Tabbi Austin

TYCOONS OF THE 1900S

The definition of tycoon is as follows:

A businessperson of great wealth and power; magnate.

WHAT IS A TYCOON?

He earned most of his fortune in the steel industry. In the 1870s, he

founded the Carnegie Steel Company, a step which cemented his

name as one of the "Captains of Industry". By the 1890s, the

company was the largest and most profitable industrial enterprise in

the world. Carnegie sold it in 1901 for $480 million to J.P. Morgan, who created U.S. Steel. Carnegie devoted

the remainder of his life to large-scale philanthropy, with special

emphasis on local libraries, world peace, education and scientific

research. His life has often been referred to as a true "rags to riches"

story.

ANDREW CARNEGIE – STEELE KING

John Davison Rockefeller I (July 8, 1839 – May 23, 1937) was an American oil magnate. Rockefeller revolutionized the petroleum

industry and defined the structure of modern philanthropy. In 1870, he founded the Standard

Oil Company and aggressively ran it until he officially retired in 1897. Standard Oil began

as an Ohio partnership formed by John D. Rockefeller, his brother William Rockefeller,

Henry Flagler, Jabez Bostwick, chemist Samuel Andrews, and a silent partner, Stephen V.

Harkness. As kerosene and gasoline grew in importance, Rockefeller's wealth soared, and he became the world's richest man and first American worth more than a billion dollars.

Adjusting for inflation, he is often regarded as the richest person in history.

JOHN D. ROCKEFELLER – OIL BARON

John Pierpont Morgan (April 17, 1837 - March 31, 1913) was an American financier, banker and art collector who dominated corporate finance and industrial consolidation during

his time. In 1892 Morgan arranged the merger of Edison General Electric and

Thomson-Houston Electric Company to form General Electric. After financing the creation of the Federal Steel Company he merged in

1901 the Carnegie Steel Company and several other steel and iron businesses, including Consolidates Steel and Wire

Company owned by William Edenborn, to form the United States Steel Corporation.

J. P. MORGAN

HUMBLE BEGINNINGS OF ANDREW CARNEGIE

Andrew Carnegie was born in Dumfermline, Scottland, the son of a weaver. The family immigrated to the United

States in 1848 because of changing labor conditions in their native land, where recently introduced steam looms were replacing many workers, Carnegie’s father among

them. The family settled in Allegheny, Pennsylvania, where Andrew received no formal education and found work as a

bobbin boy in a cotton mill. He later worked as a messenger in a telegraph office and rapidly advanced to

telegrapher.

In 1853, Carnegie became the private secretary and telegrapher to Thomas A. Scott, president of

the Pennsylvania Railroad. Taking the first step toward an

investment program, Carnegie bought stock in a sleeping-car

company and in a short time was making more from his speculative venture than his regular job. He

later made a similarly small investment in oil during its

formative years and again profited handsomely. Carnegie was

appointed a superintendent for the Pennsylvania Railroad in 1859. After the Civil War broke out in

1861, Carnegie served in the War Department reorganizing

telegraph service for the Union army. He had earlier paid a

substitute $850 to discharge his responsibilities as a draftee.

GETTING HIS FEET WET

In 1864, Carnegie devoted his full energies to the iron business. His firm received lucrative contracts from the railroads to replace aging wooden

bridges with iron ones. On a trip to Europe, Carnegie met and was inspired by Henry Bessemer, developer of breakthrough technology for making steel from

pig iron. In 1873, Carnegie sold his other interests and turned his full attention to steel; he began to acquire the components of what would become

the Carnegie Steel Company. Carnegie’s recipe for success included hard work, attention to detail and an ability to hire and rely upon qualified help; Charles Schwab was an early assistant and would later become president of

U.S. Steel and Bethlehem Steel. Carnegie also was a shrewd observer of human nature. When he opened his first steel plant in 1875, he named the facility for the president of the Pennsylvania Railroad, J. Edgar Thompson;

shortly thereafter, Carnegie received an enormous order from that organization for the production of steel rails.

RECIPE FOR SUCCESS

The low point of Carnegie’s career occurred in 1892 during the infamous Homestead Steel

Strike. Carnegie was traveling in Europe during the dispute, but his interests were represented

by Henry Clay Frick, with whom Carnegie had diff ered on labor

matters in the past. Nevertheless, the total

humiliation suff ered by the strikers at Homestead soured the opinion of many working people of Carnegie for many

years to come.

A BIT OF A LOW POINT

Carnegie Hall (1892) Carnegie Institution (1902) for research into American

colleges and universities Carnegie Hero Fund Commission (1904)

Carnegie Endowment for the Advancement of Teaching (1905)

Carnegie Endowment for International Peace (1910) Carnegie Corporation of New York (1911)

Funding for the establishment of more than 2,800 libraries

Major support for Tuskegee Institute Funding for the Peace Palace at The Hague, The

Netherlands, later the home of the United Nations International Court of Justice.

MAJOR PHILANTHROPIC VENTURES

From the start Rockefeller showed a genius for organization and method. The firm prospered during the Civil War (1861–65), when Confederate

(Southern) forces clashed with those of the Union (North). With the Pennsylvania oil strike (1859) and the building of a railroad to Cleveland, they branched out into oil refining (purifying) with Samuel Andrews, who

had technical knowledge of the field. Within two years Rockefeller became senior partner; Clark was bought out, and the firm Rockefeller and

Andrews became Cleveland's largest refinery.

With financial help from S. V. Harkness and from a new partner, H. M. Flagler (1830–1913), who also secured favorable railroad freight rebates,

Rockefeller survived the bitter competition in the oil industry. The Standard Oil Company, started in Ohio in 1870 by Rockefeller, his brother

William, Flagler, Harkness, and Andrews, had a worth of one million dollars and paid a profit of 40 percent a year later. While Standard Oil controlled one-tenth of American refining, the competition remained.

J. D. ROCKEFELLER’S START

By 1883, after winning control of the pipeline industry, Standard's monopoly was at a peak. Rockefeller created America's first great "trust" in 1882. Ever since 1872,

Standard had placed its gains outside Ohio in the hands of Flagler as "trustee" because laws denied one company's ownership of another's stock. All profits went to the Ohio

company while the outside businesses remained independent. Nine trustees of the Standard Oil Trust

received the stock of forty businesses and gave the various shareholders trust certificates in return. The trust had a

worth of about seventy million dollars, making it the world's largest and richest industrial organization.

TRUSTS

Public opposition to Standard Oil grew with the emergence of the muckraking journalists (journalists

who expose corruption), in particular, Henry Demarest Lloyd (1847–1903) and Ida Tarbell (1857–1944) who published harsh stories of the oil empire. Rockefeller

was criticized for various practices: railroad rebates (a system he did not invent and which many refiners used); price fixing; and bribery (exchanging money for favors);

crushing smaller firms by unfair competition, such as cutting off their crude oil supplies or restricting their

transportation outlets. Standard Oil was investigated by the New York State Senate and by the U.S. House of Representatives in 1888. Two years later the Ohio

Supreme Court invalidated Standard's original trust agreement. Rockefeller formally disbanded the

organization and in 1899 Standard was recreated legally under a new form as a "holding company," (this merger was dissolved by the U.S. Supreme Court in 1911, long

after Rockefeller himself had retired from active control in 1897).

CRACKING DOWN ON THE TRUST

The total of Rockefeller's lifetime philanthropies has been estimated at about $550 million. Eventually the amounts

involved became so huge (his fortune reached $900 million by 1913) that he developed a staff of specialists to help

him. Out of this came the Rockefeller Foundation, chartered in 1913, "to promote the well-being of mankind throughout the world." He died on May 23, 1937, in Ormond, Florida.

WORTH $550 MILLION

John Pierpont (JP) Morgan was born on April 17, 1837 in Hartford, Connecticut to parents Juniet Spencer Morgan and Juliet

(Pierpont) Morgan. His father was a partner of the firm George Peabody & Co. so by no means was JP Morgan born into a poor family. After he completed school at the English school in Boston, he went to the University of Gottingen in Germany. When he returned to the US in 1857 he

got a job working for the private banking house Duncan, Sherman and Company. In 1860 he was appointed as the American

agent and attorney for George Peabody & Company in which his father was a

partner. This later became J.S. Morgan & Co and when his father died in 1890 he

left it to JP Morgan giving him important European connections and enabling him to

run a large foreign reserve business.

J. P MORGAN’S OUTSET

By the time of his father's death, JP Morgan had already established

himself as a financier through Dabney, Morgan & Co. and later Drexel,

Morgan & Co. It was after the Civil War that he started buying distressed

businesses and especially railroad companies. Some of these railroads

include the West Shore, Philadelphia and Reading, Richmond Terminal, the Erie and the New England railroads.

His process of buying and consolidation of railroads came to be known as Morganization. On several occasions, JP Morgan also helped the government in its finances. In 1877,

together with August Belmont and the Rothschilds, they floated $260 million

in US government bonds. After the government ran into some gold

problems, he bought $200 million worth of government bonds with gold thereby preserving the credit of the

United States. Some of his detractors had, however, heavily criticised him for

the harsh terms of the loan. This had also resulted in a Congressional

hearing in 1912, but he walked away largely unscathed.

MONEY MAKING DEALS

Perhaps the biggest deal he was ever involved in was the forming of the US Steel Corporation, the first billion-dollar corporation. He had bought some mills from Andrew

Carnegie and together with some other steel assets formed US Steel -

worth approximately $1.2 billion. He was also involved with several

other companies and sat on quite a few boards. A few of the better

known ones include Western Union Telegraph Company and General

Electric. At the time of his death on March 31, 1913 he had an estate worth $80 million (today around

$1.2 billion). Compared to his peers of the time, especially Rockefeller, it was not such a large estate. In fact, it was Rockefeller's comment at the time, "And to think he wasn't even a rich man." Yet, JP Morgan's power did not lie in the millions he had, it

lay in the billions he controlled.

BILLIONS ON BILLIONS

The super-rich industrialists and financiers such as John D. Rockefeller, Andrew W. Mellon, Andrew Carnegie, Henry

Flagler, Henry H. Rogers, J.P. Morgan, Cornelius Vanderbilt of the Vanderbilt family, and the prominent Astor family

were attacked as "robber barons" by critics, who believed they cheated to get their money and lorded it over the

common people. There was a small, growing labor union movement led especially by Samuel Gompers, head of the

American Federation of Labor (AFL) after 1886.

GILDED AGE HOST TO ENTREPRENEURS

The wealth of the period is highlighted by the American upper class' opulence, but also by the rise of American philanthropy (referred to by Andrew Carnegie as the

"Gospel of Wealth") that used private money to endow thousands of colleges, hospitals, museums, academies,

schools, opera houses, public libraries, symphony orchestras, and charities. John D. Rockefeller, for example, donated over $500 million to various charities, slightly over

half his entire net worth.

AMERICAN PHILANTHROPY

Gould gained control of the Union Pacific, from which in 1883 he

withdrew after realizing a large profit. Buying up the stock of the Missouri Pacific he built up, by

means of consolidations, reorganizations, and the

construction of branch lines, the "Gould System" of railways in the Southwestern states. In 1880 he was in virtual control of 10,000

miles of railway, about one-ninth of the railway mileage of the United States at that time. Besides, he

obtained a controlling interest in the Western Union Telegraph

Company, and after 1881 in the elevated railways in New York City, and was intimately connected with

many of the largest railway financial operations in the US.

Jay Gould

OTHER NOTABLE TYCOONS

With absolute power over who could be nominated as a

Democratic candidate and enormous influence over

appointments to office, "Boss Tweed" was himself appointed a Deputy Street Commissioner, and began putting cronies on the city payroll for doing no work. With his substantial kickbacks, Tweed bought

several companies which were promptly awarded city

contracts. He was elected to the State Senate in 1867, and within months had charmed

and cajoled his way to similar near-absolute control over the

state's capitol.

Boss Tweed

NOTABLE TYCOONS CONT.