Stanford v. Vanderbilt
The Gist: Businessmen who rely on the government versus those who rely on consumers.
Until the 1970s, Stanford University’s teams were known as the Indians. Then some Indian activists guilted the board of trustees to change their name. A poll was conducted of students as to potential replacements, and the winner was the Stanford Robber Barons. The trustees were not enthused, and eventually instead embraced the Cardinal, which, to the endless confusion of observers, refers to a color and not a bird.
Figure 1. To add to the confusion, Stanford has no official mascot, but there is a student dressed up as a tree who dances around games representing the band. Other suggestions in the original poll included the Railroaders, the Spikes, and, perhaps most oddly, the Huns, some combination of reference to the fact that Stanford has a German motto and a pointed comment about an ethnic slur.
Very amusing, but was “robber baron” a suitable slur for Leland Stanford, a railroad tycoon who had become both Governor and Senator for California? The term originally referenced the fact that “the Rhine River was a central trading route in Europe during the Middle Ages. During the 1100s, the Rhine had nineteen toll stations, replete with armed guards, to tax traders sending goods up and down the river. These early ‘robber barons’ did not create wealth; they extorted it from others.” The term was first applied by the New York Times to the benefactor of another major university (in fact, my other alma mater), Cornelius Vanderbilt, and caught on as an epithet for the titans of the age.
But the historian Burton Fulsom argues that “robber barons” paints too broad a brush - industrialists can be divided into two groups: political entrepreneurs and market entrepreneurs. As Forrest McDonald says in his introduction to Fulsom’s book, political entrepreneurs
“were in fact comparable to medieval robber barons, for they sought and obtained wealth through the coercive power of the state, which is to say that they were subsidized by government and were sometimes granted monopoly status by government. Invariably, their products or services were inferior to and more expensive than the goods and services provided by market entrepreneurs, who sought and obtained wealth by producing more and better for less cost to the consumer.”
Fulsom notes that market entrepreneurs “usually innovated, cut costs, and competed effectively in an open economy.” Fulsom concedes that “No entrepreneur fits perfectly into one category or the other, but most fall generally into one category or the other.” But the standard history of the Gilded Age takes a hostile perspective to all businessmen. “What is missing are the builders who took the risks, overcame strong foreign competition, and pushed American industries to places of world leadership.”
So let’s talk about three industries that dominated the 19th century landscape and laid the foundation for our current prosperity: shipping, railroads, and oil.
In 1807, the American engineer Robert Fulton built the first commercially successful steamboat, running it from New York City to Albany and back, 300 nautical miles in a then rapid 62 hours. Fulton’s business partner was Robert Livingston, a significant early American politician, and together they secured from New York a state-enforced monopoly for 30 years. Not long after, the Fulton service began to atrophy - after all, people had no other options. Former New Jersey Senator Aaron Ogden initially attempted to defy their monopoly but instead purchased a license to operate under it, partnering with his wealthy investor neighbor, Thomas Gibbons. But Gibbons became convinced a better service could be run, so he set up a new unlicensed ferry and hired a 23 year old named Cornelius Vanderbilt to run it.
Figure 2. A decent rule of thumb is that if someone has held significant elected office, they are unlikely to be pure market players wanting the government to stay out and just let them freely compete.
Vanderbilt was a New York native of Dutch descent who quit school at 11 years old to work for his father’s sailing ferry and then started his own ferry service at 16 years old, resulting in people playfullying calling him the Commodore, a nickname that struck throughout his life. When Gibbons hired him, Vanderbilt knew the waters and the trade and quickly tried to establish the cheapest, fastest, best ferry service in the area - all while flying a flag from his mast that blared “New Jersey Must Be Free.” With Vanderbilt successfully dodging New York authorities, Ogden sued to enforce his monopoly and Vanderbilt retained Daniel Webster. In a landmark Supreme Court case in 1824, John Marshall wrote that New York had no right to assign a monopoly that covered interstate commerce, that that was instead reserved for the federal government.
The open competition had an immediate impact: the cost of traveling from New York to Albany went from seven to three dollars overnight. Fulton’s service, which had failed to innovate or earn customer loyalty, “couldn't meet the new rates and soon went bankrupt.” Elsewhere, “On the Ohio River, steamboat traffic doubled in the first year after Gibbons v. Ogden and quadrupled after the second year.” But Vanderbilt wasn’t satisfied: he began to run a steamboat service that charged even less than three dollars, eventually prompting the beginning of a pattern - his competitors paid him $100,000 immediately and $5,000 a year if he would just stay out of Hudson River for 10 years. Vanderbilt took the offer, but other competitors entered the market and the fares remained permanently lowered.
Paid off to leave the Hudson, Vanderbilt broadened his horizons, using his profits and the payoff money to build seaworthy vessels to take on the Atlantic. At first, he just worked the east coast and for his driving down prices, “the New York Evening Post called him ‘the greatest practical anti-monopolist in the country.’” But soon Vanderbilt had his eye on a bigger prize: trans-Atlantic traffic to and from Europe.
Figure 3. As a sports team name, the Vanderbilt Anti-monopolists doesn’t have the same ring as ‘Commodores’ and might be misleading as to the advocated solution to monopoly. The Vanderbilt Competitors is more apt, though all teams would consider themselves that. Price-cutters would be excellent, though tuition seems only to go up! ‘Commodore’ is perfectly good so long as we understand its tribute to child labor entrepreneurialism.
There were two major companies that ran transatlantic steam service, one run by the British Canadian Samuel Cunard, the other by the American Edward K. Collins. Of particular importance, though, was that each was heavily subsidized by his government, each making the argument that such traffic was uneconomical otherwise and besides such ships could constitute a merchant marine in time of war. Cunard started first with an annual subsidy of $275,00, which Parliament increased every year. Collins started later and got from Congress $3 million in start up capital plus another $385,000 annually to challenge the British. “Collins appealed to American nationalism, not to economic efficiency. Americans would not be opening up new lines of communication because the Cunarders had already opened them. Americans would not be delivering mail more often because the Collins's ships, like Cunard's, would sail only every two weeks. Finally, Americans would not be bringing the mail cheaper because the Cunarders could do it for much less.” And indeed “With annual government aid, Collins had no incentive to reduce his costs from year to year. His expenses, in fact, more than doubled in 1852: Collins preferred to compete in the world of politics for more federal aid than in the world of business against price-cutting rivals.” Spending recklessly, Collins asked for and received an increase to $858,000 a year to compete with those Brits.
So Vanderbilt made the U.S. government an offer: he would run the service for less than half the price Collins was being paid. But Collins was an effective lobbyist and Congress stuck with him. Vanderbilt went ahead and competed anyway but had to be much more efficient to have a chance. With no margin for error, Vanderbilt invested heavily in the quality and seaworthiness of his ships, cutting costs on repairs but also daring to self-insure. “He always said that if insurance companies could make money on shipping, so could he.” But Vanderbilt also created a whole new line of customers: whereas Collins essentially only provided luxury berths, Vanderbilt added steerage, which was not nearly so comfortable but was cheap and got you across the pond.
In 1856, Collins’ relative indifference to quality shipbuilding led to disaster: two of his four ships sank “killing almost 500 passengers.” Collins spent a million (taxpayer-provided) dollars building a replacement ship but it was built “so poorly that it could make only two trips and had to be sold at more than a $900,000 loss.” Ultimately, “Cunard's subsidy kept him from having to innovate and protected him from errors of judgment that would have ruined his competitors.” At this point, Congress finally realized the problem and left Collins to compete on his own, which predictably resulted in Collins’ bankruptcy. But “there was yet another twist. When Vanderbilt competed against the English, his major competition did not come from the Cunarders. The new unsubsidized William Inman Line was doing to Cunard in England what Vanderbilt had done to Collins in America.”
Amidst this battle of the Atlantic, Congress was also subsidizing naval transportation to James Knox Polk’s California acquisition: with taxpayer support, you could pay $600 to grab a boat to Panama, cross the isthmus, and grab another boat up the Pacific. Vanderbilt took a hard look, including scouting out a shorter path through Nicaragua, and, without subsidy, charged customers $150 with a guarantee that they’d arrive faster than any other service. The competition’s response was to solicit even greater subsidies from Congress and they received $900,000 a year. What they did with it was not at all expected: they paid Vanderbilt $672,000 to stop running his line. From this, Vanderbilt received the title “robber baron.” But there was a considerable difference between a lord of the Rhine extorting everyone who moved past and Vanderbilt, a ruthless competitor who consistently delivered for his customers. The Commodore would wind up selling his ships and turn his attention to railroads, our next subject. (Cornelius’ son Billy would, in response to a question about whether the Vanderbilt railroads would change policy to benefit the public, have a famous quote that went something like “The public be damned! Railroads are not run for the public benefit, but to pay. Incidentally, we may benefit humanity, but the aim is to earn a dividend.”)
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For millennia, the fastest anyone could travel on land was via horse, and only for so long and with only so much. The legendary Oregon Trail, traveled by over 250,000 pioneers, was 2,170 miles from Missouri west and took about five months to travel. The transcontinental railroad from New York to San Francisco in 1876 would take only 83 hours and 39 minutes.
Figure 4. Remember those figures next time you’re annoyed by the frustrations of modern travel
Sensing the potential, the U.S. government for decades prior had debated how best to subsidize the feat. “Congress spent $150,000 during the 1850s surveying three possible routes from the Mississippi River to the west coast” and $10 million for a part of Mexico that became southern Arizona and might constitute a smooth southern route. But it was controversial: while the Erie Canal connecting the Hudson and the Great Lakes paid off handsomely for New York, it sparked a canal mania in which state governments wound up defaulting on their bonds for having subsidized commercial failure. Henry Clay tried to convince Congress to bail out the states, but President Martin Van Buren pointedly refused, resulting in 2/3 of states adopting balanced budget constitutional amendments to restore their credit while becoming considerably more gun shy about state investments.
But when the Civil War erupted and fiscally hawkish Democrats disappeared from Congress, the Republican majority decided to make the transcontinental railroad happen. Two companies were set up: the Union Pacific would build west from Omaha and the Central Pacific, led by Leland Stanford, would build east from California. They’d meet in the middle. Congress, in all its wisdom, understood that this would be a daring challenge through mountains and Indian country, and so it generously gave loans “$16,000 for each mile of track of flat prairie land, $32,000 per mile for hilly terrain, and $48,000 per mile in the mountains” in addition to land on each side of the tracks to help populate the West.
The companies naturally responded to their incentives: “Since they were being paid by the mile, they sometimes built winding, circuitous roads to collect for more mileage” and chose worse terrain to capture the higher subsidies. Because their business models were to capture the subsidy rather than provide effective service, they “used cheap and light wrought iron rails, soon to be outmoded by Bessemer rails” and “laid track on the ice and snow” that “had to be rebuilt in the spring” but could in the meanwhile show progress to political overlords. As if that was not enough, the company directors set up other companies from which their railroads bought materials at a premium: “The UP, for example, needed coal, so six of its officers created the Wyoming Coal and Mining Company. They mined coal for $2.00 per ton (later reduced to $1.10) and sold it to the UP for as high as $6.00 a ton.” (They probably inflated costs by nearly double). As the companies finally approached each other in Utah for the ultimate meeting, “both sides graded lines that paralleled each other and both claimed subsidies for this mileage” to stretch it out for as long as possible. “With the threat of a federal investigation looming, the two lines finally compromised on Promontory Point,” where the famous ceremony occurred in which Stanford drove in a golden spike to complete the transcontinental railroad. Except it doesn’t really go coast to coast, only from Iowa to San Francisco. And the railroad had to be rebuilt and sometimes relocated.
The two companies had received “44,000,000 acres of free land and over $61,000,000 in cash loans.” Within three years, the Union Pacific was bankrupt and scandalized not only by its business practices but by how it facilitated its corruption: “In Congress and in state legislatures, free railroad passes were distributed like confetti… Oakes Ames, president of the UP, handed out [its subsidiary] Credit Mobilier stock to congressmen at a discount ‘where it would do the most good.’” The Central Pacific took longer to go bankrupt and Fulsom reports that its directors “escaped jail because the records of” its subsidiary “‘accidentally’ were destroyed.” Stanford went on to become a U.S. Senator and for decades used his political influence to ensure that the Central Pacific was the only railroad in California. So did he qualify as a robber baron? You bet!
Figure 5. The real move honoring its founder would be for Stanford to lobby for a law forbidding any other California university from having sports teams and requiring that any teams from outside the state playing against Stanford use fewer players than typical, concede multiple points in advance, and with referees contracted by the Stanford board of trustees.
Undeterred (perhaps encouraged!), Congress wanted to subsidize even more transcontinental railroads, including one through the Northwest. And for that it turned to Henry Villard. Born in Germany (originally Heinrich Hilgard), he moved to the U.S. as a teenager and became a journalist before reconnecting with his old compatriots to manage German investments in American industry. Villard built a railroad through the Rockies with the intention of drawing tourism to the scenic west but instead just accumulated greater and greater costs, to the point that, again, by the time he reached the coast, his company went bankrupt, though, as ever, he came off fairly well himself, which extended to his purchasing the Nation, which his son would turn into a magazine against laissez-faire.
Many historians lament the corruption of the railroads but nevertheless uphold their massive benefits, arguing that it all worked out, especially as the government wound up regulating the industry so tightly. But there was another way: Villard had a contemporaneous competitor, a market entrepreneur named James J. Hill, and he did build a transcontinental railroad without subsidy that was the only one never to go bankrupt because it was actually focused on serving customers.
Hill was born in Canada to Scottish Protestants and became half blind as a child due to a bow and arrow accident. His first job was with a steamboat company and then he worked for wholesale grocers and between the two jobs he came to understand and master the business of logistics. Accumulating capital, Hill began buying businesses out of bankruptcy and turning them around. At one point, he bought a failing railroad (yes, you now understand that to be practically redundant at the time).
Hill was determined to run the railroad as an actual business rather than the typical vehicle for selling bonds. His first commitment was to make each leg of his line pay for itself. So Hill built slowly and deliberately and tried to make sure that each town he hit prospered, including importing industry. As Fulsom relates,
“Hill was a pump-primer. He knew that if farmers prospered, their freight would give him steady returns every year. The key was to get people to come to the Northwest. To attract immigrants, Hill offered to bring them out to the Northwest for a mere $10.00 each if they would farm near his railroad…. ‘You are now our children,’ Hill would tell immigrants, ‘but we are in the same boat with you, and we have got to prosper with you or we have got to be poor with you.’ To make sure they prospered, he even set up his own experimental farms to test new seed, livestock, and equipment. He promoted crop rotation, mixed farming, and the use of fertilizers. Finally, he sponsored contests and awarded prizes to those who raised meaty livestock or grew abundant wheat.”
Furthermore, Hill scouted the territory personally on horseback and because he was paying for it, he wanted the smoothest path possible built at a quality he could easily maintain. Digging at his rival Villard, he insisted "What we want is the best possible line, shortest distance, lowest grades and least curvature that we can build. We do not care enough for Rocky Mountain scenery to spend a large sum of money developing it." Fulsom reports that
“Lewis and Clark had described a low pass through the Rockies back in 1805; but later no one seemed to know whether it really existed or, if it did, where it was. Hill wanted the best gradient so much that he hired a man to spend months searching western Montana for this legendary pass. He did in fact find it, and the ecstatic Hill shortened his route almost one hundred miles.” … Hill, for example, was able to outrun [Villard’s railroad] from coast to coast at least partly because his Great Northern line was 115 miles shorter than Villard's NP.”
Villard reacted by - what else? - trying to get Congress to stymie Hill, especially by denying the latter the opportunity to pay Indians fair market value for land to build his railroad. Hill eventually prevailed, completed his line from Saint Paul to Seattle in 1893, and for his success he became known as the Empire Builder. Government enthusiasm about the transcontinental railroad wasted immense resources building suboptimal track and attracting private capital inefficiently that might have actually gone to growth; the link across the country undoubtedly happened faster than it would have otherwise, but at what price? The ultimate measure is how many resources (labor, steel, land, private capital, taxpayer funding) got wasted.
And yet James J. Hill wasn’t done! Hill saw the Pacific as a natural extension of his business and established import-export relationships with Japan and China. Like his earlier prime pumping, Hill began by trying to break into Asian markets by providing goods at a discount achieved through taking less profit on transportation. But soon enough that would be a problem in the eyes of the government. More on that as we weave that story together with our final industry: oil.
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The oil industry got started further back than moderns might imagine, decades before vehicles powered by gasoline. What was valuable about oil at first was that it could be refined into a much cheaper alternative for lighting than whale oil. Kerosene was developed in the early 1850s and by the end of the decade, the first successful oil well was drilled in Titusville, Pennsylvania.
John D. Rockefeller was a businessman in Cleveland watching the oil business develop with interest. He had been born to a con artist who abandoned his family as a teenager while his mother, a devout Baptist of Ulster Scot descent, raised him up. "From the beginning, I was trained to work, to save, and to give." Rockefeller started as a bookkeeper at 16 and eventually got into commodity brokerage before turning to oil refining. Rockefeller founded Standard Oil in 1870 and by the end of that decade, he was refining over 90% of the oil in the United States.
The standard story would thus imply that with this monopoly power, Rockefeller would charge exorbitant prices. Instead, prices kept going lower and lower. In 1885, Rockefeller instructed a business partner “Let the good work go on. We must ever remember we are refining oil for the poor man and he must have it cheap and good.” After 20 years in business, he had “had pushed the price down from 58 cents to eight cents a gallon.” This had a huge practical impact: “Before 1870, only the rich could afford whale oil and candles. The rest had to go to bed early to save money. By the 1870s, with the drop in the price of kerosene, middle and working class people all over the nation could afford the one cent an hour that it cost to light their homes at night. Working and reading became after-dark activities new to most Americans in the 1870s.”
Figure 6. Rockefeller’s relentless price-cutting may have illuminated America’s nights, but at what cost? By making kerosene lighting affordable, he doomed us to a world with fewer 600-page revenge sagas against whales. Had he not meddled, perhaps every coastal town would have its own Moby Dick! Call me Inconsolable.
Rockefeller ran an extremely efficient operation that began with pure chemistry: how could he get the most kerosene out of each barrel of crude oil? While competitors developed about half of a barrel into kerosene and dumped the rest, Rockefeller both figured out how to get more, at higher quality, and hired chemists to try and figure out what to do with the rest, which wound up selling vaseline, lubricating oil, paving tar, and more, including gasoline, which proved awfully important as electricity came to replace oil as the leading source of light. To command the market, Rockefeller took slim profits. As he accumulated capital, Rockefeller approached each of his competitors with a fair price for their business (including the option of stock in Standard) with the alternative being that he’d outcompete them. He even offered to show them his books to demonstrate just how much better he was.
In 1882, Rockefeller dominated 90% of the American market and the American market dominated 85% of the world but then a massive oil find was made in Baku, Russia. Within six years, America’s share was down 53%. Oil was a worldwide commodity and “about two-thirds of the oil refined in America in the late 1800s was exported.” Further, “Russian oil was more centralized, more plentiful, and more viscous than American oil,” not to mention “closer than the U. S. to all European and Asian markets.” Rockefeller’s response was to get even more efficient and managed to sell oil profitably at a nickel a gallon, to the benefit of the entire world. While Standard remained the standard, Rockefeller’s competition grew even inside the U.S. and he began to lose American market share, controlling about 70% of refined oil and 14% of crude by 1911.
And yet on his way to becoming the richest man in the world, the richest man that ever was, Rockefeller tithed and took off the Sabbath. “He put God first, his family second, and career third.” Indeed, “Rockefeller always said the best things he had done in life were to make Jesus his savior and to make Laura Spelman his wife. He prayed daily the first thing in the morning and went to church for prayer meetings with his family at least twice a week.” Rockefeller gave away half a billion dollars - when that was real money - founding the University of Chicago "the best investment I ever made.", nearly eradicating the hookworm and yellow fever, introducing more empiricism into medicine, and advanced both temperance and schools for African Americans. Fulsom says
“To Rockefeller, [his life] was the true fulfillment of the Biblical law: ‘Give, and it shall be given unto you; good measure, pressed down, and shaken together, and running over, shall men give unto your bosom.’ Not ‘money’ itself but ‘the love of money’ was ‘the root of all evil.’ And Rockefeller loved God much more than his money. He learned what the prophet Malachi meant when he said, ‘Bring the whole tithe into the storehouse, . . . and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have room enough for it.’ He learned what Jesus meant when he said, "With the measure you use, it will be measured to you.’ So when Rockefeller proclaimed: ‘God gave me [my] money,’ he did so in humility and in awe of the way he believed God worked.”
And yet you probably know that Standard Oil is no longer a thing. The seed of its destruction was planted in sound business practice: Rockefeller did so much volume with railroads he demanded steep discounts that his competitors could not get. When Rockefeller did not get the discounts he desired, he built pipelines - which turned out to be extremely foresightful because in 1887, Congress created the Interstate Commerce Commission and not terribly long after insisted that railroads could not charge different rates to different customers. This created a bigger problem for our old friend James J. Hill, who “had given the Japanese and Chinese special rates on American cotton, wheat, and rails to wean them to American exports.” The Asian trade collapsed by half as a result. Fulsom concludes, regarding railroads, that government “aid bred inefficiency; the inefficiency created consumer wrath; the consumer wrath led to government regulation; and the regulation closed… options and helped lead to bankruptcy.”
Rockefeller, though, had dominated an industry free of subsidy and Standard’s size had created its own efficiencies. But his ruthless competitiveness attracted ire, including from the muckraker Ira Tarbell, whose father Rockefeller had run out of business, and who wrote a bestselling book lambasting his business without celebrating the gains to consumers. Simultaneously, business in the U.S. was complicated by the fact that so many states required separate incorporation so Rockefeller’s lawyers had come up with a trust that could own all the different companies as subsidiaries. Amidst the Progressive era and with the sense that big was bad, Theodore Roosevelt embarked on an antitrust mission to break up Standard (he called its directors “the biggest criminals in the country.”) As Roosevelt critic Jim Powell put it,
“the U.S. Court of Appeals…ruled that Standard Oil violated the Sherman Act because it had many subsidiaries that could compete with each other but didn't. Notably absent from the court of appeals' decision was any allegation of ‘predatory’ price-cutting. Nor was there a finding of guilt because of railroad rebates. Nor was any effort made to prove that Standard Oil had restricted output and raised prices, for the facts would have proved that output had been increasing and prices falling. The alleged crime was operating a holding company, and the legal remedy was to break up the holding company into its component parts.”
In 1911, the Supreme Court agreed, breaking it up into 34 different companies. Rockefeller was in the middle of a round of golf when he heard the news and just calmly continued his game. Because he still owned a portion of all 34 companies, his wealth actually increased and he became America’s first billionaire.
And to wrap things up: In 1901, Rockefeller’s brother had initiated a stock fight with James J. Hill (and J.P. Morgan) over control of three railroads in the northwest (including Villard’s). Hill, as a result, formed a trust to oversee the companies while inviting the brother onto the board. Roosevelt also went after Hill and the Supreme Court agreed to dissolve the trust in 1904, not because of any actual proven problem but because of potential problems (though, ironically, they would not do as well separately and would recombine in 1970; Oliver Wendell Holmes would point out in dissent that the logic of monopoly was odd insofar as a single railroad might be said to have a monopoly on its route). Hill of course remained wealthy, but his customers suffered, and he leaves us no university to remember him by - though he apparently was the inspiration for Ayn Rand’s choice to feature a railroad at the center of her massively bestselling novel Atlas Shrugged.
Perhaps the most important takeaway from all of this is that the distinction between political and market entrepreneurs persists! Yes, we ought to celebrate people like Vanderbilt, Hill, and Rockefeller who laid the foundations of our current success while lamenting the true robber barons like Fulton and Stanford - but we also need to recognize who might be in each category today and properly support the right politicians: more Andrew Jacksons, less Teddy Roosevelts. As Forrest McDonald notes,
“Folsom's study has profound implications for American historiography beyond the immediate subject to which it is addressed. It is commonly held that the Whig Party of Clay and Webster and its successor Republican Party of Abraham Lincoln and William McKinley were the ‘pro-business’ parties, and that the Jack-sonian Democrats were anti-business. What comes through here is something quite different. The Whigs and Republicans engaged in a great deal of pro-business rhetoric and in talk of economic development, but the policies they advocated, such as subsidies, grants of special privileges, protective tariffs, and the like, actually worked to retard development and to stifle innovation. The Jacksonian Democrats engaged in a great deal of anti-business rhetoric, but the results of their policies were to remove or reduce governmental interferences into private economic activity, and thus to free market entrepreneurs to go about their creative work. The entire nation grew wealthy as a consequence.”
Figure 7. Click here to acquire the Myth of the Robber Barons by Burton Fulsom. I don’t love that the title leans into the standard narrative - and indeed, its original title was Entrepreneurs vs. the State - but the content is a splendid revisionist history. Also talks about Charles Schwab, the Scrantons, and Andrew Mellon. McDonald summarizes: "Political promotion of economic development is inherently futile, for it invariably rewards incompetence; if incompetence is rewarded, incompetence will be the product; and when incompetence is the product, politicians will insist that increased planning and increased regulation is the appropriate remedy."