There are a great number of topics that outline the economic development of the United States in various history volumes. One of the most fascinating concepts about the economic development in the United States in the late 19th century is how many individuals made their fortunes by what many would define as unconventional means. While today’s society expects business moguls to raise prices in order to ensure their continued cash flow, the opposite was done in the late 1800s and was extremely successful. It was a risky way to conduct business, but it was proven to be extremely successful and made millions for countless business owners during this time period. Author Burton Folsom wrote a book in 1991 called The Myth of Robber Barons which explores the phenomenon of this time period and discusses how the robber barons were given this name. Additionally, it illustrates the creative geniuses of business owners such as Andrew Mellon, James Hill and George Scranton and how they contributed to this myth in history.
In order to discuss the book and its contents, it is first important to get a working definition of the robber barons and how it is applied to this specific volume. Even when writing a book review, it is a good idea to have a basic understanding of the key concept(s) focused on by the author. When the term is located in the dictionary, the definition given for robber baron is a ruthless, powerful capitalist who lived during the late 19th century who allegedly became wealthy by exploitation or other unethical means. Given the reputations of many of the industrialists during this time period, this would be a logical way to describe these individuals. However, Folsom has given the reading audience a different point of view on these men and their contributions to the U.S. economy by using unorthodox methods to make their fortunes.
The book first gives a distinction between the robber barons of the time period such as Leland Stanford for allegedly exploiting Chinese workers in his railroad companies and the businessmen such as Andrew Mellon who was successful in banking, oil, and construction (Folsom, 1991). There is no doubt that there were individuals who made questionable decisions regarding their business practices which notably included the exploitation of laborers, but it did not exist in the businesses in many of the most noted capitalists of the late 19th century. In essence, one can say that the businessmen of this time period helped to define business ethics and practices that would be used well into the modern era. One question that is raised in Folsom’s book is whether or not businessmen in this time period were truly innovative in their methods to improve the overall economy of the nation. There have been numerous examples of these entrepreneurs who made decisions to alter the course of business with the consumers’ benefitting from these decisions.
A prime example of this occurrence is Cornelius Vanderbilt making his fortune in steam boating. Instead of increasing his prices per ride in different regions, he began to gradually decrease prices for customers, which drove his boats up significantly in popularity, thereby increasing the amount of business Vanderbilt conducted annually (Folsom, 1991). This type of business practice was also adapted by Andrew Carnegie, who installed furnaces and other appliances at two third of the cost of his competition, again making his company popular amongst consumers. It is human nature to go with the best value for their dollar, which is the principle for these businessmen as well as their peers who adapted the same practices in their own industries.
The question then becomes how does one business tycoon from the 19th century become classified as a robber baron versus another who is simply practicing good, sound economic principles in their day to day operations? The answer to this mainly rests on the actual ethics and practices regarding other areas of business, such as the exploitation of laborers and natural resources. Most notable of these industries was the railroad companies who were notorious for making Chinese immigrants work long, hard hours to make sure the tracks were completed on time and were in good working order for the progression of transit. Again, Leland Stanford is one of the most notable figures in this scenario, having run several railroad companies and is noted for using immigrant labor to finish projects taken on by that railroad (Folsom, 1991). While there are other examples in the book, Stanford seems to be the most prominent one used by the author, possibly because of the influence he had on California.
After reading this book, the reader would have to recommend this book for other students. Not only is it a good resource for those wanting to understand 19th century American History, but it is also good for teaching lessons in government, politics and economic history of this defined time period. Many authors glaze over the contributions made by these industrialists and are quick to label them robber barons, but careful examination of the facts as presented by Folsom has changed the mind of this reader. It was a good business and marketing decision for these men to reduce the cost of goods to the consumers, and it ultimately paid off in significant financial gain. Additionally, it also paved the way for other entrepreneurs to use these established business practices on order to further the growing American economy.
- Folsom, B. W. (1991). The Myth of the Robber Barons: A New Look at the Rise of Big Business in America. Young Americas Foundation.