Big business leaders during the United States Gilded Age are more accurately coined "Captains of Industry" than “Robber Barons”, pioneering new methods of efficiency, harnessing unskilled labor, and setting a precedent for modern business practice in the United States. Cornelius Vanderbilt, John D. Rockefeller, and Andrew Carnegie made their fortunes through hard work, skill, and ruthless ambition, transforming themselves from poverty-stricken young boys to some of the richest businessmen in history. Though their success was fueled by the dawn of the Industrial Revolution, they in turn shaped modern industrialism, creating some of the largest and most successful corporations, many of which still exist today.
Before the industrial revolution spread to the overseas from Europe, the United States economic model was heavily dependent on craftsman and tradesmen who produced a specific good or textile within their homes, passing this craft on to their children. A single family of coopers would buy the wood and metalworking tools required to make barrels, produced the product in their own homes, and sold it from either their homes or local markets. Due to the glaring inefficiencies that seem obvious in the context of modern production methods, prices for textiles were high, production rates were low, and workers, often immigrants, could not survive in the United States without a skillset or a trade they could master. The industrial revolution turned this economic model on its head – unskilled workers were in high demand to work in factories making textiles and other products, distribution of goods expanded dramatically, and new methods of efficiency were integrated into common business practice.
In the realm of production, these Captains of Industry found new, innovative ways to operate a corporation efficiently. The industrial revolution increased demand for items such as kerosene and petroleum, steel, and the rapidly spreading railroad. Mass quantities of these industrial necessities were controlled by Rockefeller’s company, Standard Oil; Carnegie’s company, American steel; and Vanderbilt’s railroad, respectively. Kerosene became a household item, so Rockefeller invested in more factories, bought out other oil companies, and produced more kerosene at a cheaper price than it had ever been, making kerosene more readily available than ever to the people who needed it. Eventually, Standard Oil produced over 29,000 barrels of crude oil every day, sold in barrels made by their own coopers. (1) Carnegie’s American Steel company cut prices in any way possible and invested in new iron making methods before they were proven profitable, which made Carnegie millions. As cities expanded, stretching over the landscape and into the clouds, cheap but reliable materials from American steel fed into the growth of skyscrapers during this era. (2) Vanderbilt, in the business of transportation and shipping, made his beginnings in the steamboat industry. In the 1860s, Vanderbilt realized the innovation and necessity of the railroad before people across the country came to rely on it. He left his successful steamboat ventures, and focused his investments entirely on the railway industry. As Vanderbilt bought out other railways and extended the trans-continental railroad through the west, New York Central Railroad cut costs and lowered shipping prices for consumers, and would make over 25 million dollars in its first five years. (3)
Harnessing unskilled labor was another major success of the Captains of Industry. Political turmoil and religious persecution swept through Europe in 1848, causing a swell of European immigration to the United States. From Italy, Russia, Poland, and other south eastern European countries, immigrants came in search of land, social mobility, and economic opportunity. This continued into the Gilded Age, and business leaders welcomed the massive influx of unskilled laborers who often could not speak any English. Many of these immigrants arrived impoverished, and therefore flocked to the cities seeking access to jobs and basic necessities. These were the kind of people who were accustomed to living on very little income, and business leaders took advantage of the circumstance. Factories employed millions of immigrants and still maintain a better life for themselves and their children than the one they fled in Europe, and in the grand scheme of industrial profit, Captains of Industry increased profit margins through immigrant labor. Even impoverished United States citizens could find employment without a trade, craft, or skillset, and make a living. A common example of unskilled labor being employed effectively during this era was the mass amounts of Chinese immigrants who were essentially the hands that constructed the trans-continental railroad, along with a minority percentage of Irish and German immigrants. By 1882, industrial era business leaders had employed so many immigrants that Congress passed the Chinese Exclusion Act, restricting the immigration of Chinese laborers entirely. One of the major motivational factors behind the exclusion of Chinese immigrants was the number of jobs occupied by unskilled, illiterate immigrants that could not be occupied by hard-working American citizens. So many immigrants were employed that the people allowed Congress to restrict immigration flow to the United States for the first time in American history. (4)
During the industrial era, businesses expanded from small, family-owned stores to multi-million dollar companies with multiple locations throughout the country. Frederick Taylor saw the need to redesign the way business was managed to fit the new and demanding dynamic of modern business, so he applied the scientific method to labor and workplace interactions. The new formula he created for management is often referred to as scientific management, or Taylorism. In order to streamline efficiency, Taylor advocated that decision making responsibilities be reallocated from laborers on the production floor to managers, who would handle the decision making on how and when production when occur. He argued that this would make the production process faster and therefore cheaper and more efficient. Based on this idea, many corporations began introducing a hierarchy of management to their businesses in order to operate more smoothly. (5) Proving its effectiveness and practicality, these business models and principles are still utilized today in businesses of varying size and type.
The Captains of Industry during the Gilded Age, specifically Carnegie, Rockefeller, and Vanderbilt, are the epitome of the “rags to riches” American dream. In 1835, Andrew Carnegie was born to a poor weaver couple in Dunfermline, Scotland, reaching the United States at age 13 upon his mother’s urging. (6) John D. Rockefeller was born to a religious mother and traveling con artist father in Richford, New York, in 1839, earning money through yardwork for his neighbors. Cornelius Vanderbilt was born in 1794 to a ferryman, beginning his own work in the trade at age eleven. These men began as ordinary boys, stricken by poverty since birth, each with their own unique stories of rising to greatness through ambition and calculated risk. They began with nothing, and died having donated an average of three hundred to four hundred million dollars of their fortune back to the communities that helped them achieve such tremendous success. Carnegie’s article “Wealth” advocates that the rich are the caretakers of the poor, warning against the foolish dangers of bequeathing wealth to one’s children or the public upon death. (7) He was known to say that “the man who dies rich dies disgraced.” He founded over 2,000 libraries during his lifetime and died with very little fortune left for his family. Vanderbilt founded the famed university in his own name, and Rockefeller founded the University of Chicago, donating 75 million dollars to the institution by 1932. (8) Historians often villainize the Captains of Industry in this era, and not without reason, but these business leaders were just that – leaders. History cannot discount the astonishing innovations and overwhelming impact these men had on United States economic systems as they exist today.
Citations:
Footnotes:
Bibliography
“Biography: John D. Rockefeller, Senior.” Public Broadcasting Service. Accessed September 30, 2015. http://www.pbs.org/wgbh/americanexperience/features/biography/rockefellers-john/.
Carnegie, Andrew. “Wealth.” North American Review. Accessed September 30, 2015. https://www.swarthmore.edu/SocSci/rbannis1/AIH19th/Carnegie.html.
“Controlling the Shop Floor.” Digital History. Accessed September 30, 2015. http://www.digitalhistory.uh.edu/disp_textbook.cfm?smtID=2&psid=3172.
“Cornelius Vanderbilt [1794-1877]: Industrial and Commercial Leader.” New Netherland Institute: Exploring America’s Dutch Heritage. Accessed September 30, 2015. http://www.newnetherlandinstitute.org/history-and-heritage/dutch_americans/cornelius-vanderbilt/.
“Industrial Age in America: Sweatshop, Steel Mills, and Factories, The.” Edsitement!. Accessed September 30, 2015. http://edsitement.neh.gov/lesson-plan/industrial-age-america-sweatshops-steel-mills-and-factories.
“Industrial Age in America: Robber Barons and Captains of Industry, The.” Edsitement!. Accessed September 30, 2015. http://edsitement.neh.gov/lesson-plan/industrial-age-america-robber-barons-and-captains-industry#sect-thelesson.
“People and Events: Andrew Carnegie.” Public Broadcasting Service. Accessed September 30, 2015. http://www.pbs.org/wgbh/amex/carnegie/peopleevents/pande01.html.
“Reading 1: The Vanderbilt Family Beginnings.” National Park Service. Accessed September 30, 2015. http://www.nps.gov/nr/twhp/wwwlps/lessons/78vanderbilt/78facts1.htm.
“Rush of Immigration, The.” U.S. History: Pre-Columbian to the New Millennium. Accessed September 30, 2015. http://www.ushistory.org/us/38c.asp.
“Robber Baron or Industrial Statesman.” Digital History. Accessed September 30, 2015. http://www.digitalhistory.uh.edu/teachers/lesson_plans/pdfs/unit7_7.pdf.
“Rockefeller and the Standard Oil Monopoly.” Constitutional Rights Foundation. Accessed September 30, 2015. http://www.crf-usa.org/bill-of-rights-in-action/bria-16-2-b-rockefeller-and-the-standard-oil-monopoly.html.
“Rockefellers: John D. Rockefeller, 1839-1937, The.” Rockefeller Archive Center. Accessed September 30, 2015. http://www.rockarch.org/bio/jdrsr.php.
Header Photograph: Carnegie Library. Library of Congress Photograph Collections. 1909. Accessed September 30, 2015. http://www.loc.gov/item/npc2007018883.
Before the industrial revolution spread to the overseas from Europe, the United States economic model was heavily dependent on craftsman and tradesmen who produced a specific good or textile within their homes, passing this craft on to their children. A single family of coopers would buy the wood and metalworking tools required to make barrels, produced the product in their own homes, and sold it from either their homes or local markets. Due to the glaring inefficiencies that seem obvious in the context of modern production methods, prices for textiles were high, production rates were low, and workers, often immigrants, could not survive in the United States without a skillset or a trade they could master. The industrial revolution turned this economic model on its head – unskilled workers were in high demand to work in factories making textiles and other products, distribution of goods expanded dramatically, and new methods of efficiency were integrated into common business practice.
In the realm of production, these Captains of Industry found new, innovative ways to operate a corporation efficiently. The industrial revolution increased demand for items such as kerosene and petroleum, steel, and the rapidly spreading railroad. Mass quantities of these industrial necessities were controlled by Rockefeller’s company, Standard Oil; Carnegie’s company, American steel; and Vanderbilt’s railroad, respectively. Kerosene became a household item, so Rockefeller invested in more factories, bought out other oil companies, and produced more kerosene at a cheaper price than it had ever been, making kerosene more readily available than ever to the people who needed it. Eventually, Standard Oil produced over 29,000 barrels of crude oil every day, sold in barrels made by their own coopers. (1) Carnegie’s American Steel company cut prices in any way possible and invested in new iron making methods before they were proven profitable, which made Carnegie millions. As cities expanded, stretching over the landscape and into the clouds, cheap but reliable materials from American steel fed into the growth of skyscrapers during this era. (2) Vanderbilt, in the business of transportation and shipping, made his beginnings in the steamboat industry. In the 1860s, Vanderbilt realized the innovation and necessity of the railroad before people across the country came to rely on it. He left his successful steamboat ventures, and focused his investments entirely on the railway industry. As Vanderbilt bought out other railways and extended the trans-continental railroad through the west, New York Central Railroad cut costs and lowered shipping prices for consumers, and would make over 25 million dollars in its first five years. (3)
Harnessing unskilled labor was another major success of the Captains of Industry. Political turmoil and religious persecution swept through Europe in 1848, causing a swell of European immigration to the United States. From Italy, Russia, Poland, and other south eastern European countries, immigrants came in search of land, social mobility, and economic opportunity. This continued into the Gilded Age, and business leaders welcomed the massive influx of unskilled laborers who often could not speak any English. Many of these immigrants arrived impoverished, and therefore flocked to the cities seeking access to jobs and basic necessities. These were the kind of people who were accustomed to living on very little income, and business leaders took advantage of the circumstance. Factories employed millions of immigrants and still maintain a better life for themselves and their children than the one they fled in Europe, and in the grand scheme of industrial profit, Captains of Industry increased profit margins through immigrant labor. Even impoverished United States citizens could find employment without a trade, craft, or skillset, and make a living. A common example of unskilled labor being employed effectively during this era was the mass amounts of Chinese immigrants who were essentially the hands that constructed the trans-continental railroad, along with a minority percentage of Irish and German immigrants. By 1882, industrial era business leaders had employed so many immigrants that Congress passed the Chinese Exclusion Act, restricting the immigration of Chinese laborers entirely. One of the major motivational factors behind the exclusion of Chinese immigrants was the number of jobs occupied by unskilled, illiterate immigrants that could not be occupied by hard-working American citizens. So many immigrants were employed that the people allowed Congress to restrict immigration flow to the United States for the first time in American history. (4)
During the industrial era, businesses expanded from small, family-owned stores to multi-million dollar companies with multiple locations throughout the country. Frederick Taylor saw the need to redesign the way business was managed to fit the new and demanding dynamic of modern business, so he applied the scientific method to labor and workplace interactions. The new formula he created for management is often referred to as scientific management, or Taylorism. In order to streamline efficiency, Taylor advocated that decision making responsibilities be reallocated from laborers on the production floor to managers, who would handle the decision making on how and when production when occur. He argued that this would make the production process faster and therefore cheaper and more efficient. Based on this idea, many corporations began introducing a hierarchy of management to their businesses in order to operate more smoothly. (5) Proving its effectiveness and practicality, these business models and principles are still utilized today in businesses of varying size and type.
The Captains of Industry during the Gilded Age, specifically Carnegie, Rockefeller, and Vanderbilt, are the epitome of the “rags to riches” American dream. In 1835, Andrew Carnegie was born to a poor weaver couple in Dunfermline, Scotland, reaching the United States at age 13 upon his mother’s urging. (6) John D. Rockefeller was born to a religious mother and traveling con artist father in Richford, New York, in 1839, earning money through yardwork for his neighbors. Cornelius Vanderbilt was born in 1794 to a ferryman, beginning his own work in the trade at age eleven. These men began as ordinary boys, stricken by poverty since birth, each with their own unique stories of rising to greatness through ambition and calculated risk. They began with nothing, and died having donated an average of three hundred to four hundred million dollars of their fortune back to the communities that helped them achieve such tremendous success. Carnegie’s article “Wealth” advocates that the rich are the caretakers of the poor, warning against the foolish dangers of bequeathing wealth to one’s children or the public upon death. (7) He was known to say that “the man who dies rich dies disgraced.” He founded over 2,000 libraries during his lifetime and died with very little fortune left for his family. Vanderbilt founded the famed university in his own name, and Rockefeller founded the University of Chicago, donating 75 million dollars to the institution by 1932. (8) Historians often villainize the Captains of Industry in this era, and not without reason, but these business leaders were just that – leaders. History cannot discount the astonishing innovations and overwhelming impact these men had on United States economic systems as they exist today.
Citations:
Footnotes:
- “The Rockefellers: John D. Rockefeller, 1839-1937,” Rockefeller Archive Center, accessed September 30, 2015, http://www.rockarch.org/bio/jdrsr.php.
- “Andrew Carnegie: The Steel Business,” Public Broadcasting Service, accessed September 30, 2015, http://www.pbs.org/wgbh/amex/carnegie/sfeature/mf_flames.html.
- “Cornelius Vanderbilt [1794-1877]: Industrial and Commercial Leader,” New Netherland Institute: Exploring America’s Dutch Heritage, accessed September 30, 2015, http://www.newnetherlandinstitute.org/history-and-heritage/dutch_americans/cornelius-vanderbilt/.
- “The Rush of Immigrants,” U.S. History: Pre-Columbian to the New Millennium, accessed September 30, 2015, http://www.ushistory.org/us/38c.asp.
- “Controlling the Shop Floor,” Digital History, accessed September 30, 2015, http://www.digitalhistory.uh.edu/disp_textbook.cfm?smtID=2&psid=3172.
- “People and Events: Andrew Carnegie,” Public Broadcasting Service, accessed September 30, 2015, http://www.pbs.org/wgbh/amex/carnegie/peopleevents/pande01.html.
- Andrew Carnegie, “Wealth,” North American Review, June 1889, accessed September 30, 2015, https://www.swarthmore.edu/SocSci/rbannis1/AIH19th/Carnegie.html.
- Keith Poole, “Biography: John D. Rockefeller, Senior,” Public Broadcasting Service, accessed September 30, 2015, http://www.pbs.org/wgbh/americanexperience/features/biography/rockefellers-john/.
Bibliography
“Biography: John D. Rockefeller, Senior.” Public Broadcasting Service. Accessed September 30, 2015. http://www.pbs.org/wgbh/americanexperience/features/biography/rockefellers-john/.
Carnegie, Andrew. “Wealth.” North American Review. Accessed September 30, 2015. https://www.swarthmore.edu/SocSci/rbannis1/AIH19th/Carnegie.html.
“Controlling the Shop Floor.” Digital History. Accessed September 30, 2015. http://www.digitalhistory.uh.edu/disp_textbook.cfm?smtID=2&psid=3172.
“Cornelius Vanderbilt [1794-1877]: Industrial and Commercial Leader.” New Netherland Institute: Exploring America’s Dutch Heritage. Accessed September 30, 2015. http://www.newnetherlandinstitute.org/history-and-heritage/dutch_americans/cornelius-vanderbilt/.
“Industrial Age in America: Sweatshop, Steel Mills, and Factories, The.” Edsitement!. Accessed September 30, 2015. http://edsitement.neh.gov/lesson-plan/industrial-age-america-sweatshops-steel-mills-and-factories.
“Industrial Age in America: Robber Barons and Captains of Industry, The.” Edsitement!. Accessed September 30, 2015. http://edsitement.neh.gov/lesson-plan/industrial-age-america-robber-barons-and-captains-industry#sect-thelesson.
“People and Events: Andrew Carnegie.” Public Broadcasting Service. Accessed September 30, 2015. http://www.pbs.org/wgbh/amex/carnegie/peopleevents/pande01.html.
“Reading 1: The Vanderbilt Family Beginnings.” National Park Service. Accessed September 30, 2015. http://www.nps.gov/nr/twhp/wwwlps/lessons/78vanderbilt/78facts1.htm.
“Rush of Immigration, The.” U.S. History: Pre-Columbian to the New Millennium. Accessed September 30, 2015. http://www.ushistory.org/us/38c.asp.
“Robber Baron or Industrial Statesman.” Digital History. Accessed September 30, 2015. http://www.digitalhistory.uh.edu/teachers/lesson_plans/pdfs/unit7_7.pdf.
“Rockefeller and the Standard Oil Monopoly.” Constitutional Rights Foundation. Accessed September 30, 2015. http://www.crf-usa.org/bill-of-rights-in-action/bria-16-2-b-rockefeller-and-the-standard-oil-monopoly.html.
“Rockefellers: John D. Rockefeller, 1839-1937, The.” Rockefeller Archive Center. Accessed September 30, 2015. http://www.rockarch.org/bio/jdrsr.php.
Header Photograph: Carnegie Library. Library of Congress Photograph Collections. 1909. Accessed September 30, 2015. http://www.loc.gov/item/npc2007018883.