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Key insights from

The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan Invented the American Supereconomy

By Charles R. Morris

What you’ll learn

As the nineteenth century came to a close, it became increasingly clear—much to the chagrin of Great Britain—that the young United States of America had become the most powerful country in the world. For a country that had torn itself apart in a bloody civil war, the strides it made in just 30 years were remarkable. Historian Charles R. Morris elucidates the key characters and cultural ambience that brought a nation to unprecedented heights.


Read on for key insights from The Tycoons.

1. America changed dramatically in the 19th-century thanks to a combination of key businessmen and an optimistic, adaptive American culture.

When Lincoln was assassinated in 1865, Andrew Carnegie was barely 30 and already wealthy, but had not yet cast his lot with steel. He was still taking soundings to divine into which industry he would invest his time and energy. At 26, John D. Rockefeller already owned an oil refinery in Cleveland and had a clear framework for taking over the entire industry. Jay Gould was only 29 and his career path had been as tumultuous as it was ambitious, with his inroads into the railroad industry. John Pierpont Morgan (or J.P. Morgan as he’s now commonly known) was 28, assiduously learning the banking trade that would allow him to rein in the excesses of the industry tycoons.

These men, all very different in temperament, were some of the leads in the story of the United States’ astoundingly swift rise to global superpower. In other historical eras, and in other places, these men would have become powerful advisors to kings or military leaders, but in the mid-19th century United States, business was the realm where unfettered ambition had room to spread its wings.

It’s easy to fall into the trap of the so-called “Great Men Theory,” which talks about history through the lives of key charismatic individuals. Critics of this theory say it focuses too much on individuals, and not enough on the societal influences and dynamics that help them succeed. But given the scale of the structural changes these tycoons initiated, for good and for ill, the attention is warranted. It would, however, be impossible to talk about these tycoons without reference to the general culture of the American people that made their ascendancy possible.

At the heart of the American cultural profile of the day was the optimistic, can-do spirit of the pioneer, and a remarkable adaptability and willingness to try something new. In this young nation of transplants, shallow roots gave mobility. There was a willingness to dispense with traditional guilds and status that stabilized societies and limited mobility. These cultural features shocked and awed a comparatively risk-averse Europe.

2. Before Silicon Valley, there was the Connecticut River Valley.

Over 150 years before Silicon Valley, another unexpected center of innovation developed along the United States’ east coast. In the early 1800s, there was a serendipitous convergence of machine geeks and a culture of innovation in the Connecticut River Valley. At that time, New York’s large farms were beginning to eclipse New England’s agricultural operations. Most boys and young men were putting their bets on machinery and aligning themselves with one technology or another, hoping it would take off and they’d managed to hitch their wagon to that star.

One of the Connecticut River Valley stars was Thomas Blanchard, a sorely underestimated farmhand who spoke with a stammer. He was tired of manually hauling rocks out of the fields, so he designed a machine to do it instead. His first job was working in his brother’s tack factory, where his task was to attach the head to the tack. Blanchard built a machine that could assemble 500 tacks in one minute. He was issued a patent, which he sold for $5,000—an enormous amount of money for a farm boy in the early 1800s. For decades after that, he proved a genius at finding simple mechanical designs that would change patterns of labor around the world, in everything from metal to wood to steam technology. Perhaps his most significant invention was the gun-stock machine, which allowed for the creation of irregular shapes that until then could only be fashioned by hand: plowshares, wheel spokes, axe handles, and so on.

The United States’ long strides in mechanical technology took the world by surprise. The Great Crystal Palace Exhibition of 1851 in London’s Hyde Park showcased the inventions and developments of industrial nations, but was also a shameless attempt to highlight England’s imperial prowess and accomplishment. About six million people came from all over the world and gaped at an exquisite exhibition hall a third of a mile long, housing 13,000 technological exhibitions from numerous nations. The British considered themselves without peer, but as they saw Samuel Colt’s repeating firearm, unopenable machine-rendered locks, and machine-made rifles with perfectly interchangeable pieces (unheard of in those days), the British papers changed their tune from condescension to fretful admiration. The Americans had been busy.

This interest in labor-saving machinery, a quick patenting and licensing process, and a spirit of technological improvement in the early 1800s laid the industrial groundwork that would allow the United States to catapult ahead of the rest of the world in the late-1800s. Lincoln foresaw the tremendous potential for the “prudent, penniless beginner” to create a successful business. What he did not anticipate was the enormity of operations that some of these penniless businessmen would achieve—or the upheaval their businesses would engender.

3. Jay Gould came from nothing, but he gave tycoons and bankers a run for their money.

Jay Gould was in his early 30s and a virtual no-name on Wall Street when he tried to wrest control of the railroad industry from the hands of “Commodore” Cornelius Vanderbilt—arguably the wealthiest and most powerful man in the United States at that time.

Gould was a small man, but what he lacked in height he more than compensated for in fight. No doubt Gould’s unremitting tenacity was born of the self-reliance he learned when his father sent him off to a school when he was 13 with only 50 cents to his name, and then never took him back. As a teenager, Gould taught himself bookkeeping, and, by 17, he was the best surveyor in his county. He wasn’t even 20 when he successfully won his state legislature’s approval and received funding to survey and map the county.

His rivalry with Vanderbilt began with Gould’s efforts to relieve Vanderbilt of the Erie Railway construction efforts, which would connect the Atlantic Ocean to the Great Lakes. Gould made a connection with Daniel Drew, who sat on the Erie Railway board. Together with another profligate named Jim Fisk, they formed a small, subversive coterie that played Vanderbilt and bought up enough Erie stock to challenge the tycoon. Gould bought $10 million worth of bonds that could be traded as stock. Vanderbilt began buying up as much Erie Railway stock as he could, which would have driven up stock prices. But Gould and Drew were converting their bonds into stocks and secretly adding their shares to the market every time Vanderbilt bought. So the Erie stock kept dropping, despite Vanderbilt’s aggressive purchases. The margin calls kept growing as the prices dropped, putting tremendous strain on Vanderbilt’s empire, as his wealth was almost exclusively in his own enterprises.

Eventually, Vanderbilt grew wise to Drew’s and Gould’s scheme and ran to a judge to invalidate their convertible bonds. He was faster than Drew and Gould in finding sympathetic judges. So Drew, Gould, and Fisk fled on a ferry to evade arrest and holed up in a hotel with suitcases filled with $8 million, some of which they distributed to relevant parties to get charges and warrants waived. Gould eventually got the Erie Railway, but Vanderbilt intentionally mucked up the Erie Company, leaving Gould with a pyrrhic financial victory.

This was the first of Gould’s many adventures and misadventures. He was not a paragon of virtue, but it is astounding what an impecunious youth had managed to pull off, and the impact he had on business practices and public policy is undeniable. His ambitious limit pushing revealed to bankers and governments exploitable loopholes in the law. In many ways, he wrote the business playbook that Rockefeller would use in oil. His ventures and investments shook and rattled the markets for decades. By 1883, despite bad press and fierce adversaries from every direction, Gould managed to gain control of the country’s central railroad system and was expanding it in all directions. The railways he mapped across most of the country have changed little since his day.

4. Rockefeller was no saint, but he wasn’t as monstrous as historians suggest.

Like Jay Gould and Andrew Carnegie, John D. Rockefeller came from modest means. He was born into a farming family in western New York, and he might have stayed a farm boy like most of his peers, but for his charismatic, idiosyncratic father—William “Big Bill” Rockefeller. He was a farmer and a businessman, but also a con artist and a traveling medicine man. Though married, he took another wife under a pseudonym and was essentially supporting two families.

It seems John D. Rockefeller sought to embody everything his father had not. He was a devout Baptist, a disciplined, bright student, and an industrious worker. As John’s wealth and fame grew, he avoided answering questions about his father. That his father was still a backwoods huckster while he became the world’s richest oil man was a bitter truth John was eager to forget.

Historian and muckraker Ida Tarbell wrote of Rockefeller that he possessed the soul of a bookkeeper. While Rockefeller certainly derived satisfaction from well-kept records, this characterization is hardly summative. In contrast to Pierpont Morgan’s daunting intensity or Carnegie’s raucous flair, Rockefeller had a quiet, winning charisma. In any setting he joined, whether it was a church or business association, he managed to glide into leadership positions without much effort or persuasion. He exuded astounding confidence, but without the bravado. He remained level-headed even as he undertook tremendous risks throughout his career.

Rockefeller spoke softly and moved quickly in his business dealings. His trajectory toward the summit of the oil industry was steep and swift and relatively straight forward. It was as if he knew from the beginning exactly what he wanted and how to get it. In just 15 years in the refining business, he’d essentially reached the top. Through his years in business, he typically directed operations from the background, garnering a mysterious grandeur in the eyes of the public.

Many historical accounts leave Rockefeller’s good name tarred and feathered and barely breathing, often presenting him as the spider at a center of a vast criminal web called Standard Oil. There is one documented case of his committing perjury, and he regularly offered bribes to local officials. But there was nothing singular about offering bribes in 1800s American corporate life. Moreover, there’s no indication that Rockefeller was spiteful and backbiting in his dealings with competitors. His buy-out offers were always fair-minded—sometimes even above market price. When refused, Rockefeller put the squeeze on a competitor’s operations with clinical precision until they relented. He would extend the original, market-price offer, as well as the opportunity to join his company.

Rockefeller didn’t swindle his way to the top of the oil industry; he was simply the best at what he did.

5. During the Industrial Revolution, there was no banker the world trusted more than Pierpont Morgan.

By the 1900s, Pierpont Morgan was quite possibly the top banker in the world. Pierpont was the national bank at a time in the nation’s history when there was no national bank. He had a sterling reputation with Europe and the rest of the world. When colossal deals went south and the world’s banks ran for cover, Morgan was often the man trusted to salvage the financial failures of other nations.

Morgan was a force to be reckoned with. Many were in awe of his powerful, stern, laser-like presence. Even other high profile bankers found him intimidating. He was also deeply unoriginal. He didn’t have anything novel to add to the conversation about banking, but he took the framework of banking operations his banker father had given him, and expanded it to a scale far beyond what his father could have imagined. While Morgan was at the helm of the firm, he and his partners handled 40 percent of the liquid industrial and commercial capital for the United States. It was the largest amount of money in any one bank in the world at that time.

In contrast to the sprawling bureaucracies that some major banks today have become, Morgan’s firm employed relatively few people: no more than a dozen or so partners and fewer than 100 employees under them. 

Pierpont Morgan was one of the first generation of bankers in history whose clients were typically private entities rather than governments. Many of Morgan’s efforts were conserving and reeling in, heading off wars not between nations but between rival corporations. There was a dimension of diplomacy and risk mitigation.

Morgan was the banker in the early 1900s in a way that the Rothschilds were a century prior. Despite some deals that displayed uncharacteristic recklessness on Morgan’s part, he rightly deserves the mantle of disciplined, responsible banker. He was a vital countervailing force in an era of “ruinous competition” toward which Carnegie, Rockefeller, and especially Gould, were often careening. Morgan could grant massive loans that would remove opportunity for betting on volatile industries, volatility that tycoons could manipulate. When there were massive crashes, like the gold panic of 1893-95 or the stock market crash of 1907, Morgan was able to minimize the damage.

In 1800, Great Britain’s mining and factory production was six times that of the United States. Eighty years later, the United States was producing two-thirds of what Great Britain was producing. By 1900, the United States’ industrial production was 25 percent greater than Great Britain’s. The axis of power had already begun shifting from Great Britain and Europe to the United States when Pierpont Morgan was reaching full stature in the banking world. In 1915, with more gold in reserve than any other country, the US dollar became the world’s standard, and while it would have likely taken place with or without Morgan, Pierpont’s position at the helm made the transition far less chaotic than it might have been.

In an industrial, 19th-century United States, an environment of rapid and unprecedented change, full of ambitions as grandiose as Carnegie’s, Rockefeller’s, and Gould’s, J.P. Morgan helped to guide them in the most beneficial direction possible. 

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