Rapacious? Sure.But 19thcentury titans Carnegie

Rapacious? Sure.But 19th century titans
Carnegie; Rockefeller and Morgan set the
stage for the empire builders of the 20th
ByRON CHERNOW
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, taring out from their
. photographs, they
are the archetypal
tycoons: one a steelyeyed Scot with a
spade-shaped white
beard; another a
craggy, Ichabod Crane lookalike; the third a fat cat in
striped pants with a watch chain .
strung across an ample paunch .
Today they have the look of
fossilizedreactionaries, but
these turn-of-the-century titans
were men who lived in booming, anarchic times and thrived
on them, The Gilded Age was a
turbulent period of unfettered
capitalism and unfathomable
wealth for them and their
peers-an environment free of
income tax, meddling regulators and other curbs. on the animal spirits of freewheeling entrepreneurs, Yet these febrile
decades, forever decried as the
era of the robber barons, .
.forged the tremendous engine .
of economic growth that propelled the country from rural
.-isolationism in the 19th century
~ to world industrial leadership
• in the 20th,
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Three men-Andrew
: Carnegie, John D, Rockefeller
~ and]. Pierpont Morgan-per~ sonified this sweeping turn-of§ the-century transformation.
: Imbued with all the greed,
; guile and enterprise of the age,
~ they exhibited a bullish faith in
America's future despite the depressions,
strikes and financial
panics thatpunctuated these tumultuous years, In their
diHerent ways, each
dealt a mortal blow
to .the small-seale
econornv of the earlyrepublic, fostering vast industries
that forever altered
the size and scope of
the nation's business.
In crafting the first
major multinational corporation, Standard Oil, Rockefeller
was a devout Baptist with a
tics that made him a legend,
ministerial air, who professed
(1839-i937) provided a sneak
Imposing his own granite dispreview of the 20th century, At
to have no less a business excipline on the industry, he
his zenith, he refined, distribbought up rivals, modernized
pert than the Lord on his side.
uted arid marketed nearly 90%
Rockefeller believed in a
plants and organized the oil
of America's oil, The unlikely
industry on an enduring basis,
new economic order that he
offspring of a raffish snake-oil
dubbed "cooperation." PresiNever the cunnudgeon of
salesman and a strict Baptist
dent Theodore Roosevelt and
myth, Rockefeller had adroll,
his trustbusters had another
mother, Rockefeller grew up in
genial personality that masked
several rustic hamlets in upstate
supreme cunning and formidawordfor it-monopoly-and the
ble self-control. It is certainly
Lord proved no help to RockeNew Yorkand Ohio. He began
his career as an assistant bookfeller against T.R Rockefeller's
true that he was not the least
touzh tactics forced America to
keeper in a Cleveland, Ohio,
. bit squeamish about tough tactics. He colluded with railroads
de~e the limits of corporate
commodity-brokerage house in
1855 and invested in his first reto gain preferential freight
behavior, Since Rockefeller
finery during the Civil War,
rates, secretly owned rivals,
managed to figure out every
bribed state legislators and en- . conceivable anticompetitive
When he co-founded Stangaged in industrial espionage,
practice, the authors of the
dard in 1870, the oil fields of
Sherman Antitrust Act in 1890
western Pennsylvania-the
From Cleveland, he rolled up
simply had to study his career
one refining center after anheart of the new industrywere in a chaotic state as gluts
to draw up a reform agenda.
other until his control was abIn the end, Rockefeller
. solute. He was still in his 30s,
dragged down prices below
the boy wonder of American
amassed a fortune that begproduction costs. Rockefeller
gared description. When his
then began to employ the tacbusiness. At the same time, he
TIME.
DECEMBER
t. 1998
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moth, U.S. Steel, Carnegie devoted himself to good deeds. A
prodigious philanthropist, he
created 2,800 free libraries
worldwide. "The man who dies
· rich dies disgraced," he de-:
elared bluntly. Like Rockefeller, Carnegie endowed large
corporate foundations with
elastic charters that took on an
· autonomous existence. At his
death he had disbursed almost
his entire $350 million fortune.
___ .If Bockefeller and Car.negiebuilt the industrial. age, .
then Morgan (1837~1913) £~
nanced.it, The most imposing
personage ever to bestride
Wall Street-hisniclmame
was
Jupiter-Morgan
hada thunderclap voice, a ferocious glare
. and agrotesquely disfig:ured
red nose that; he once ruefully
· joked, had becornet'part
of the
· American business structure."
Where Rockefeller and Carnegie endured hardscrabble
boyhoods, Morgan came from
a well-to-do Hartford,' Conn.,
family, andhis appetite for
bosomy women, enormous
yachts (his 300-ft. Corsair lent
him a piratical image) and exquisite art was legendary,
After studying in Switzerland and Germany; the
cosmopolitan young Morgan
arrived on Wall Street in
1857, serving as agent for his
His steel furnished the
father Junius Spencer Morsinews of America's burgeongan, who had taken over a
London merchant bank.
ing towns and factories.
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A prolific writer and auto· Though Pierpont participated
didact who authored eight
in refinancing the Civil War
books and 70 magazine artidebt in the 1870s, he acquired
cles, Carnegie was a voluble, if
true imperial status in undersometimes naive, adherent of
writing America's railroads.
the Victorian faith inmanMorgan issued stocks and
bonds for railroads (think of.
kind's progress. His quixotic
ideals often clashed, homver,
them as you would software
with the brute realities of his
companies today), brokered
steel mills, where men toiled
deals among them and domi12-hour days, seven days a
nated their boards. He recapitalized so many bankrupt railweek. If Carnegie fancied
himself the friend of the workroads-Morganized
them, as
ingman, he had to face the ulwits said-that
by the 1890s he
. timate comeuppance in 1892
controlled one-sixth of Ameriwhen his associate Henry Clay
ca's railway system.
Frick brutally suppressed
Like Rockefeller, Morgan
striking workers in Homescorned competition as wasteful and ran afoul of federal
stead, Pa., in the bloodiest
clash in U.S. labor history.
trustbusters who broke up his
After selling his empire to
railroad holding company,
J.P. Morgan in 1901 to form the
Northern Securities, in the earcenterpiece of the new behely 1900s. The apex of Morgan's
Tom Scott, a powerful overlord
of the Pennsylvania Railroad.
At 23 Carnegie headed
Pennsy's Pittsburgh division
and began to rake in a small
fortune from outside investments ranging from oil to iron
bridges. When he was 33; the
rich young man privately leetured himself that his continued pursuit of wealth "must
degrade me beyond hope of
permanent recovery." Yet he
couldn't abandon the money
chase. "Put all your eggs into
one basket," Carnegie once advised, "and then watch that
.basket. " For him that basket
brimmed with steel. Fiercely
competitive, obsessed with
innovation and efficiencyhe would unhesitatingly
scrap a relatively new plant
to erect a more modem one-Carnegie
imported the
Bessemer
forced-air steel
process to
America. Such
innovation permitted him to
.reduce the price
of rails=-the
product that ini-
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. ~et worth peaked at$900 mill ion in 1913, it was equivalent
[JJ more than 2% of the gross
rational product; such a share
todav would be worth $190
.l?illi~n, or nearly three times
.s much as Bill Gates' wealth,
Carnegie (l835-1919),the
.son of a master weaver in DunbermJine, Scotland, saw his
boyhood paradise tom asunder
. vhen his father's skills were
rendered obsolete by the pow. a loom. The Carnegies had to
-rnigrate to the foul Pittsburgh,
P'a., slums when Andrew was
2.. Quick-witted, shrewd and
Cesilient, he survived a Dickensian adolescence that included
working as a bobbin boy in a
~xtiJe mill.
.His first breakthrough
Same when he landed ajob as
.$ecretary and telegrapher to
TIME. DECEMBER
i. 1998
power came in 1901 with the
creation of U.S. Steel, the first
billion-dollar corporation. This
was followed by International
Harvester, the farm-equipment
trust, and the International
Mercantile Marine, the North
Atlantic shipping cartel. In fact,
Morgan presided over so many
large-scale industrial consolidations that he recast the banker's
role from that of handmaiden
to master of industry.
Between 1836 and 1914,
. the D.S.lacked
central bank;
Morgan steppedboldly,
sometimes magnificently, into that
.breach. When gold reserves
backing the country's legal
tender dipped perilously low
in 1895, he masterminded
a
bond issue in New York and
London that replenished the
gold stock-one
of many acts
he performed that preserved
America's credit abroad and
evinced a new financial maturity that won the confidence of
foreign investors.
During the 1907 Panic on
Wall Street, an aging Morgan
'mobilized the city's bankers in
his solemnly ornate library and
got them to commit money to a
.'rescue fund that ended the
bank runs convulsing the city.
It was the last hurrah for a selfregulated financial system:
Morgan's dazzling improvisation proved the urgent need
for a central bank, setting the
stage for the passage of the
Federal Reserve Act in 1913.
. Rockefeller, Carnegie and,
Morgan were not the only robber barons, of course. Edward
H. Harriman fought Morgan
for control of the railroads.
Andrew and Richard Mellon
founded four major companies, including Alcoa. But the
scale on which Rockefeller,
Carnegie and Morgan operated
was unprecedented,
paving
the way for a world of global
companies and capital flows.
And their money built a platform for philan thropy that has
grown every bit as much as
their corporations.
•
a
~on Chernow is the author of
Titan: The-Life of John D. Rockefeller Sr. He has also written a .
biography of}.P. Morgan
75
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.Three Entrepreneurs
, Andrew Carnegie
.John D.Rockefeller
. J.P.Morgan
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b.
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e.
a. How did each man make his fortune?
b. What characteristics of an entrepreneur did he exhibit? What sacrifices did he
make? .
c. What product did he manufacture? What caused him to get into that business?
d. What tactics did each use that '¥Quid be illegal today?
e. What philanthropies did each engage in later in life? How much money did he
give away?
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