The Age of Big Business by Burton Jesse Hendrick (read an ebook week .txt) 📖

from that of fifty years ago is apparent when we recall that the proposed capitalization of $15,000,000, caused by the merging of the Boston and Worcester and the Western railroads, was widely denounced as “monstrous” and as a corrupting force that would destroy our Republican institutions.

Naturally this small-scale ownership was reflected in the distribution of wealth. The “swollen fortunes” of that period rested upon the same foundation that had given stability for centuries to the aristocracies of Europe. Social preeminence in large cities rested almost entirely upon the ownership of land.

The Astors, the Goelets, the Rhinelanders, the Beekmans, the Brevoorts, and practically all the mighty families that ruled the old Knickerbocker aristocracy in New York were huge land proprietors. Their fortunes thus had precisely the same foundation as that of the Prussian Junkers today. But their accumulations compared only faintly with the fortunes that are commonplace now. How many “millionaires” there were fifty years ago we do not precisely know. The only definite information we have is a pamphlet published in 1855 by Moses Yale Beach, proprietor of the New York Sun, on the “Wealthy Men of New York.”

This records the names of nineteen citizens who, in the estimation of well-qualified judges, possessed more than a million dollars each. The richest man in the list was William B.

Astor, whose estate is estimated at $6,000,000. The next richest man was Stephen Whitney, also a large landowner, whose fortune is listed at $5,000,000. Then comes James Lenox, again a land proprietor, with $3,000,000. The man who was to accumulate the first monstrous American fortune, Cornelius Vanderbilt, is accredited with a paltry $1,500,000. Mr. Beach’s little pamphlet sheds the utmost light upon the economic era preceding the Civil War. It really pictures an industrial organization that belongs as much to ancient history as the empire of the Caesars. His study lists about one thousand of New York’s “wealthy citizens.”

Yet the fact that a man qualified for entrance into this Valhalla who had $100,000 to his credit and that nine-tenths of those so chosen possessed only that amount shows the progress concentrated riches have made in sixty years. How many New Yorkers of today would look upon a man with $100,000 as “wealthy”?

 

The sources of these fortunes also show the economic changes our country has undergone. Today, when we think of our much exploited millionaires, the phrase “captains of industry” is the accepted description; in Mr. Beach’s time the popular designation was “merchant prince.” His catalogue contains no “oil magnates” or “steel kings” or “railroad manipulators”; nearly all the industrial giants of ante-bellum times—as distinguished from the socially prominent whose wealth was inherited—had heaped together their accumulations in humdrum trade. Perhaps Peter Cooper, who had made a million dollars in the manufacture of isinglass and glue, and George Law, whose gains, equally large, represented fortunate speculations in street railroads, faintly suggest the approaching era; yet the fortunes which are really typical are those of William Aspinwall, who made $4,000,000 in the shipping business, of A. T. Stewart, whose $2,000,000

represented his earnings as a retail and wholesale dry goods merchant, and of Peter Harmony, whose $1,000,000 had been derived from happy trade ventures in Cuba and Spain. Many of the reservoirs of this ante-bellum wealth sound strangely in our modern ears. John Haggerty had made $1,000,000 as an auctioneer; William L. Coggeswell had made half as much as a wine importer; Japhet Bishop had rounded out an honest $600,000 from the profits of a hardware store; while Phineas T. Barnum ranks high in the list by virtue of $800,000 accumulated in a business which it is hardly necessary to specify. Indeed his name and that of the great landlords are almost the only ones in this list that have descended to posterity. Yet they were the Rockefellers, the Carnegies, the Harrimans, the Fricks, and the Henry Fords of their day.

 

Before the Civil War had ended, however, the transformation of the United States from a nation of farmers and small-scale manufacturers to a highly organized industrial state had begun.

Probably the most important single influence was the War itself.

Those four years of bitter conflict illustrate, perhaps more graphically than any similar event in history, the power which military operations may exercise in stimulating all the productive forces of a people. In thickly settled nations, with few dormant resources and with practically no areas of unoccupied land, a long war usually produces industrial disorganization and financial exhaustion. The Napoleonic wars had this effect in Europe; in particular they caused a period of social and industrial distress in England. The few years immediately following Waterloo marked a period when starving mobs rioted in the streets of London, setting fire to the houses of the aristocracy and stoning the Prince Regent whenever he dared to show his head in public, when cotton spindles ceased to turn, when collieries closed down, when jails and workhouses were overflowing with a wretched proletariat, and when gaunt and homeless women and children crowded the country highways. No such disorders followed the Civil War in this country, at least in the North and West. Spiritually the struggle accomplished much in awakening the nation to a consciousness of its great opportunities. The fact that we could spend more than a million dollars a day—expenditures that hardly seem startling in amount now, but which were almost unprecedented then—and that soon after hostilities ceased we rapidly paid off our large debt, directed the attention of foreign capitalists to our resources, and gave them the utmost confidence in this new investment field.

Immigration, too, started after the war at a rate hitherto without parallel in our annals. The Germans who had come in the years preceding the Civil War had been largely political refugees and democratic idealists, but now, in much larger numbers, began the influx of north and south Germans whose dominating motive was economic. These Germans began to find their way to the farms of the Mississippi Valley; the Irish began once more to crowd our cities; the Slavs gravitated towards the mines of Pennsylvania; the Scandinavians settled whole counties of certain northwestern States; while the Jews began that conquest of the tailoring industries that was ultimately to make them the clothiers of a hundred million people. For this industrial development, America supplied the land, the resources, and the business leaders, while Europe furnished the liquid capital and the laborers.

 

Even more directly did the War stimulate our industrial development. Perhaps the greatest effect was the way in which it changed our transportation system. The mere necessity of constantly transporting hundreds of thousands of troops and war supplies demanded reconstruction and reequipment on an extensive scale. The American Civil War was the first great conflict in which railroads played a conspicuous military part, and their development during those four years naturally left them in a strong position to meet the new necessities of peace. One of the first effects of the War was to close the Mississippi River; consequently the products of the Western farms had to go east by railroad, and this fact led to that preeminence of the great trunk lines which they retain to this day. Almost overnight Chicago became the great Western shipping center, and though the river boats lingered for a time on the Ohio and the Mississippi they grew fewer year by year. Prosperity, greater than the country had ever known, prevailed everywhere in the North throughout the last two years of the War.

 

So, too, feeding and supplying an army of millions of men laid the foundation of many of our greatest industries. The Northern soldiers in the early days of the war were clothed in garments so variegated that they sometimes had trouble in telling friend from foe, and not infrequently they shot at one another; so inadequately were our woolen mills prepared to supply their uniforms! But larger government contracts enabled the proprietors to reconstruct their mills, install modern machines, and build up an organization and a prosperous business that still endures.

Making boots and shoes for Northern soldiers laid the foundation of America’s great shoe industry. Machinery had already been applied to shoe manufacture, but only to a limited extent; under the pressure of war conditions, however, American inventive skill found ways of performing mechanically almost all the operations that had formerly been done by hand. The McKay sewing machine, one of the greatest of our inventions, which was perfected in the second year of the war, did as much perhaps as any single device to keep our soldiers well shod and comfortable. The necessity of feeding these same armies created our great packing plants.

Though McCormick had invented his reaper several years before the war, the new agricultural machinery had made no great headway.

Without this machinery, however, our Western farmers could never have harvested the gigantic crops which not only fed our soldiers but laid the basis of our economic prosperity. Thus the War directly established one of the greatest, and certainly one of the most romantic, of our industries—that of agricultural machinery.

 

Above all, however, the victory at Appomattox threw upon the country more than a million unemployed men. Our European critics predicted that their return to civil life would produce dire social and political consequences. But these critics were thinking in terms of their own countries; they failed to consider that the United States had an immense unoccupied domain which was waiting for development. The men who fought the Civil War had demonstrated precisely the adventurous, hardy instincts which were most needed in this great enterprise. Even before the War ended, a great immigration started towards the mines and farms of the trans-Mississippi country. There was probably no important town or district west of the Alleghanies that did not absorb a considerable number. In most instances, too, our ex-soldiers became leaders in these new communities. Perhaps this movement has its most typical and picturesque illustration in the extent to which the Northern soldiers opened up the oil-producing regions of western Pennsylvania. Venango County, where this great development started, boasted that it had more ex-soldiers than any similar section of the United States.

 

The Civil War period also forced into prominence a few men whose methods and whose achievements indicated, even though roughly and indistinctly, a new type of industrial leadership. Every period has its outstanding figure and, when the Civil War was approaching its end, one personality had emerged from the humdrum characters of the time—one man who, in energy, imagination, and genius, displayed the forces that were to create a new American world. Although this man employed his great talents in a field, that of railroad transportation, which lies outside the scope of the present volume, yet in this comprehensive view I may take Cornelius Vanderbilt as the symbol that links the old industrial era with the new. He is worthy of more detailed study than he has ever received, for in personality and accomplishments Vanderbilt is the most romantic figure in the history of American finance.

We must remember that Vanderbilt was born in 1794 and that at the time we are considering he was seventy-one years old. In the matter of years, therefore, his career apparently belongs to the ante-bellum days, yet the most remarkable fact about this remarkable man is that his real life work did not begin until he had passed his seventieth year. In 1865 Vanderbilt’s fortune, consisting chiefly of a fleet of steamboats, amounted to about $10,000,000; he died twelve years later, in 1877, leaving $104,000,000, the first of those colossal American fortunes that were destined to astound the world. The mere fact that this fortune was the accumulated profit of only ten years shows perhaps more eloquently than any other circumstance that the United States had entered a new economic age. That new factor in the life of America and the world, the railroad, explains his achievement. Vanderbilt was