Length: 1–2 paragraphs per question, double-spaced, typed using 12 Point Times New Roman font.
Industry in America
After reading the background materials and the short biographies of each of the three men listed below, respond to the three short-answer questions.
Note that all three questions contain multiple elements. So please make sure that you have addressed each one completely before moving to the next one. Also, in the readings below you’ll see the term, “Gilded Age” used to refer to the time in which these men lived. This term was taken from the book, The Gilded Age: A Tale of Today, written in 1873 by American author Mark Twain. To gild gold is to put gold on top of gold, a very excessive and wasteful use of a precious resource. But it was exactly this apparent excess and waste that Twain was highlighting in his book. As a result, the term ‘Gilded Age’ has become synonymous with greed and corruption.
- How did these three men build empires in America? Give examples.
- Were they in the right place at the right time? In other words, could they have succeeded in a different moment in history? Why or why not?
- What foresights did these opportunists envision? What led to the “invention” of their products?
J. P. MorganJohn D. RockefellerCornelius Vanderbilt
J. P. MorganOne of the most powerful bankers of his era, J.P. (John Pierpont) Morgan (1837-1913) financed railroads and helped organize U.S. Steel, General Electric and other major corporations. The Connecticut native followed his wealthy father into the banking business in the late 1850s, and in 1871 formed a partnership with Philadelphia banker Anthony Drexel. In 1895, their firm was reorganized as J.P. Morgan & Company, a predecessor of the modern-day financial giant JPMorgan Chase.
Morgan used his influence to help stabilize American financial markets during several economic crises, including the panic of 1907. However, he faced criticism that he had too much power and was accused of manipulating the nation’s financial system for his own gain. The Gilded Age titan spent a significant portion of his wealth amassing a vast art collection.
During the late 19th century, a period when the U.S. railroad industry experienced rapid overexpansion and heated competition (the nation’s first transcontinental rail line was completed in 1869), Morgan was heavily involved in reorganizing and consolidating several financially troubled railroads. In the process, he gained control of significant portions of these railroads’ stock and eventually controlled an estimated one-sixth of America’s rail lines.
The great ship Titanic, owned by one of the IMM companies, White Star, sank on its maiden voyage after hitting an iceberg. Morgan, who attended the ship’s christening in 1911, was booked on the ill-fated April 1912 voyage but had to cancel.
During Morgan’s era, the United States had no central bank, so he used his influence to help save the nation from disaster during several economic crises. In 1895, Morgan assisted in rescuing America’s gold standard when he headed a banking syndicate that loaned the federal government more than $60 million. In another instance, the financial panic of 1907, Morgan held a meeting of the country’s top financiers at his New York City home and convinced them to bail out various faltering financial institutions to stabilize the markets.
Morgan initially was widely commended for leading Wall Street out of the 1907 financial crisis; however, in the ensuing years the portly banker with the handlebar mustache and gruff manner faced increasing criticism from muckraking journalists, progressive politicians and others that he had too much power and could manipulate the financial system for his own gain.
In 1912, Morgan was called to testify before a congressional committee chaired by U.S. Representative Arsene Pujo (1861-1939) of Louisiana that was investigating the existence of a “money trust,” a small cabal of elite Wall Street financiers, including Morgan, who allegedly colluded to control American banking and industry. The Pujo Committee hearings helped bring about the creation of the Federal Reserve System in December 1913 and spurred passage of the Clayton Antitrust Act of 1914.
The famous financier died at age 75 on March 31, 1913, in Rome, Italy.
(source: JP Morgan – https://www.history.com/topics/john-pierpont-morgan)
John D. RockefellerJohn D. Rockefeller (1839-1937), founder of the Standard Oil Company, became one of the world’s wealthiest men and a major philanthropist. Born into modest circumstances in upstate New York, he entered the then-fledgling oil business in 1863 by investing in a Cleveland, Ohio, refinery. In 1870, he established Standard Oil, which by the early 1880s controlled some 90 percent of U.S. refineries and pipelines. Critics accused Rockefeller of engaging in unethical practices, such as predatory pricing and colluding with railroads to eliminate his competitors, to gain a monopoly in the industry. In 1911, the U.S. Supreme Court found Standard Oil in violation of anti-trust laws and ordered it to dissolve. During his life Rockefeller donated more than $500 million to various philanthropic causes.
John Davison Rockefeller, the son of a traveling salesman, was born on July 8, 1839, in Richford, New York. Industrious even as a boy, the future oil magnate earned money by raising turkeys, selling candy and doing jobs for neighbors. In 1853, the Rockefeller family moved to the Cleveland, Ohio, area, where John attended high school then briefly studied bookkeeping at a commercial college.
In 1855, at age 16, he found work as an office clerk at a Cleveland commission firm that bought, sold and shipped grain, coal and other commodities. (He considered September 26, the day he started the position and entered the business world, so significant that as an adult he commemorated this “job day” with an annual celebration.) In 1859, Rockefeller and a partner established their own commission firm. That same year, America’s first oil well was drilled in Titusville, Pennsylvania. In 1863, Rockefeller and several partners entered the booming new oil industry by investing in a Cleveland refinery.
In 1865, Rockefeller borrowed money to buy out some of his partners and take control of the refinery, which had become the largest in Cleveland. Over the next few years, he acquired new partners and expanded his business interests in the growing oil industry. At the time, kerosene, derived from petroleum and used in lamps, was becoming an economic staple. In 1870, Rockefeller formed the Standard Oil Company of Ohio, along with his younger brother William (1841-1922), Henry Flagler (1830-1913) and a group of other men. John Rockefeller was its president and largest shareholder.
Standard Oil gained a monopoly in the oil industry by buying rival refineries and developing companies for distributing and marketing its products around the globe. In 1882, these various companies were combined into the Standard Oil Trust, which would control some 90 percent of the nation’s refineries and pipelines. In order to exploit economies of scale, Standard Oil did everything from build its own oil barrels to employ scientists to figure out new uses for petroleum by-products.
Rockefeller’s enormous wealth and success made him a target of muckraking journalists, reform politicians and others who viewed him as a symbol of corporate greed and criticized the methods with which he’d built his empire. As The New York Times reported in 1937: “He was accused of crushing out competition, getting rich on rebates from railroads, bribing men to spy on competing companies, of making secret agreements, of coercing rivals to join the Standard Oil Company under threat of being forced out of business, building up enormous fortunes on the ruins of other men, and so on”.
In 1890, the U.S. Congress passed the Sherman Antitrust Act, the first federal legislation prohibiting trusts and combinations that restrained trade. Two years later, the Ohio Supreme Court dissolved the Standard Oil Trust; however, the businesses within the trust soon became part of Standard Oil of New Jersey, which functioned as a holding company. In 1911, after years of litigation, the U.S. Supreme Court ruled Standard Oil of New Jersey was in violation of anti-trust laws and forced it to dismantle (it was broken up into more than 30 individual companies).
Rockefeller retired from day-to-day business operations of Standard Oil in the mid-1890s. Inspired in part by fellow Gilded Age tycoon Andrew Carnegie (1835-1919), who made a vast fortune in the steel industry then became a philanthropist and gave away the bulk of his money, Rockefeller donated more than half a billion dollars to various educational, religious and scientific causes. Among his activities, he funded the establishment of the University of Chicago and the Rockefeller Institute for Medical Research (now Rockefeller University).
Rockefeller died at 97 on May 23rd, 1937, at The Casements, his winter home in Ormond Beach Florida. He’s buried at Lake View Cemetery in Cleveland. His goal was to reach the age of 100.
(source: John D. Rockefeller – https://www.history.com/topics/john-d-rockefeller)
Cornelius VanderbiltShipping and railroad tycoon Cornelius Vanderbilt (1794-1877) was a self-made multi-millionaire who became one of the wealthiest Americans of the 19th century. As a boy, he worked with his father, who operated a boat that ferried cargo between Staten Island, New York, where they lived, and Manhattan. After working as a steamship captain, Vanderbilt went into business for himself in the late 1820s, and eventually became one of the country’s largest steamship operators. In the process, the Commodore, as he was publicly nicknamed, gained a reputation for being fiercely competitive and ruthless. In the 1860s, he shifted his focus to the railroad industry, where he built another empire and helped make railroad transportation more efficient. When Vanderbilt died, he was worth more than $100 million.
A descendant of Dutch settlers who came to America in the mid-1600s, Cornelius Vanderbilt was born into humble circumstances on May 27, 1794, on Staten Island, New York. His parents were farmers and his father also made money by ferrying produce and merchandise between Staten Island and Manhattan in his two-masted sailing vessel, known as a periauger. As a boy, the younger Vanderbilt worked with his father on the water and attended school briefly. When Vanderbilt was a teen he transported cargo around the New York harbor in his own periauger. Eventually, he acquired a fleet of small boats and learned about ship design.
In 1817, Vanderbilt went to work as a ferry captain for a wealthy businessman who owned a commercial steamboat service that operated between New Jersey and New York. The job provided Vanderbilt the opportunity to learn about the burgeoning steamship industry. In the late 1820s, he went into business on his own, building steamships and operating ferry lines around the New York region. Shrewd and aggressive, he became a dominant force in the industry by engaging in fierce fare wars with his rivals. In some cases, his competitors paid him hefty sums not to compete with them. (Throughout his life, Vanderbilt’s ruthless approach to business would earn him numerous enemies.)
In the 1840s, Vanderbilt constructed a large brick home for his family at 10 Washington Place, in Manhattan’s present-day Greenwich Village neighborhood. Despite his growing wealth, the city’s elite residents were slow to accept Vanderbilt, considering him rough and uncultured.
In the early 1850s, during the California Gold Rush, a time before transcontinental railroads, Vanderbilt launched a steamship service that transported prospectors from New York to San Francisco via a route across Nicaragua. His route was faster than an established route across Panama, and much speedier than the other alternative, around Cape Horn at the southern tip of South America, which could take months. Vanderbilt’s new line was an instant success, earning more than $1 million (about $26 million in today’s money) a year.
In the 1860s, Vanderbilt shifted his focus from shipping to the railroad industry, which was entering a period of great expansion. He gained control of several railway lines operating between Chicago and New York and established an interregional railroad system. According to T.J. Styles, author of “The First Tycoon: The Epic Life of Cornelius Vanderbilt”: “This was a major transformation of the railroad network, which previously had been fragmented into numerous short railroads, each with its own procedures, timetables, and rolling stock. The creation of a coherent system spanning several states lowered costs, increased efficiency, and sped up travel and shipment times.”
Vanderbilt was the driving force behind the construction of Manhattan’s Grand Central Depot, which opened in 1871. The station eventually was torn down and replaced by present-day Grand Central Terminal, which opened in 1913.
Unlike the Gilded Age titans who followed him, such as steel magnate Andrew Carnegie (1835-1919) and oil mogul John Rockefeller (1839-1937), Vanderbilt did not own grand homes or give away much of his vast wealth to charitable causes. In fact, the only substantial philanthropic donation he made was in 1873, toward the end of his life, when he gave $1 million to build and endow Vanderbilt University in Nashville, Tennessee. (In a nod to its founder’s nickname, the school’s athletic teams are called the Commodores.)
The Vanderbilt mansions associated with the Gilded Age, including the Breakers in Newport, Rhode Island, and the Biltmore in Asheville, North Carolina, were built by Cornelius Vanderbilt’s descendants. (The 250-room Biltmore estate, constructed in the late 19th century by one of Vanderbilt’s grandsons, is the largest privately-owned home in the United States today.)
Vanderbilt died at age 82 on January 4, 1877, at his Manhattan home, and was buried in the Moravian Cemetery in New Dorp, Staten Island. He left the bulk of his fortune, estimated at more than $100 million, to his son William (1821-85).
(source: Cornelius Vanderbilt – https://www.history.com/topics/cornelius-vanderbilt)
SLP Assignment Expectations
Use concepts from the background readings as well as any academic resources you can find (Wikipedia-type sources are not acceptable). Please be sure to cite your sources within the text and provide a reference page at the end of the paper.
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