The late 19th century and early 20th century was the age of big businesses. It bore a class of entrepreneurs known as robber barons. These entrepreneurs carry a perception in the eyes of most historical commentators that they committed veiled larceny acts to enrich themselves to the detriment of the customers, often seeking the aid of politicians to support their crony capitalist endeavors. Such portrayal by the historians lives us with the picture of greedy and exploitative capitalists. However, there are cases where this ‘robber baron’ string of entrepreneurs did indeed exploit their customers financial gain. Jay Cooke, famously known as the ‘financier of the Civil War’, was an example of this string of entrepreneurs and their reaches within the United States government.
The Lincoln government underestimated both the duration and cost of the war, resulting in the Treasury facing bankruptcy. There was a “collapse of government credit” and an increased need for government funds, creating an opportunity for Cooke to inject himself into the government financing scheme. Cooke knew politicians, particularly the Governor of Ohio, Salmon P. Chase,
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and Congressman John Sherman, both of whom were acquainted with Cooke’s journalist brother, Henry (Josephson). Cooke was responsible for securing Chase’s position as the Secretary of Treasury under Lincoln’s government, allowing for the provision of Cooke seeking something in return of the favor. Cooke’s closeness with politicians also provided him with information on the government’s need of funding, allowing him to focus his skills in government financing. In 1861, shortly after the beginning of the Civil War, Cooke established his banking firm, Jay Cooke & Company.
Jay Cooke & Company’s first endeavor was the selling of bonds to cover the loan sought by the Pennsylvania State Legislature to fund its war efforts, and Cooke was able to sell these bonds “at not less than par” (Josephson). Cooke’s tactic involved playing into the patriotic sentiments in the North by claiming that the Union efforts would be “[suppressing] treason and rebellion” (Josephson). Cooke’s success in financing Pennsylvania’s loan led him to seek an alliance between his banking house and the United States Treasury. Chases initially rejected this, as this would create a monopoly in the government bond market. Cooke’s success eventually made it impossible for Chase to deny his friend the role as a fiscal
agent. With the help of the Secretary of Treasury, Jay Cooke & Company became an official, and eventually the largest, agent of selling government bonds. Chase patronized Jay Cooke & Company, appointing him as the national loan subscription agent in 1862, after Cooke noted success in selling roughly one quarter of the total amount sold. Cooke’s ‘minutemen’, subagents were critical in Cooke’s success, as they helped him float $5 million five-twenty bonds, which were redeemable after 5 years and payable after 20 (Josephson). Cooke encourage the loaning of money to the government with his philosophy, “a national debt a national blessing” (Josephson). Cooke had managed to perform like a monopolist without actually having complete control of the government bond market. With the help of his friend, Secretary of Treasury, Salmon Chase, and his exceptional performance in bond selling, Jay Cooke & Company became an official agent of selling government bonds. Chase patronized Cooke’s banking firm heavily, promoting Cooke’s patriotism and dedication to the Union cause, resulting in Cooke’s appointment as the sole “Subscription Agent for National Loan” in May 1862 (Munden). Cooke’s performance as the patriotic agent for the funding of the government’s loan was undeniable, but his friendship with the Chase and his influence in Congress with the help of his brother certainly helped him secure his monopoly of the government bond market. Cooke has successfully managed to sell what the government was struggling to, as he was able to convince potential buyers to buy long-term bonds, which have a bear higher interest rate risks than short-term bonds. Cooke’s success can also be attributed to the depreciation of the dollar that resulted from the suspension of specie payments and the issue of greenbacks as legal tender (Josephson). This made lending to the Union government more appealing than it was when specie payments were in use. Cooke was largely responsible for relieving the financial strain the was placed on the government and he achieved this task by selling bonds. Cooke’s marketing strategy proved extremely effective, as he sold around $200 million in bonds, covering around 65% of the government’s revenue (Seavoy). Cooke’s success in financing the government’s war spending also provided Cooke with enormous personal wealth. Cooke sold around $2 million in bonds a day, earning .5 per cent commission for each bond sold, which resulted in a yearly salary around $3 million dollars (Josephson). Cooke also constructed the grand palace, called Ogontz, in the outskirts of Philadelphia. Cooke was a man “made rich by the drippings of the Treasury” (Josephson). Cooke became an important advisor to the government following his success in financing its loan. The government went to Cooke for his advice, and according to Matthew Josephson, the government “could not long resist [Cooke’s] further encroachment.” Cooke was responsible for raising around 65% of the government’s revenue, so naturally this earned him the privilege to seek favors from the government, as well as, have some say in legislation. This was true in the chartering of a national bank in this era. Cooke partook in the passing of the National Bank Act and the drafting of the bank’s charter. Cooke’s company also owned and organized the First National Bank of Washington, as well as a number of the other banks under the charter. Cooke’s influence in the government and his monopoly of the bond market allowed Cooke access to secretly selling government property, which by definition is corruption. (Munden). Cooke’s secret selling of government bonds was intended to stabilize prices, and he also achieved this goal by selling government gold, as well.
A major question historians have disagreed on has been whether or not John D. Rockefeller was a so-called "robber baron". Matthew Josephson agreed that Rockefeller was indeed a "robber baron". In the book Taking Sides, He claims that Rockefeller was a deceptive and conspiratorial businessman, whose fortune was built by secret agreements and wrung concessions from America's leading railroad companies (Taking Sides 25).
Morgan was one of the more selfish of the barons. He once said, “I owe nothing to the public, and often practiced fraud and distortion. His methods of monopolizing the banking industry were so obvious, that they were in fact called, “Morganization.” He once sold 5,000 defective rifles to General Fremont, and was never even filed suit against. Morgan still has an impact today since many companies produce faulty products or perform inadequate services that can sometimes even result in injury or even death, and are often written off as “human error” or bundles of cash pushed towards the victims to keep them
In The Dinner, the+ men compromise on Hamilton’s Assumption Plan. When an exhausted and unkempt Hamilton tells Jefferson that he wishes to resign from Secretary of Treasury because his financial plan “was trapped in a congressional gridlock” because of James Madison’s strong disapproval of it, Jefferson agreed to help him. The recovery of Public Credit assumed that the “federal government would take on all the accumulated debts of the states” . However, Madison disapproved of this plan because he worried that Hamilton valued speculators over the common man who had fought in the Revolution. Also, many states had already paid off their wartime debts, so the Assumption Bill would do them an injustice by “compelling them, after having done their duty, to contribute to those states who have not equally done their duty” . Later on Jefferson invited Hamilton and Madison over to dinner, their discussion lead to a
During the 1800’s, business leaders who built their affluence by stealing and bribing public officials to propose laws in their favor were known as “robber barons”. J.P. Morgan, a banker, financed the restructuring of railroads, insurance companies, and banks. In addition, Andrew Carnegie, the steel king, disliked monopolistic trusts. Nonetheless, ruthlessly destroying the businesses and lives of many people merely for personal profit; Carnegie attained a level of dominance and wealth never before seen in American history, but was only able to obtain this through acts that were dishonest and oftentimes, illicit.
The validity of President Andrew Jackson’s response to the Bank War issue has been contradicted by many, but his reasoning was supported by fact and inevitably beneficial to the country. Jackson’s primary involvement with the Second Bank of the United States arose during the suggested governmental re-chartering of the institution. It was during this period that the necessity and value of the Bank’s services were questioned.
During the Gilded Age, several Americans emerged as leaders in many fields such as, railroads, oil drilling, manufacturing and banking. The characterization of these leaders as “robber barons” is, unfortunately, nearly always correct in every instance of business management at this time. Most, if not all, of these leaders had little regard for the public or laborers at all and advocated for the concentration of wealth within tight-knit groups of wealthy business owners.
In the beginning of the 1830s, the United States experienced a short period of expansion and a prosperous economy. Land sales, new taxes, such as the Tariff of 1833, and the newly constructed railroads brought a lot of money into the government’s possession; never before in the history of the country had the government experienced a surplus in its national bank. By 1835, the government was able to accumulate enough money to pay off its national debt. Much of the country was happy with this newly accumulated wealth, but President Jackson, before leaving office in 1836, issued what is called a Specie Circular. Many local and state governments liked to save specie, or gold and silver, and use paper money to take care of transactions. President Jackson, in his Specie Circular, said that the Treasury was no longer allowed to accept paper money as payment for the sales of land and the like. Most, if not all, of the country did not like this, and as a result many banks restricted credit and discontinued the loans. The effects of Jackson’s Specie Circular took effect in 1837, when Martin van Buren became president. All investors became scared, and in 1837, attempted to withdraw all of their money at once. Soon after this, unemployment and riots occurred in many cities, and the continued expansion of the railroad ceased to be.
When the names Carnagie, Rockefeller, and Pullman come to mind, most of us automatically think of what we saw or read in our history books: "These men were kind and generous and through hard work and perseverance, any one of you could become a success story like them," right? Wrong. I am sick of these people being remembered for the two or three "good deeds" they have done. Publicity and media have exaggerated the generosity of these men, the government has spoiled these names with false lies, and people have been blind to see that these men were ruthless, sly businessmen who were motivated by your money and their struggle for power.
During his term as secretary of the treasury, he acted with the power and commanding force of a Prime Minister. None of the other founding fathers contributed as much to the economy’s growth, and the shape of the country in general, as he did. Alexander Hamilton was the most influential of the United States’ early politicians in the development of the country’s economy. One of the earliest examples of Hamilton’s power was his role in the national assumption of state debts. After the Revolutionary War, individual states had varying amounts of debt.
He believed the bank and those who controlled it had too much power and could ruin the country financially for their own gains. In 1833, Jackson fired his Treasury Secretary for refusing to remove deposits from the Second Bank and became the only President censured by the Senate for his actions, although the censure was expunged at the end of his second term. In January 1835, Jackson paid off the entire national debt, the only time in U.S. history that has been accomplished. However, in 1837, depression ensued and the national debt rose
Mooney, Richard. "Banker of America." The Boston Globe 4 Apr. 1999: L1 "Powerful house of Morgan Changes with the Times." The San Diego Union-Tribune 24 Feb. 1986: 18 Sinclair, Andrew. Corsair: The Life of J. Pierpont Morgan. Toronto: Little, Brown and Company, 1981.
The term “robber barons” originated from the turn of the twentieth century during the Gilded Age. The name “Gilded Age” was derived from Mark Twain’s novel, The Gilded Age: A Tale of Today, in which he portrayed American society as “gilded”, meaning that despite how fancy and luxurious it might have seemed on the surface, underneath the gild was actually a plethora of grave social issues that society refused to acknowledge. The title “robber baron” was a derogatory nickname meant to criticize the morals of businessmen who used immoral methods to gain immense wealth. It first appeared in The New York Times as early as February 9, 1859, where authors criticized the infamous business man Cornelius Vanderbilt for his unethical manner of achieving
He explained to the Senate that the income for exported goods (1857) was about $279,000,000. Of that amount he calculated that about $158,000,000 of that amount came from southern goods such as cotton and rice. He ends his speech with “No power on earth dares to make war on cotton. Cotton is King.” The economies of the north and south pushed the nation into separation. It made the south believe that they didn’t need the north to make money and to live, but the north needed the south they needed the income. I can assure you that cash money was a huge part of causing the Civil
Roark, James L. et al., eds. The American Promise: A Compact, Vol. I: To 1877. 3rd edition. Boston and New York: Bedford/St. Martin’s, 2007.
In the 1939 film, Mr.Smith Goes to Washington, the filmmaker gives a distinct contrast between the idealized and assumed morality of American patriotism and the reality of the corruption that can be found within the political machines of the government. As seen in this film, the human desire for money and power is often a drive that individuals within the government cannot help but clasp onto. For example, Clarissa Saunders proclaims that she is only in her job for “money and a new suit of clothes,” Joseph Paine elects Smith as a way to remain in control of the Senate and to remain connected to the power source of Jim Taylor, and the political machine Jim Taylor attempts to influence Senate to push a bill through that will continue to increase the power of his own monopoly. However, when Jefferson