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Madrigal !

Jimena Madrigal

B 3/4

December 2, 2016

The decades after the Civil War were a period of economic prosperity in the United

States. The industrial capitalist economy boomed, encouraging investment, expansion, and

production. (Collier) The economic setting of the country was transformed by individual

entrepreneurs known as Captains of Industry or Robber Barons. These ruthless businessmen

were considered both the greatest heroes and villains of the era. The economic setting and

resource demand during the Civil War allowed for the Captains of Industry to make small

fortunes that they then invested in post-war economy, fuelling the industrialization of America.

A war significantly affects the economy in that it causes demand of both resources and

services. By the end of the war, the United States had become convinced of the value of a free

market economy, characterized by low taxation and promotion of private investment (Collier).

This particular economic setting proved to be crucial for the entrepreneurial success of private

investors and enterprises. A turning point in the industrial development of the era was the new

found benefits of railroad transportation, as a result of the pressing need for efficient transport of

manufactured goods and raw materials (Conlin). By the year 1862, shortly after the start of the

Civil War, The Pacific Railroad act allotted funding to construct the first transcontinental railroad

(Pacific). This milestone spurred investment in both their construction and the materials needed

for it, therefore proving beneficial to the steel, lumber and coal industries. Other industries

influenced by wartime events were shipping and trade. The Union Blockade, a naval strategy
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meant to keep the Confederates from trading, drove shipments of Midwestern crops towards the

east and directly through Cleveland. Ports and businesses of the area were directly benefitted,

while elsewhere, others were gravely affected (Bryan).

John D. Rockefeller was an American industrialist born in 1839, New York city. As a

child, his family moved to Cleveland, Ohio. There, during his youth, he embarked on several

small-business ventures. The most successful of which was a shipping firm, established around

1860. It benefitted from the fore mentioned blockade that resulted in an increased activity at the,

conveniently located, Cleveland ports. Another factor that contributed to his success was the start

of the Civil War, which spurred high demands of wartime supplies such as food, clothing, and

weapons. These supplies eventually filled the firms warehouses and by the year 1862,

Rockefellers shipping firm was booking a profit of $17,000. By his twenty-third birthday, John

D. Rockefeller was making enough extra money to start considering other ambitious investment

opportunities. (Bryan) Considering the increasing oil production in western Pennsylvania,

Rockefeller decided to install an oil refinery near Cleveland. The refinerys further success

encouraged him to dedicate full time to the oil industry and incorporate, in 1870, along with his

associates, the Standard Oil Company. It immediately prospered and after two years it controlled

the majority of refineries in the area. Eventually, in addition to making favorable deals with

railroad companies, Standard invested in their own terminals, pipelines, and even acres of forest

for lumber, consequently, owning every aspect of the business. The Antitrust Act of 1890,

deemed it an illicit monopoly (Sherman) and the Standard Oil Company was divided into

separate entities a survival mechanism. By the time he died in 1937, Rockefellers assets equaled

1.5% of Americas total economic output. That constitutes the modern equivalent of $340
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billion dollars, more than four times, the current richest man alive, Bill Gates net worth.

(ODonnell)

Another successful industrialist from the era, who benefitted from the Civil Wars

economic environment was John Pierpont Morgan, an investment banker, and corporate

entrepreneur. J. P. Morgan was born in Hartford, Connecticut, 1837 into a prominent upper-class

family. After completing studies abroad, Morgan moved to New York. Meanwhile, his father,

Junius Morgan, continued to head a successful banking firm in London. The Morgans took

advantage of the situation and by funneling overseas investments into American business through

their partnership. Morgan's already successful career took a leap in 1879, after William

Vanderbilt, another successful industrialist of the era, drew his attention towards investing in

250,000 shares of stock in the New York Central Railroad. The firm soon became a major player

in the steel industry as well. In 1898 he financed the formation of Federal Steel and three years

later he purchased Andrew Carnegies steel industry for $500 million. Morgan managed to merge

his entities into U.S. Steel, creating the first billion-dollar corporation (J.P. Morgan). His success

as an investment banker is due to both the advantage of being born in a well-connected upper-

class family and his fore acquired small fortune, which gave him the capital to invest in business

ventures. The backbone of his successful business was a corrupt trade deal with United States

government that costs U.S. citizens more than just cash but rather the lives of American soldiers.

Morgan took advantage of the weaponry demand at the time period and, in partnership with

Simon Stevens, he purchased 5,000 obsolete carbine rifles from the Union Armys arsenal at

Governors Island, New York. The rifles barely worked and proved extremely dangerous, since

they notoriously blew off soldiers thumbs when fired. Their value really came from the fact that
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they were purchased for $3.50 each, but were sold as allegedly new guns to the U.S Army for

$22.00 each.

Andrew Carnegie was a Scottish-born man, from humble progeny, who grew up to

become one of the wealthiest businessmen in America. As he went from being a telegraph

messenger to a railroad worker, to the leader of a steel empire, Andrew Carnegie was truly a

self-made man. After moving to the United States, between 1865 and 1870, Carnegie took

advantage of the increase in international business following the Civil War. He traveled abroad,

selling the bonds of American railroads and other businesses. (McNamara)The United States

government had recently put a huge tariff on incoming steel. Carnegie saw an opportunity and

decided to invest in this industry. Together with his brother Tom, he opened the first steel plant

in 1874. He soon began taking steps towards controlling the whole industry, by for example

buying off rival steel mills and raw material providers. Carnegie accomplished domination of the

industry and accumulated great wealth by underselling his competition and dropping market

prices. He made steel affordable, which fuelled the construction of bridges and skyscrapers but

also consequently resulted in meager working conditions for his employees. After a very

successful industrial career Carnegie devoted his life to learning and philanthropic causes.

It has been over a century since the rise of this magnates and yet the world still debates

whether they were true captains of industry who incited the economic prosperity of the era, or

rather robber barons who limited healthy competition and robbed the poor to benefit the rich.

The political cartoon by Bernhard Gilliam, depicts this subject by portraying the idea that many

of this men were thought to have achieved greatness via unfair practices that undermined the

common folk (See Fig. 4). Modern society still faces a similar dilemma regarding the costs and
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benefits of competition and what is to be considered fair business. It is also debated whether or

not market forces can restrain unfair business practices, and if not so, to what extent should

governments intervene. Corporate giants and overly powerful businessmen becoming part of the

economic panorama of the United States has affected the social hierarchy. Money and power are

mutually reinforcing each other; therefore, corporations and wealthy businessmen arguably

exercise superior authority over the United States rather than governments and law enforcement

entities (Harvard). Powerful men of the era, like Cornelius Vanderbilt, most certainly agreed with

the previous statement when Vanderbilt said, "Law? Who cares about the law. Hain't I got the

power? showing his arrogance and apparent awareness of his hierarchical position in

comparison to the law. John D. Rockefeller shares this perception of the government, as

depicted by Horace Taylor (See fig. 1). The political cartoon shows the Capitol Building

overtook by industry, and Rockefeller himself holding a belittled White House, as a powerful

criticism to his superiority and exemption from governmental authority. The time period

encompassing the end of the 19th century and the beginning of the 20th is known as the Gilded

Age. During the Gilded Age, the nation was unofficially ruled by Corporations who, bought

politicians, used violence against unions, and engaged in open corruption (Loomis).

The Captains of Industry shaped the economic progressed of the decades following the

Civil War. The influence the Civil War had on the development of their careers becomes evident

after analyzing these mens rise from small entrepreneurs to powerful industrialists. They saw the

resource and service demand resulting from war as an opportunity to supply for that demand and

financially profit from it. For example, Carnegie, who took advantage of the increase in

international business to sell bonds internationally, and J. P Morgan, who supplied guns at a time
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they were most needed. The situation leaves room to analyze the positive effects the war had on

the nation, especially regarding the economy. Wars provide a temporary boost of domestic

demand, they lead to development of new technologies and reduce unemployment. These

characteristics contribute to the event leading to a period of industrialization. The American Civil

war can, therefore, be considered one of the main causes of the American Industrial Revolution.

Honor Pledge

On my Honor, I have neither given nor received help, assistance or guidance outside of class on
this task.

Jimena Madrigal

___________________________
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Figure 1: Washington As Seen By The Trusts


by Horace Taylor

Figure 2: The Protectors of our Industries


by Bernhard Gilliam
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Works Cited

Primary Sources

Gillam, Bernhard. Protectors of our Industries. Keppler & Schwarzmann, 1883, http://

explorepahistory.com/displayimage.php?imgId=1-2-193D.

Pacific Railway Act Pacific Railway Act, Congress of the United States of America, July 1,

1862 ourdocuments.gov, https://www.ourdocuments.gov/doc.php?doc=32.

Sherman Antitrust Act. Sherman Antitrust Act. Congress of the United States of America, 1890,

ourdocuments.gov https://www.ourdocuments.gov/doc_large_image.php?doc=51.

Taylor, Horace. Washington as Seen by The Trusts. 1900, eHistory.osu.edu, https://

ehistory.osu.edu/exhibitions/1912/trusts/attacks1.

Vanderbilt, Cornelius. brainyquote.com https://www.brainyquote.com/quotes/quotes/c/

corneliusv309794.html.

Secondary Sources

Bryan, Dan. John D. Rockefeller in the Civil War americanhistoryusa.com, April 13, 2012

https://www.americanhistoryusa.com/john-d-rockefeller-in-the-civil-war/.

Collier, Paul. On the Economic Consequences of Civil War. Oxford Economic Papers, 51,

1999, Washington D.C.

Conlin, Joseph R. The American Past: A Survey of American History. Volume 2, 1865.

Harvard Law School Forum on Corporate Governance and Financial Regulation. The

Corporate Capture of the United States harvard.edu https://corpgov.law.harvard.edu/

2012/01/05/the-corporate-capture-of-the-united-states/.

John D. Rockefeller. history.com, http://www.history.com/topics/john-d-rockefeller.


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J.P. Morgan Biography biography.com, A&E Television Networks, http://www.biography.com/

people/jp-morgan-9414735#related-video-gallery.

Loomis, Erik. 8 ways Americas Headed Back to the Robber-Baron Era. alternet.org, http://

www.alternet.org/story/156111/8_ways_america's_headed_back_to_the_robber- `

baron_era.

McNamara, Robert. Ruthless Businessman Dominated Industry, Then Gave Away Millions

history1800s.about.com http://history1800s.about.com/od/organizedlabor/a/Homestead-

Strike-1892.htm.

ODonnell, Carl. The Rockefellers: The Legacy Of History's Richest Man forbes.com July 11,

2014 http://www.forbes.com/sites/carlodonnell/2014/07/11/the-rockefellers-the-legacy-

of-historys-richest-man/#2b1f1f3660e7.