subject to the vagaries of a nascent industry, and Tarbell used his failures to motivate her crusades.  It is no wonder that many of the contemporary critics of Rockefeller were businessmen who lost out to him or were not good enough.  

In a myth-busting series for the Foundation for Economic Education entitled “Rockefeller’s Standard Oil Company Proves Why we need Antitrust” (this is listed as myth #41 by the author), Lawrence Reed provides a critical counter to this ignorance: “Among the great misconceptions about a free economy is the widely-held belief that “laissez-faire” embodies a natural tendency toward monopoly concentration. Under unfettered capitalism, so goes the familiar refrain, large firms would systematically devour smaller ones, corner markets, and stamp out competition until every inhabitant of the land fell victim to their power. Supposedly, John D. Rockefeller’s Standard Oil Company of the late 1800s gave substance to this perspective.”  

Reed goes on to note, “Does the story of Standard Oil really present a case against the free market? It most emphatically does not. Furthermore, setting the record straight on this issue must become an important weapon in every free-market advocate’s intellectual arsenal.” Current antitrust thought then, as well as today, is predicated on consumer harm.  The reality was that consumers were better off.  

Another myth is that Rockefeller ruthlessly crushed his competitors.  The reality was that he wanted a smoothly running industry for all players. “One of Rockefeller’s strengths in bargaining situations was that he figured out what he wanted and what the other party wanted and then crafted mutually advantageous terms. Instead of ruining the railroads, Rockefeller tried to help them prosper, albeit in a way that fortified his own position,” notes Chernow. Of course he wanted to fortify his own position.  CEOs have a duty to their stakeholders to do so.  

The other contention is the use of predatory practices, a charge made by Tarbell and, not shockingly, Standard competitors.  However, the reality was that Standard was better managed.  

Economist D. T. Armentano describes the economic excellence of their performance: “Instead of buying oil from jobbers, they made the jobbers’ profit by sending their own purchasing men into the oil region. In addition, they made their own sulfuric acid, their own barrels, their own lumber, their own wagons, and their own glue. They kept minute and accurate records of every item from rivets to barrel bungs. They built elaborate storage facilities near their refineries. Rockefeller bargained as shrewdly for crude as anyone before or since. Moreover, Sam Andrews coaxed more kerosene from a barrel of crude than could the competition. In addition, the Rockefeller firm put out the cleanest-burning kerosene, and managed to dispose of most of the residues like lubricating oil, paraffin, and Vaseline at a profit.”

Tarbell herself wrote of Standard’s managerial expertise:

“Not far away from the canning works, on Newton Creek, is an oil refinery. This oil runs to the canning works, and as the newly made cans come down a chute from the works above, where they have just been finished, they are filled, twelve at a time, with the oil made a few miles away. The filling apparatus is admirable. As the newly made cans come down the chute, they are distributed, twelve in a row, along one side of a turntable. The turntable is revolved, and the cans come directly under twelve measures, each holding five gallons of oil—a turn of a valve, and the cans are full. The table is turned a quarter, and while twelve more cans are filled and twelve fresh ones are distributed, four men with soldering cappers put the caps on the first set. Another quarter turn, and men stand ready to take the cans from the filler, and while they do this, twelve more are having caps put on, twelve are filling, and twelve are coming to their place from the chute. The cans are placed at once in wooden boxes standing ready, and, after a twenty-four-hour wait for discovering leaks, are nailed up and carted to a nearby door. This door opens on the river, and there at anchor by the side of the factory is a vessel chartered for South America or China or where not—waiting to receive the cans which a little more than twenty-four hours before were tin sheets lying on flat-boxes. It is a marvelous example of economy, not only in materials, but in time and in footsteps.”

Even a Socialist historian, Gabriel Kolko, argues in The Triumph of Conservatism that the forces of competition in the free market of the late 1800s were too potent to allow Standard to cheat the public, and stresses that “Standard treated the consumer with deference. Crude and refined oil prices for consumers declined during the period Standard exercised greatest control of the industry.”

Professor McGee once again:

“Judging from the Record, Standard Oil did not use predatory price discrimination to drive out competing refiners, nor did its pricing practice have that effect. Whereas there may be a very few cases in which retail kerosene peddlers or dealers went out of business after or during price cutting, there is no real proof that Standard’s pricing policies were responsible. I am convinced that Standard did not, if ever, systematically use local price cutting in retailing or anywhere else to reduce competition. To do so would have been foolish; and, whatever else has been said about them, the old Standard organization was seldom criticized for making less money when it could readily have made more.”

In 1915, Charles W. Eliot, president of Harvard, observed: “The organization of the great business of taking petroleum out of the earth, piping the oil over great distances, distilling and refining it, and distributing it in tank steamers, tank wagons, and cans all over the earth, was an American invention.” 

Even as Rockefeller controlled the oil industry, Andrew Carnegie forged an empire in the steel industry. It is not surprising that Carnegie came to his success in the same century that Darwin published his Origin of Species: “And while the law of competition may be sometimes hard for the individual, it is best for the race because it ensures the survival of the fittest in every department,” noted the steel magnate.  

Using the Bessemer process and reinvesting profits relentlessly into technological improvements, Carnegie Steel achieved unprecedented efficiency and output. Carnegie’s philosophy of business was simple: cut costs, eliminate waste, and dominate competitors. However, Carnegie’s empire was built on harsh labor conditions. The 1892 Homestead Strike, in which workers at his steel plant clashed violently with Pinkerton agents, became a symbol of the era’s brutal industrial relations. Carnegie (from Europe) referred to the labor unrest as “the trial of my life” and castigated his manager, Henry Clay Frick, over some of his decisions.  Public opinion sharply criticized Carnegie for advocating philanthropic ideals while presiding over a workforce subjected to low wages and dangerous conditions.  

What progressive historians do not report in terms of industrial workers is as opposed to what.  The alternative was working on a farm—six days of back-breaking toil alleviated by winter or the occasional famine.  

Just as the corporation organized capital, so did it in terms of labor organize the workers.  In ancient and medieval times, peasant uprisings occurred, but unless organized in a city, it was difficult to communicate over a vast number of farms and manors.  However, at Homestead, there were 4,000 workers in proximity, making it easier to share grievances, unionize, and organize a strike.  

Later in life, Carnegie donated vast portions of his fortune to libraries, universities, and cultural institutions. His “Gospel of Wealth” argued that the rich had a moral obligation to use their wealth for public good—an idea that continues to influence philanthropic traditions. In many ways, Carnegie’s vast philanthropy encouraged not just contemporaries, including Rockefeller, but business plutocrats of today, ranging from Bill Gates to Mark Zuckerberg.  However, in providing quality steel for the nation’s industrial build-out, creating a foundation of steel excellence that was to last 100 years with far-off implications for the 20th century, and creating millions of jobs over the life of his Steel Enterprises, it was not his philanthropy but his creation of Carnegie Steel that should get as many, if not more plaudits. 

Jay Gould gets a lot of enmity for his wild stock market speculations and, at one point, even his attempt to use Grant’s corrupt brother-in-law to corner the entire gold market.  He gets less press for attempting to create a true coast-to-coast railroad under one management, well, his management.  In this attempt, he built thousands of miles of track and brought efficiencies to the railroads he controlled.  

J.P. Morgan, the most powerful financier of the age, wielded such immense influence that the federal government sometimes relied on him to stabilize national finances. Morgan orchestrated mergers that created giant corporations, including US Steel, the world’s first billion-dollar company. Through “Morganization,” he rationalized industries by reducing competition, controlling prices, and coordinating production.

Morgan’s defenders argued that he brought stability to volatile markets, while critics saw him as an unelected autocrat who manipulated the economy for private gain. Public backlash intensified after the Panic of 1907, which Morgan helped resolve—yet the crisis demonstrated the precarious power of private financiers over national well-being.

This event inspired the creation of the Federal Reserve System in 1913, illustrating how the industrialists’ power ultimately pushed the United States toward modern regulatory frameworks.  Since the creation of the Federal Reserve, we have had the Great Depression, several recessions, and the Great Recession of 2008.  However, was it the Industrialists’ fault?  

Part of the narrative is how the wealth of the Industrialists stood in sharp contrast to the experiences of millions of workers who labored in their factories, mines, and railroads. Workdays often lasted twelve hours or more; accidents were common; and wages remained low even amid rising profits. 

The increasing nationalization wrought by communications miracles.  It was not as if humanity had not labored in poverty for the better part of written history.  It was that not many historians covered this.  However, in the early 20th century, you have a host of historians, steeped in labor theory, cataloging these events.  Add to those later historians, under the sway of influencers from Marx to Engels, and you see why labor unrest gets so much press, but the benefits of industrialization do not. Immigrants from Europe, China, and elsewhere supplied much of the labor, yet they faced discrimination, exploitation, and hazardous living conditions. Urban tenements became overcrowded and unsanitary as cities struggled to cope with rapid growth. The reality of the industrial build-out did not diminish the impact of this rapid change on the population.  Thus, while the industrialists drove economic expansion, they also contributed to deep social inequalities that fueled the rise of the Progressive Era, labor unions, and new regulatory laws.  

The concentrated power of industrial titans provided an opportunity for reformers and policymakers.  Every hero needs a villain, and the new wealth accrued by a few provided much of the impetus.  The fact that, for all of recorded history, disparities between the rich and the poor were the norm was dismissed. In ancient Rome, a few families controlled vast amounts of land, often worked by slaves. In Feudal times, a few thousand nobles controlled all the land (along with the Church), wherein peasants and serfs provided the labor.  

The difference here was that though the South resembled ancient agriculture (different crops, same labor), in the Northern United States, from the inception of the Republic to the late 1800s, a class of the super-rich was not in appearance.  Though many of these first-generation super-rich were not above building mansions and, in Carnegie’s case, an entire castle, it is the second generation, certainly in the case of the Vanderbilts, who brought ostentation to an extreme.  However, in, say, 14th-century England, we have John of Gaunt building the Savoy Palace, or in the 17th century, the Duke of Buckingham erecting a massive palace.  Wealth disparity was historically not new, but it was, at that scale, in the Northern part of America.  Under pressure from the public, Congress passed the Sherman Antitrust Act in 1890, the first major attempt to limit monopolies. For years, it was poorly enforced, partly due to judicial hostility and political resistance. However, by the early 1900s, under presidents Theodore Roosevelt and William Howard Taft, antitrust enforcement intensified. Standard Oil was famously broken up in 1911. Railroads faced new oversight under the Interstate Commerce Commission. Labor protections slowly expanded. These reforms did not end big business, but they helped establish the foundations of modern economic regulation.

One of the most striking aspects of the Industrialists’ careers is their later-life philanthropy. Historically, the rich, from Rome to China to Medieval Europe, were primarily landowners and viewed their holdings as patrimony.  The American industrialists, in many regards, viewed their newfound wealth as something unseemly.  

Rockefeller established foundations that revolutionized medicine, education, and public health; Carnegie endowed thousands of libraries and cultural institutions; and others supported universities, museums, and scientific research. 

There have been many references to progressive historians. The dean of the group was Charles Beard.  In his 1913 book An Economic Interpretation of the Constitution of the United States, Charles Beard argued that the US Constitution was not created by high-minded founders pursuing pure democratic ideals, but was instead an economic document designed by wealthy property owners to protect their own financial interests.  

Writing for the Foundation of Economic Education, Burton Fulsom wrote, “Each state had to vote on ratifying the Constitution, and Beard offered evidence that “the leaders who supported the Constitution in the ratifying conventions represented the same economic groups as the members of the Philadelphia convention.'” The Founders, Beard conceded, did not write the Constitution merely to make money, but “The Constitution was essentially an economic document.”

Beard’s thesis, seemingly well-researched, was presented tentatively, but it soon swept the historical profession and became gospel in college classrooms by the 1920s. The Constitution, professors suggested to their students, was not a document worthy of special respect. It was a product of self-interest that should be interpreted loosely and changed as the Progressives saw fit. Not only did Beard’s thesis inform Woodrow Wilson, but it was also the precursor to Howard Zinn, Bernie Sanders, and much of the left.  

However, a 1950s historian, Forrest McDonald, did a more thorough study of the Founders and discovered what can most generously be described as errors in research and, less generously, as fraudulent research.  He completely debunked Beard’s entire thesis.  So why does Beard matter?  His emphasis on the dynamics of socioeconomic conflict and change and his analysis of motivational factors in the founding of institutions made him one of the most influential American historians of his time. By positing that economic self-interest and class conflict were the primary driving forces behind American history, the industrialists could not be left alone by Beard’s followers.  If Class conflict is the thing, no greater example exists than Robber Barons! The progressive historians could redefine America not as a place of unlimited opportunity where a poor person could grow up to be John Rockefeller, but as one who has to fight against corruption and inequality. Beard changed the way we look at history then and today.  

Moreover, we now come to Mathew Josephson and his definitive book. This book is certainly a product of its time. First published in 1934 at the height of the Great Depression, this is a damning look at the men who arose around the Civil War and after, and how they basically looted the country through government giveaways of land and tax breaks (railroads).  Problem is, like Beard’s work, it was crap.  Burton Fulsome, whom we heard from above, and the aforementioned Forrest McDonald teamed up to write a corrective to Josephson's The Myth of the Robber Barons. This book examines textbook bias on the Robber Barons and the rise of the U.S. in the late 1800s. One chapter shows how many historians misread American history and disparage market entrepreneurs rather than political entrepreneurs. 

“A lot can be learned from the story of the Scrantons. The first lesson is that entrepreneurs are needed to create wealth; when they succeed, others then have the chance to build on what they started. If we look at the later history of Scranton, we can also learn a second lesson: that it is hard for those on top to stay there in the generations that follow. An inheritance can be transferred; but entrepreneurship, talent, and vision cannot be. The industrial city of Scranton saw lots of movement down the ladder of social mobility, as well as up.”

Industrialists remain controversial figures in American history. Oil magnates then, Tech titans today.  However, these people, not any government employee, were the innovators who drove industrial progress and economic expansion. They built railroads, steel mills, refineries, banks, and corporations that helped turn the United States into the world’s leading industrial power. They shaped the structure of modern business and laid the groundwork for a globalized economy. Moreover, it was this industrial base that, in the 20th century, powered victories in World Wars I and II and in the Cold War.  To this day, the US military, built on the platform of industrial might, remains the preeminent, unchallenged factor in global affairs.  The United States has lost wars, but never because of military inadequacy—another legacy of the industrialists.  

However, they also amassed vast fortunes through practices that were often coercive, exploitative, or monopolistic. Their rise exposed deep inequalities and sparked movements for labor rights, social reform, and government regulation.

I would not want to be a small business person entering a particular industry if Standard Oil or Carnegie Steel were in my way. However, these men were more positive than negative, and the concept of them as villains, barons, or robbers is more a matter of historiography.  More to do with the desire for government, and those supporting expansion of government, to find a justification for their interventions.