TYCOONS OF THE 1900S

Tabbi Austin
 WHAT IS A TYCOON?

The definition of tycoon is as follows:

A businessperson of great wealth and power; magnate.
 ANDREW CARNEGIE – STEELE
KING

He earned most of his fortune in the steel

industry. In the 1870s, he founded the
Carnegie Steel Company, a step which
cemented his name as one of the "Captains
of Industry". By the 1890s, the company
was the largest and most profitable
industrial enterprise in the world. Carnegie
sold it in 1901 for $480 million to J.P.
Morgan, who created U.S. Steel. Carnegie
devoted the remainder of his life to large-
scale philanthropy, with special emphasis
on local libraries, world peace, education
and scientific research. His life has often
been referred to as a true "rags to riches"
story.
JOHN D. ROCKEFELLER – OIL
BARON

John Davison Rockefeller I (July 8, 1839 – May 23,

1937) was an American oil magnate. Rockefeller
revolutionized the petroleum industry and defined the
structure of modern philanthropy. In 1870, he founded
the Standard Oil Company and aggressively ran it until
he officially retired in 1897. Standard Oil began as an
Ohio partnership formed by John D. Rockefeller, his
brother William Rockefeller, Henry Flagler, Jabez
Bostwick, chemist Samuel Andrews, and a silent
partner, Stephen V. Harkness. As kerosene and gasoline
grew in importance, Rockefeller's wealth soared, and he
became the world's richest man and first American
worth more than a billion dollars. Adjusting for
inflation, he is often regarded as the richest person in
history.
 J. P. MORGAN

John Pierpont Morgan (April 17, 1837 - March 31,

1913) was an American financier, banker and art
collector who dominated corporate finance and
industrial consolidation during his time. In 1892
Morgan arranged the merger of Edison General
Electric and Thomson-Houston Electric Company to
form General Electric. After financing the creation of
the Federal Steel Company he merged in 1901 the
Carnegie Steel Company and several other steel and
iron businesses, including Consolidates Steel and
Wire Company owned by William Edenborn, to form
the United States Steel Corporation.
 HUMBLE BEGINNINGS OF
ANDREW CARNEGIE

Andrew Carnegie was born in Dumfermline, Scottland, the son of a

weaver. The family immigrated to the United States in 1848 because of
changing labor conditions in their native land, where recently introduced
steam looms were replacing many workers, Carnegie’s father among them.
The family settled in Allegheny, Pennsylvania, where Andrew received no
formal education and found work as a bobbin boy in a cotton mill. He later
worked as a messenger in a telegraph office and rapidly advanced to
telegrapher.
 GETTING HIS FEET WET

In 1853, Carnegie became the private

secretary and telegrapher to Thomas A.
Scott, president of the Pennsylvania
Railroad. Taking the first step toward an
investment program, Carnegie bought stock
in a sleeping-car company and in a short
time was making more from his speculative
venture than his regular job. He later made
a similarly small investment in oil during its
formative years and again profited
handsomely. Carnegie was appointed a
superintendent for the Pennsylvania
Railroad in 1859. After the Civil War broke
out in 1861, Carnegie served in the War
Department reorganizing telegraph service
for the Union army. He had earlier paid a
substitute $850 to discharge his
responsibilities as a draftee.
 RECIPE FOR SUCCESS

In 1864, Carnegie devoted his full energies to the iron business. His firm received
lucrative contracts from the railroads to replace aging wooden bridges with iron ones.
On a trip to Europe, Carnegie met and was inspired by Henry Bessemer, developer of
breakthrough technology for making steel from pig iron. In 1873, Carnegie sold his
other interests and turned his full attention to steel; he began to acquire the components
of what would become the Carnegie Steel Company. Carnegie’s recipe for success
included hard work, attention to detail and an ability to hire and rely upon qualified
help; Charles Schwab was an early assistant and would later become president of U.S.
Steel and Bethlehem Steel. Carnegie also was a shrewd observer of human nature.
When he opened his first steel plant in 1875, he named the facility for the president of
the Pennsylvania Railroad, J. Edgar Thompson; shortly thereafter, Carnegie received an
enormous order from that organization for the production of steel rails .
 A BIT OF A LOW POINT

T h e l o w p o i n t o f C a r n e g i e ’s c a re e r
o c c u r re d i n 1 8 9 2 d u r i n g t h e i n f a m o u s
Homestead Steel Strike. Carnegie was
t r a v e l i n g i n E u ro p e d u r i n g t h e d i s p u t e ,
b u t h i s i n t e re s t s w e re re p re s e n t e d b y
Henry Clay Frick, with whom Carnegie
h a d d i f f e re d o n l a b o r m a t t e r s i n t h e
past. Nevertheless, the total humiliation
s u f f e re d b y t h e s t r i k e r s a t H o m e s t e a d
s o u re d t h e o p i n i o n o f m a n y w o r k i n g
people of Carnegie for many years to
come.
 MAJOR PHILANTHROPIC
VENTURES

 Carnegie Hall (1892)

 Carnegie Institution (1902) for research into American colleges and
universities
 Carnegie Hero Fund Commission (1904)
 Carnegie Endowment for the Advancement of Teaching (1905)
 Carnegie Endowment for International Peace (1910)
 Carnegie Corporation of New York (1911)
 Funding for the establishment of more than 2,800 libraries
 Major support for Tuskegee Institute
 Funding for the Peace Palace at The Hague, The Netherlands, later the
home of the United Nations International Court of Justice.
 J. D. ROCKEFELLER’S START

From the start Rockefeller showed a genius for organization and method. The firm
prospered during the Civil War (1861–65), when Confederate (Southern) forces
clashed with those of the Union (North). With the Pennsylvania oil strike (1859) and
the building of a railroad to Cleveland, they branched out into oil refining (purifying)
with Samuel Andrews, who had technical knowledge of the field. Within two years
Rockefeller became senior partner; Clark was bought out, and the firm Rockefeller
and Andrews became Cleveland's largest refinery.

With financial help from S. V. Harkness and from a new partner, H. M. Flagler
(1830–1913), who also secured favorable railroad freight rebates, Rockefeller
survived the bitter competition in the oil industry. The Standard Oil Company, started
in Ohio in 1870 by Rockefeller, his brother William, Flagler, Harkness, and Andrews,
had a worth of one million dollars and paid a profit of 40 percent a year later. While
Standard Oil controlled one-tenth of American refining, the competition remained.
 TRUSTS

By 1883, after winning control of the pipeline industry, Standard's

monopoly was at a peak. Rockefeller created America's first great "trust" in
1882. Ever since 1872, Standard had placed its gains outside Ohio in the
hands of Flagler as "trustee" because laws denied one company's ownership
of another's stock. All profits went to the Ohio company while the outside
businesses remained independent. Nine trustees of the Standard Oil Trust
received the stock of forty businesses and gave the various shareholders
trust certificates in return. The trust had a worth of about seventy million
dollars, making it the world's largest and richest industrial organization.
 CRACKING DOWN ON THE TRUST

Public opposition to Standard Oil grew with the emergence of the

muckraking journalists (journalists who expose corruption), in
particular, Henry Demarest Lloyd (1847–1903) and Ida Tarbell (1857–
1944) who published harsh stories of the oil empire. Rockefeller was
criticized for various practices: railroad rebates (a system he did not
invent and which many refiners used); price fixing; and bribery
(exchanging money for favors); crushing smaller firms by unfair
competition, such as cutting off their crude oil supplies or restricting
their transportation outlets. Standard Oil was investigated by the New
York State Senate and by the U.S. House of Representatives in 1888.
Two years later the Ohio Supreme Court invalidated Standard's original
trust agreement. Rockefeller formally disbanded the organization and in
1899 Standard was recreated legally under a new form as a "holding
company," (this merger was dissolved by the U.S. Supreme Court in
1911, long after Rockefeller himself had retired from active control in
 WORTH $550 MILLION

The total of Rockefeller's lifetime philanthropies has been estimated at

about $550 million. Eventually the amounts involved became so huge (his
fortune reached $900 million by 1913) that he developed a staff of
specialists to help him. Out of this came the Rockefeller Foundation,
chartered in 1913, "to promote the well-being of mankind throughout the
world." He died on May 23, 1937, in Ormond, Florida.
 J. P MORGAN’S OUTSET

John Pierpont (JP) Morgan was born on April 17,

1837 in Hartford, Connecticut to parents Juniet
Spencer Morgan and Juliet (Pierpont) Morgan.
His father was a partner of the firm George
Peabody & Co. so by no means was JP Morgan
born into a poor family. After he completed
school at the English school in Boston, he went
to the University of Gottingen in Germany. When
he returned to the US in 1857 he got a job
working for the private banking house Duncan,
Sherman and Company. In 1860 he was
appointed as the American agent and attorney for
George Peabody & Company in which his father
was a partner. This later became J.S. Morgan &
Co and when his father died in 1890 he left it to
JP Morgan giving him important European
connections and enabling him to run a large
foreign reserve business.
MONEY MAKING DEALS

By the time of his father's death, JP Morgan had

already established himself as a financier through
Dabney, Morgan & Co. and later Drexel, Morgan
& Co. It was after the Civil War that he started
buying distressed businesses and especially
railroad companies. Some of these railroads
include the West Shore, Philadelphia and
Reading, Richmond Terminal, the Erie and the
New England railroads. His process of buying
and consolidation of railroads came to be known
as Morganization. On several occasions, JP
Morgan also helped the government in its
finances. In 1877, together with August Belmont
and the Rothschilds, they floated $260 million in
US government bonds. After the government ran
into some gold problems, he bought $200 million
worth of government bonds with gold thereby
preserving the credit of the United States. Some
of his detractors had, however, heavily criticised
him for the harsh terms of the loan. This had also
resulted in a Congressional hearing in 1912, but
he walked away largely unscathed.
 BILLIONS ON BILLIONS

Perhaps the biggest deal he was ever involved

in was the forming of the US Steel
Corporation, the first billion-dollar
corporation. He had bought some mills from
Andrew Carnegie and together with some
other steel assets formed US Steel - worth
approximately $1.2 billion. He was also
involved with several other companies and
sat on quite a few boards. A few of the better
known ones include Western Union Telegraph
Company and General Electric. At the time of
his death on March 31, 1913 he had an estate
worth $80 million (today around $1.2
billion). Compared to his peers of the time,
especially Rockefeller, it was not such a large
estate. In fact, it was Rockefeller's comment
at the time, "And to think he wasn't even a
rich man." Yet, JP Morgan's power did not lie
in the millions he had, it lay in the billions he
controlled.
 GILDED AGE HOST TO
ENTREPRENEURS

The super-rich industrialists and financiers such as John D. Rockefeller,

Andrew W. Mellon, Andrew Carnegie, Henry Flagler, Henry H. Rogers, J.P.
Morgan, Cornelius Vanderbilt of the Vanderbilt family, and the prominent
Astor family were attacked as "robber barons" by critics, who believed they
cheated to get their money and lorded it over the common people. There
was a small, growing labor union movement led especially by Samuel
Gompers, head of the American Federation of Labor (AFL) after 1886.
 AMERICAN PHILANTHROPY

The wealth of the period is highlighted by the American upper class'

opulence, but also by the rise of American philanthropy (referred to by
Andrew Carnegie as the "Gospel of Wealth") that used private money to
endow thousands of colleges, hospitals, museums, academies, schools,
opera houses, public libraries, symphony orchestras, and charities. John D.
Rockefeller, for example, donated over $500 million to various charities,
slightly over half his entire net worth.
 OTHER NOTABLE TYCOONS

Jay Gould
Gould gained control of the Union Pacific,
from which in 1883 he withdrew after
realizing a large profit. Buying up the stock
of the Missouri Pacific he built up, by means
of consolidations, reorganizations, and the
construction of branch lines, the "Gould
System" of railways in the Southwestern
states. In 1880 he was in virtual control of
10,000 miles of railway, about one-ninth of
the railway mileage of the United States at
that time. Besides, he obtained a controlling
interest in the Western Union Telegraph
Company, and after 1881 in the elevated
railways in New York City, and was
intimately connected with many of the
largest railway financial operations in the
US.
NOTABLE TYCOONS CONT.

B o s s Tw e e d

With absolute power over who could be

nominated as a Democratic candidate
and enormous influence over
appointments to office, "Boss Tweed"
was himself appointed a Deputy Street
Commissioner, and began putting
cronies on the city payroll for doing no
work. With his substantial kickbacks,
Tweed bought several companies which
were promptly awarded city contracts.
He was elected to the State Senate in
1867, and within months had charmed
and cajoled his way to similar near-
absolute control over the state's capitol.