What conditions favored the rise of robber barons in the late 1800s and early 1900s?

The Myth of the Robber Barons — A New Look at the Rise of Big Business in America, by Burton W, Folsom, Jr., Ph.D.

a short Book Report by Ron Housley

When I was a child in New Jersey, the Lehigh Valley Railroad practically ran through my back yard. Every day at suppertime a dark red passenger train, powered by one of those ALCO PA diesel locomotives, roared by and I always wondered where it came from, where it was going, and who was on it. Little did I know that Charles Schwab’s Bethlehem Steel produced the rails, that Lehigh was actually part of Pennsylvania, that the railroad in my backyard was a symbol of American industrial history — which I wouldn’t fully learn about for decades to come. Folsom’s book colored in more of the missing pieces for me.

Burt Folsom shows us that the industrialization of America was not a “pure” story of individual productivity. Rather, it was a story seriously contaminated by ongoing instances of innovation-stifling government intrusion (think: special privileges, regulations, subsidies, fines, charters, tariffs and miscellaneous obstructionism) at every turn, just a little at first but ever more as the years ticked by. And we learn in this volume to be on the lookout for those never-ending contaminations —— which prevented the story from being one of productive capitalism and turned it into a story of how government coercion always makes things worse and can damage an entire civilization’s understanding of what productivity and industrialization depends upon.

Folsom’s little book from 1987, now in its seventh printing, lays out the basic facts of notable American entrepreneurs. And woven into each story we see the same history repeating itself over and over: economic growth stifled by coercive government forcing citizens to misallocate their wealth.

The culture at large painted each of the successful industrial pioneers as an object of scorn, as if each had stolen, rather than created, his wealth.

Vanderbilt, for instance, uprooted Robert Fulton’s state-granted and state-enforced monopoly of all steamboat traffic in New York; he was instrumental in removing government force from the economic equation; he relentlessly competed against federal aid to other steamboat operators; and when he out-competed even the most heavily subsidized shipping lines, he was vilified and hated for his success.

These American producers were likened to the “Robber Barons” of medieval Germany who used force to extort wealth from innocent merchants. “Robber Baron” turned out to be an effective smear, casting paragons of virtue and productivity with the opprobrium ordinarily reserved from rapists and murderers.

Those who benefited most from the new comforts afforded by the industrial revolution were the ones who most vehemently denounced the very men who made those comforts possible.

It was these envious and vengeful regressives who ultimately rose to prominent numbers in government, in academia and in the press. These were the ones who clamored for federal subsidies and loans (think: Solyndra, today, or railroad land grants, back when); these were the ones who threw up obstacles to economic development (think: ICC, FTC, anti-trust); these were the ones infecting the American culture of freedom with the notion that protecting individual rights was, therefore, the central mistake of our country’s founding (!).

So, all during the careers of Vanderbilt, of the Scranton’s, of Rockefeller, of Carnegie and Schwab, of Mellon, there was a cultural counter-current, even as the developing industrial revolution was lifting the masses out of poverty for the first time in human history.

Each instance where an industrial hero created new wealth and opportunity where none had existed before, the counter-current grew louder.

And what was the counter-current? It was the growing chorus in support of government confiscating this newly created wealth and distributing it to non-producers; in support of disallowing inheritances; in support of throwing up obstacles to business growth; in support of coercively imposing equality of wealth —— never mind the producer who created the wealth in the first place; and never mind the impact on would-be future producers.

The counter-current was a resurrection of the Christian morality outlined in The Sermon on the Mount; it was given new energy by 19th century German philosophers; it was smuggled into America by the country’s intellectuals, not the least of which was Woodrow Wilson who had pursued his graduate education in Germany, itself.

Never mind that millions of Americans suddenly were lifted out of century’s-old poverty; never mind the new opportunities suddenly available to anyone willing to pursue them; the culture was already under the spell of this “new” (think: old) moral philosophy insisting that our foremost moral duty is to sacrifice ourselves to others — i.e., otherism, or, altruism.

Folsom’s book gives us a glimpse into the phenomenon of wealth creation itself. We see that it depends entirely upon the focused effort of individuals.

And side by side with stories of wealth creation we see how the wealth destroyer gradually but steadily took command of the culture’s hatred for individual productivity. We see how the bias against individualism has been woven into today’s indoctrination which passes for education.

To me, Folsom’s most compelling act was to make solidly concrete the picture supporting an otherwise abstract principle: productivity requires freedom. It is a principle practically lost by today’s culture.

Why did America favor robber barons?

What most contributed to the rise of robber barons during the Gilded Age?

What were robber barons of the late 1800s?

What tactics did robber barons use?