Continuing the draft book I'm working on about the history of supra-national corporations. Part One is here:
http://www.dailykos.com/...
Part Two consists of the remainder of Chapter Three in the draft manuscript.
I welcome any criticisms or comments.
Part Three will consist of Chapter Four of the draft, covering the Progressive Era from the Grangers to the end of World War One. It will probably go up tomorrow.
Monopoly
The first method used by the corporations to end competition and fix profits was the pool or cartel. This was a voluntary arrangement wherein a group of companies simply decided to fix a common price and assign each member a fixed share of the market. Since this was illegal, the whole thing was done out of sight. Invariably, however, such cartels collapsed, as sooner or later, one member would always get greedy, begin to undercut the others to gain a bigger market share, and break up the cartel.
Another method to dominate the market was the “trust”, in which a large number of companies mutually chose a single board of directors and then assigned all their voting stock to this board to be held “in trust”. The trust members would then receive interest-bearing certificates in return, which were paid for out of the profits that the trust made by managing all of the joint assets. The archetypical trust was the Standard Oil Company. While trusts quickly became the favorite means of gaining a monopoly (and the name “trust” soon began to be applied by the public to any large corporation), the tactic drew legal challenges from the government, and the Sherman Anti-Trust Act made it illegal in 1890. The corporations then turned to the method originally used by the railroaders—the holding company. In this method, a corporation would simply buy and hold controlling shares of stock in other corporations. Once the corporations enticed all the states to pass laws legalizing the holding company, it became the favorite method of assembling huge combined corporations. General Motors soon became the largest and richest of the holding companies.
The handful of people at the top of the corporate pyramid became known as “robber barons”. They were the wealthiest and most powerful people in the world at the time, and their names—Cornelius Vanderbilt, John D Rockefeller, John Pierpont Morgan, Andrew Carnegie—became legends.
Cornelius “Commodore” Vanderbilt
Inevitably, the first mega-corporations came from the railroad companies, and a number of railroad tycoons soon built private empires. In 1853, Erastus Corning and Dean Richmond merged a handful of small companies to form the New York Central Railroad, and grew rich. Within a short time, however, their little fiefdom was swallowed up by Cornelius Vanderbilt.
Cornelius Vanderbilt was born in Staten Island in 1794. As a young boy, he worked on a ferry boat owned by his father; at age 16, he borrowed money from his family to buy a boat of his own. After marrying his cousin at age 19, he formed a partnership with his father and bought another boat, and was soon making a modest living transporting passengers and cargo across the Hudson River. Four years later, another steamboat operator, named Gibbons, hired Vanderbilt as a boat captain. Within a few years, Vanderbilt was managing Gibbons’ business, while continuing to run his own shipping company.
Years before, the New York state legislature had granted a monopoly to Robert Fulton’s steamboat company, which was now being managed by a man named Ogden. Both Vanderbilt and Gibbons sued Ogden’s company to end the monopoly, and, in the Gibbons v Ogden case, the US Supreme Court ruled that states could not interfere in interstate commerce, and could not legally grant such a monopoly.
In 1829, Vanderbilt devoted himself solely to his own shipping company. He began buying up other small companies, starting with the one Gibbons had hired him to manage. In 1831, Vanderbilt collided with the company run by Daniel Drew, who was also building up a significant share of the New York shipping business. Vanderbilt won, bought out Drew’s company, then formed a secret partnership with him to avoid future competition. In 1834, Vanderbilt formed another shipping company on the Hudson River, and after being bought out himself by another larger company, focused his operations on Long Island Sound. By 1840, he controlled virtually all of the steamboat traffic to Long Island, and had already become a millionaire.
Vanderbilt now made the move to expand nationally.
Much of the cargo came from the textile mills in New York, which were moved by boat to the railroad terminals to be carried across the country. Vanderbilt decided to start buying up the railroad lines that served these terminals, beginning with the New York, Providence and Boston Railroad. The method he used was simple—he began charging the company’s competitor’s less for shipping freight, boxing the Railroad in until he had driven the stock price low enough to allow him to buy it out.
His next move was to go into ocean shipping. Most of the traffic to the West Coast, during the 1849 Gold Rush, went by ship to Central America, where carriages took people and cargo from one coast to the other. Vanderbilt formed a shipping company to Nicaragua and, after failing to interest the US Government in building a sea-level canal there, he built his own railroad line from coast to coast.
Shortly after, he formed a trans-Atlantic shipping line to Europe, and quickly drove the competing Collins Line out of business.
By this time, Vanderbilt also owned a number of railroads, consolidating them into the New York Central Railroad. In 1868, he began buying shares in his only remaining competitor, the Erie Railroad owned by his former steamboat rival Daniel Drew in partnership with Jay Gould and Jim Fisk. The “Erie Wars” were Vanderbilt’s first turf battle with robber barons who were just as ruthless as he, and he lost. Gould sold him 100,000 shares of worthless “watered stock”, above the legal number of shares than the company was allowed to issue, then bribed the state legislature to pass a law legalizing the sale. Vanderbilt, who once famously remarked, “Law? What do I care about the law? Ain’t I got the power?” now turned to the law, and filed a lawsuit.
Despite this setback, Vanderbilt continued to buy up railroads, and soon had tracks stretching from New York to Chicago. When the economy collapsed in the Panic of 1873, Vanderbilt’s company was large enough to weather the storm, and he bought up all the smaller lines that were failing. By 1875, he controlled most of the railroad traffic in the US and was one of the richest men in the world.
One of Vanderbilt’s favorite tactics to drive out competitors was the “rebate”, in which large freight companies were given back a portion of their freight charges (essentially a kickback) in exchange for 100% of their business.
Another favorite tactic was to build short railroad spur lines to isolated farming towns, where there was no competition, and charge rates there that were several times higher than those on longer lines—a practice that drew never-ending opposition from the rural farmers who had to pay the inflated shipping prices.
When Vanderbilt died in 1877, he left behind holdings worth $104 million—equal to the entire United States Treasury at the time.
Vanderbilt’s railroads and other holdings were inherited by his son William, who is most well-known for, when asked about how his company took the public interest into its plans, replying simply, “The public be damned.”
John D Rockefeller
Perhaps the most famous of the Robber Barons, John D Rockefeller was the original architect of the “trust”, and also built the first mega-corporation around oil, an industry that continues to exert enormous political power even today. It is worth, therefore, looking at Rockefeller’s methods in some detail.
John Davison Rockefeller was born in Richford, New York, in 1839. His father was a “snake oil salesman”, a quack “doctor” who sold patent medicines. His mother instilled a deep sense of religion in the boy, and throughout his life Rockefeller remained an active church-goer who always donated heavily to his church.
The young Rockefeller’s first business venture happened when he was just 12 years old. By raising turkeys for sale on his family’s farm, and by working a few odd jobs for neighbors, he had managed to save the then-significant sum of $50. He loaned it to a neighboring farmer for seven percent interest. Fascinated with this trick of seemingly making money from nothing, Rockefeller decided then and there that he would “let money be my servant and not make myself a slave to the money”.
In 1853, the family moved to Cleveland, Ohio, and, after attending college and learning bookkeeping, Rockefeller got a job with the Hewitt and Tuttle Company. He was soon placed in charge of the company’s shipping.
In 1859, just before his 20th birthday, Rockefeller formed a business partnership with a neighbor. The Clark and Rockefeller Company sold grain on commission. Within a few years, however, Rockefeller saw that the steamship transport that Cleveland was dependent upon would, very soon, give way to the new railroad networks, and that the local Ohio grain trade would collapse. He began looking for a new business which could take advantage of the growing railroad ties from Ohio to the East Coast. In 1863, the industry appeared that gave Rockefeller everything he was looking for; a small company called the Pennsylvania Rock Oil Company successfully drilled for oil in Titusville, Pennsylvania.
Before this time there was, of course, no electricity, and people used oil lamps to light their homes and businesses. Nearly all of this lamp oil came from whales, and the dangerous process to obtain and purify whale oil made it expensive.
In 1859, however, it was found that petroleum, a sticky black liquid that sometimes oozed to the surface, would, if distilled, produce a number of useful chemicals, among which was kerosene. Kerosene, it turned out, made an excellent lamp oil—it was easy to handle, it burned brightly and cleanly, and it was far cheaper than whale oil. Furthermore, the technology for obtaining petroleum oil was readily available; it could be extracted by the same drilling process that was already being used to obtain subterranean water or brine (which was evaporated into salt). After the first oil gusher in Titusville, drilling rigs appeared all over Pennsylvania, in the world’s first oil boom.
When two railroad lines were built to connect Cleveland with New York and Pennsylvania, Rockefeller realized that he was perfectly positioned, in Ohio, to import oil by rail from Pennsylvania, refine it into kerosene, and then ship it out either by rail or by steamboats on the Great Lakes. In 1863, Rockefeller, his partner Clark, Clark’s two brothers, and geologist Samuel Andrews (who had done some work with oil shale) joined together to form a new partnership, called Andrews, Clark and Company, and opened an oil refinery in Cleveland. Two years later, Rockefeller wanted to borrow money from a bank to finance an expansion, but the Clark brothers thought it too risky and balked. Rockefeller responded by buying the three brothers out, and the partnership was renamed Rockefeller and Andrews. The next year, Rockefeller’s brother William built another refinery in Cleveland, and shortly after, both brothers joined investor Henry Flagler and formed the Rockefeller, Andrews and Flagler Company. They were the largest oil refinery in the world.
Rockefeller realized, however, that as long as the equipment for refining oil was cheap and simple, his dominant position could fall at any time to some new upstart company. Even if an economic downturn drove most of the refineries out of business, the low cost of building a new one insured that a flood of new competitors would quickly reappear. He therefore devised a plan to dominate the entire oil industry from top to bottom, and in 1870, formed the Standard Oil Company to carry it out.
The first thing Rockefeller did was to increase the size and sophistication of the refinery, to make it more efficient and, not coincidentally, to increase the cost for new competitors. The company bought its own barrel-making facility, allowing them to obtain oil barrels at half the cost that their competitors had to pay to buy their barrels. Rockefeller also installed his own plant for making all the chemicals needed for the refining process, and devised ways to recycle them after use. And Standard Oil reduced its transport costs by buying its own fleet of oil tanker ships and tanker trucks. To further cut its transport costs, Standard used its huge size to extract preferential shipping rates from the railroads that its competing refineries could not get.
In addition, Standard put its chemists to work finding new commercial uses for the waste products that were left over from the refining process. Soon, Rockefeller was increasing his profits (and increasing the pressure on smaller competitors) by selling naptha, turpentine, paraffin, petroleum jelly, and benzene, which were used in manufacturing solvents, paint, lubricating oil, varnish, candles, even chewing gum. The company also found that they were able to use a waste product called “gasoline” as a usable fuel for engines. Rockefeller capped off his plans by imposing a strict secrecy on everyone in the company, so no competitor would be able to easily duplicate his efforts.
The plan worked. At its beginning, Standard Oil refined about 10% of America’s petroleum. Fifteen years later, it refined 90%.
But Rockefeller was not finished yet. The cost of opening up an oil well was also very low (the technology was basically the same as drilling for water), and as numerous small companies flooded into the oil fields to drill wells, the supply of oil glutted, driving down prices for everyone. While Standard Oil was far large enough to weather the downturns, Rockefeller saw no reason why his company should lose money through the overproduction of so many small drillers. He therefore laid plans to eliminate them, and to place himself in the position of being able to regulate the supply of oil to keep the price stable (the same plan that OPEC would use a century later). “We reached the conclusion,“ Rockefeller would later write, “that there were three great divisions in the petroleum business—the production, the carriage of it, and the preparation of it for market. If any one party controlled absolutely any one of those three divisions, it practically would have a very fair show of controlling the others.”
He was correct. His utter domination of the refining business (a condition known to business students today as “horizontal integration) gave him the leverage he needed to dominate every step of the industry (a condition known as “vertical integration”), from drilling oil to refining it to transporting the products and selling them at retail. By bringing every stage of production, from ground to kerosene lamp (or, in a few years, to automobile gas station) under his control, Rockefeller was able to drop the cost of producing kerosene from three cents a gallon in 1870 to just one-half a cent a gallon fifteen years later. His profits were enormous.
And his methods were ruthless. Vanderbilt’s railroads became weapons in Rockefeller’s hands. As one of the railroad’s biggest customers, he could name his own freight price, and received generous “rebates”. Standard Oil spied relentlessly on everyone around it, friend or foe, and was therefore able to detect whenever the railroads gave a break on freight prices for a competing oil company, and fire off an imperious letter asking the railroad to “Please turn another screw.” Since the Standard refineries were virtually the only place a producer could sell crude oil, Rockefeller could ask any price he wanted, often driving producers into near-bankruptcy before buying them up and adding them to the Standard empire. Conversely, Rockefeller could lower his own prices at any targeted market, selling at a loss long enough—for months, if necessary—to drive any competitor to his knees. And, according to some reports, Standard Oil was not above sometimes using outright sabotage of a competitor’s equipment to get what it wanted.
When a group of independent oil producers built an underground pipeline to carry crude oil, considerably reducing the cost of transport, Rockefeller quickly moved to secretly buy up a controlling share of stock through go-betweens and took over. Then he built up his own massive pipeline network.
By 1880, Standard Oil held controlling shares of stock in some 40 different corporations, giving him control of nearly the entire oil industry. A year later, Rockefeller introduced his most infamous innovation—the trust company. In this arrangement, all 40 of the captive companies turned over all their voting stock to a Standard Oil Trust, consisting of 9 members. This board of trustees would then assume total management powers over all of their operations. In return, each shareholder would receive a certificate from the trust entitling them to dividend payments. Rockefeller was now the unquestioned head of the largest industrial empire ever seen.
But the empire had its challengers. In 1888, a number of Congressional investigations were looking very hard at the Standard Oil trust, some of them at the instigation of the railroads, who were tired of being strong-armed by Rockefeller. In 1890, the Sherman Anti-Trust Act was passed, which specifically banned the corporate setup used by Standard Oil, where a fortune of $150 million per year was being managed by just nine men. In response, Standard Oil replaced its trust certificates with fixed proportions of stock shares. Of the resulting 970,000 shares, 250,000 went to John D Rockefeller.
The bookkeeping trick was not enough, however. In 1911, the US Supreme Court ruled that Standard Oil was restricting free trade in violation of the Sherman Anti-Trust Act, and ordered the company to be broken up into separate entities. One of those portions became Amoco. One became Chevron. One became Mobil. And one became Esso, later to be renamed Exxon.
Rockefeller had already turned the day-to-day running of his empire over to John Archbold, and had effectively retired by 1899, remaining only as a name on the company roster. He spent the rest of his life in philanthropy, motivated by his still-deeply-held religious beliefs. He gave away hundreds of millions of dollars to educational institutions, churches and charities, and founded a number of nonprofit foundations.
When John D Rockefeller died in 1937, his personal wealth was still $1.4 billion, dwarfing, in converted dollars, any of the later super-billionaires, including Bill Gates or Sam Walton. Rockefeller may indeed have been the single richest person in all of human history.
Andrew Carnegie
Andrew Carnegie was born in Scotland in 1835. His father, a weaver, was an active union agitator and a member of the socialist Chartist movement. In 1848, the family emigrated to the United States, settling near Pittsburgh, Pennsylvania.
In 1853, Carnegie began working as a secretary and telegraph operator for the Pennsylvania Railroad Company magnate Thomas Scott. At Scott’s well-practiced knee, Carnegie learned the ins and outs of insider trading, and began judiciously investing some money in shares of companies that he knew would soon increase in value through railroad actions. One of these was the Woodruff Sleeping Car Company, which made railroad passenger cars. Just before the Civil War, Carnegie helped arrange a merger between the Woodruff Company and the Pullman Sleeping Car Company. The new Pullman Company became one of the largest pieces in the railroad empire.
When Thomas Scott went to the War Department to coordinate the Union Army’s supply and rail transport system, he took young Carnegie with him, where he became the chief manager of the Army’s telegraph system.
After the war ended, Carnegie, who had amassed a considerable amount of money through his railroad investments, left the Pennsylvania railroad and formed a small iron foundry in Pittsburgh, the Union Ironworks. With Scott’s help, Carnegie got numerous contracts to provide train track rails. On a visit to England, Carnegie first saw the Bessemer process of making steel and recognized its superiority over iron, and in 1870 installed his own blast furnace for making steel. After buying up a number of smaller companies, he consolidated his holdings in 1873 as the Carnegie Steel Company. His partner, Henry Frick, controlled much of the coke industry (coke was the fuel needed for the steel-making furnaces). Once again his old friends at the Pennsylvania Railroad helped him out—Carnegie received the contract to produce steel rails for the tracks. His company soon became the largest steel producer in the world.
Carnegie never dominated his market to the extent that Vanderbilt and Rockefeller did. Major competitors included Rockefeller’s Mesabi Company, JP Morgan’s Federal Steel Company, and the Mellon brothers’ Union Sharon Steel Company. Rockefeller even made an unsuccessful attempt to buy Carnegie out. Carnegie Steel was immensely profitable, however, and he became fabulously wealthy. Copying Rockefeller’s strategy of vertical integration, Carnegie bought up all the iron ore mines, coal fields, coke ovens, rolling mills, and transportation facilities that his steel furnaces needed.
By the late 1880’s Carnegie had turned over most of the management of the company to his partner Frick, and devoted himself more and more to philanthropic and humanitarian projects. He wrote books extolling the virtues of democracy, and also wrote “The Gospel of Wealth”, arguing that rich men should use their money for philanthropic causes. Carnegie established universities and libraries, and also donated to arts and science (he helped fund the world’s largest telescope at the astronomic observatory on Mount Wilson). One of his oddest adventures was an attempt to gain independence for the Philippine Islands, which had been bought from Spain by the US for $20 million at the end of the Spanish-American War, a war which Carnegie had opposed. Carnegie offered $20 million of his own money if the US granted independence to the Philippines, but his offer was politely turned down.
In 1892, while Carnegie was traveling in Scotland, a strike broke out at the Homestead Steel Mill and Frick, against Carnegie’s wishes, brought in armed Pinkerton guards and thousands of strikebreakers. Ten people were killed in the ensuing melee. It led to a falling out between Carnegie and Frick, and a few years later Carnegie bought out his partner, paying $15 million for Frick’s share in the company.
In 1901, Carnegie was considering retirement, when financier JP Morgan came calling. Told by Morgan to name any price he wanted for his companies, Carnegie wrote the figure of $480 million on a napkin and pushed it across the table. Morgan accepted the deal, which was at the time the largest personal financial transaction ever. Carnegie retired to a life of philanthropy. Before he died in 1919, he had given away an estimated $350 million. The $30 million remaining after his death was given to foundations and charities.
After buying Carnegie Steel, JP Morgan partnered with Carnegie’s former partner Henry Frick and combined several companies to form US Steel. With initial capital of $1.4 billion, it was one of the largest corporations in the US. Its first President was Charles Schwab, who left three years later to form his own steel company in Bethlehem, Pennsylvania.
John Pierpont Morgan
JP Morgan was unlike most of the other Robber Barons. He didn’t run factories or manufacture any products. His commodity was money, lots of it. As one of the most powerful investment bankers of the Gilded Age, the House of Morgan supplied the cash fuel that fed all of the huge corporations.
John Pierpont Morgan was born in Connecticut in 1837. The son of a wealthy banker, he was sent to school in Boston before working at his father’s bank. By the time of the Civil War, he had formed his own Morgan and Company, acting as the New York agent for his father.
As befits a Wall Street investment banker, one of his first commercial ventures was a fraudulent scam against the US Government. As the Civil War started, Morgan was asked to broker the sale of some 3000 defective rifles that the Army was discarding as scrap. Morgan bought them all, had them re-machined, then sold them back to the Army for ten times the price. When the defective rifles blew up in use, the Army refused to pay, and Morgan twice sued the Government, unsuccessfully, to collect on the deal.
In 1871, Morgan partnered with a member of the wealthy Drexel family of Philadelphia to form Drexel, Morgan and Company. Over the next two decades, the company would broker dozens of railroad mergers, including the New York Central, the Chesapeake and Ohio, the Philadelphia and Reading, and the Great Northern. When Drexel died in 1893, Morgan reorganized the company under his control, renaming it JP Morgan and Company. He was already one of the most powerful financiers in the country.
When the Panic of 1873 crippled the economy and depleted the US Treasury, President Grover Cleveland approached Morgan to arrange a consortium that would purchase $65 million in gold from around the world, allowing the government to float a bond issue to restore the Treasury.
For the next 40 years, Morgan provided much of the cash that fueled the Gilded Age. His tactic of buying up a company, reorganizing it to make it more profitable, and then selling it off, became known as “Morganization”. His habit of placing his bank directors on the boards of every company that he financed gave him a huge interlocking network of information and influence.
There was scarcely a major deal that he was not involved with. Money from the House of Morgan helped finance the formation of General Electric, AT&T and International Harvester. In 1901, he financed the deal that purchased Carnegie Steel and turned it into US Steel. In 1902, he financed the formation of the International Mercantile Maritime Company, a holding company that owned several trans-Atlantic shipping lines. One of these was the White Star Line, and in 1912, Morgan was scheduled to sail on the maiden voyage of White Star’s newest luxury liner, the Titanic. Last-minute schedule changes forced him to cancel.
Morgan died in 1913, leaving behind an estate of $68.3 million. By Robber Baron standards, it was a modest sum—as John D Rockefeller dismissively noted, “He was not even a very rich man”.
He was not even the richest investment baker—the Mellon Brothers had far more personal wealth. But Morgan’s power was enough that even Rockefeller bowed to it—when the financial panic of 1907 threatened to cost everyone millions in losses, Morgan took charge, demanded specific steps from all of the companies he had influence over, including Rockefeller’s, and everyone did exactly what Morgan told them to, averting the crisis. Morgan assembled various bankers in a room, handed them all a pre-written agreement spelling out how much money each was to give to the struggling banks so they wouldn’t go bankrupt and trigger a collapse of the whole system. “There’s the place,” indicating where they should sign. “And here’s the pen.”
Morgan’s most famous statement, however, given during a rare press interview, would stand for a century as the most appropriate motto for Wall Street. “I owe the public nothing,” Morgan declared.
The Best Government Money Can Buy
A major factor in the domination of the Robber Barons was the US Government’s complete inability—or at least unwillingness—to do anything about it.
The period from 1865 to 1900 may well stand as the most corrupt and bribery-ridden era in American history. Not one President escaped scandal; government positions were often sold outright, while bribery and graft became almost routine.
One reason for the rampant corruption was the “spoils system”, in which any incoming government accepted it as a given right that it could fill any Federal job with anyone that it wanted to—nearly always, these government jobs were given away to cronies and political supporters as payment for favors (in exchange, government employees were expected to “donate” a portion of their pay towards the political party that had hired them). After every election, Washington DC was besieged by people hoping to curry favor one way or another into a government job. During most of the Gilded Age, neither party differed very much from the other in its platform, and elections, for many politicians, were only for the purpose of determining who got patronage jobs and who did not.
In 1871, an effort was made to set up a merit system, which would have protected many government positions from the spoils system. But the merit idea never really gained much enthusiasm, and died for lack of funding.
The end of the patronage system did not come until 1881, when an unbalanced man named Charles Guiteau, who had been rejected for a patronage job, shot and killed President Garfield in retaliation. Shortly after, the Pendleton Act was passed, creating a Civil Service Commission to hire government employees based on merit rather than political favors or loyalty.
It didn’t end the blatant corruption, of course. Judges were still bribed, Congressional members were still paid off, entire state legislatures still became captives of the corporations.
When Civil War hero Ulysses S Grant was elected to two terms as President, it proved to be the most corrupt and scandal-ridden Administration in history. While Grant himself was never accused of impropriety, nearly his entire Cabinet was. The charges ranged from fraudulent dummy railroad companies that collected money for construction projects that didn’t exist, to bribes in order to allow certain companies to trade on Indian reservations, to a plan by financier Jay Gould and Grant’s own brother-in-law to make a fortune by cornering the world’s gold market.
Between 1875 and 1885, the Central Pacific Railroad was said to have spent half a million dollars each year on bribing various government officials. Railroad manager Collis Huntington later tried to explain that bribery was a civic duty: “If you have to pay money to have the right thing done, it is only just and fair to do it . . . If someone has the power to do great evil and won’t do right unless he is bribed to do it, I think it is a man’s duty to go up and bribe.”
Another reason for government inaction was the prevailing ideology of the day, which was known as “Social Darwinism” or “survival of the fittest”. The prophet of this ideology was Herbert Spencer, who based an entire Malthusian economic and social philosophy on the scientific principles of evolution, or at least as he misunderstood them. Although Darwin had never used the term “survival of the fittest”, Spencer reveled in it, arguing in a series of best-selling books that government programs to help the poor, such as food, education, or free hospitals, would destroy civilization by allowing the weak and unfit to reproduce—under the “natural system of evolution”, Spencer argued, the fittest would inevitably rise to the top of the social order, while the unfit would simply die out.
It was an ideology that was certain to warm the cockles of a Robber Baron’s heart, and they embraced it ethusiastically. Railroad chieftain James J Hill declared, “The fortunes of railroad companies are determined by the law of the survival of the fittest.” John D Rockefeller announced that his being rich was no less than the will of God; “The growth of a large business is merely a survival of the fittest . . . It is merely the working out of a law of nature and of God.” Even the pious philanthropist Andrew Carnegie opined, “While the law of competition may be sometimes hard for the individual, it is best for the race, because it insures the survival of the fittest in every department.”
Politically, Spencer’s view found its expression in “laissez faire”, the idea that it was not the government’s job to interfere in the workings of the “free market”; government’s role was not much more than to deliver mail and raise an army when it was needed. As New York Governor Roswell P Flower put it, “In America, the people support the government. It is not in the province of the government to support the people.”
Among both government and industry leaders, then, the prevailing view was that poor people were poor because they deserved to be, and that they should expect no help from anyone if they weren’t able to keep up in the survival of the fittest.
In the farms and the factories, however, a movement was already appearing that would prove that the poor were not so helpless or powerless as the Robber Barons believed.