Western Railroad Discussion > What is a "robber baron"?

I'm seeing the term used more and more on TO, most recently a couple threads down about re-regulation:

MC6853 Wrote:
> ... Some of the stories I'm hearing
> about PSR are reminding me of 19th century
> railroads and the robber barons of the day...

So I'm wondering, what exactly qualifies someone as a robber baron?

Folks like Jay Gould, Commodore Vanderbilt, Daniel Drew, John D Rockefeller, Mark Hanna, amassed enormous wealth in the 1870s and later as they manipulated companies, wiped out competitors, cut secret rebates, bought off politicians, etc. The good old days when buying Congress was a more or less open activity.

First cousin to asset strippers who gain a controlling interest in a firm, take out the cash,sell off property,  mortgage the real estate, and let the company fall into bankruptcy.

Wikipedia's version:

https://en.wikipedia.org/wiki/Robber_baron_(industrialist)

click on the link " Did you mean: Robber baron (industrialist)? "

Basically those that became extremely rich between the 1850's and 1900, when Government Regulation became a deterrent.



Edited 2 time(s). Last edit at 01/19/19 10:08 by TCnR.

Robber barons also built infrastructure which the economy needed.

For a more balanced treatment, see Maury Klein's, The Life and Legend of Jay Gould.

Not unlike the huge build out of dark fiber in the US before 2001. Everybody was borrowing money to lay fiber.

After Global Crossing, WorldCom Charter etc floundered, Verizon, SouthWest Bell, Comcast bought thousands of miles of fiber for nickels on the dollar. Just like EH Harriman and other vultures.

Posted from Android

The link to Wikipedia above doesn't work for some reason, and I could not get one that would.  Go to Google (or Wikipedia directly), search for "robber baron," and you'll get what appears to be an identical URL except that it works.

The point is that the people who controlled the large railroads of the late-nineteenth century exercised an inordinate amount of power for the benefit of themselves and their companies in ways that, to the people of the time, mostly ignored the public interest.  Railroad corporations (and other post-Civil War industrial corporations) were larger than anything the country had previously seen, dominated the economy (for most of the country railroads were the only practical way to transport goods or people), and seemed oblivious to the public interest.  Those who controlled them appeared able to set any rates they wanted--one Vanderbilt famously commented that he would charge "all the traffic will bear"--that is, everything he could get without losing the load, without regard to the railroad's costs for the service.  At a time when more Americans were farmers than anything else, that meant that the railroads controlled people's livelihood--profits for farming did not depend on how good the crop was or what the price for it was at a commercial center where it could be sold--they depended on what the railroad would charge to get it to that center.  For most farmers, especially on the plains and in the west, where there was usually only one railroad available, that was something that was beyond their control.  It's not surprising that regulation began in the states of those areas before it became national.  Americans generally did not like the idea that a few wealthy people could control their lives in that fashion.  The comparison was to medieval "robber barons," minor nobility who imposed obnoxious charges for letting goods pass through their territories.

BobB Wrote:
-------------------------------------------------------
> The link to Wikipedia above doesn't work for some
> reason, and I could not get one that would.  Go
> to Google (or Wikipedia directly), search for
> "robber baron," and you'll get what appears to be
> an identical URL except that it works.
>
> The point is that the people who controlled the
> large railroads of the late-nineteenth century
> exercised an inordinate amount of power for the
> benefit of themselves and their companies in ways
> that, to the people of the time, mostly ignored
> the public interest.  Railroad corporations (and
> other post-Civil War industrial corporations) were
> larger than anything the country had previously
> seen, dominated the economy (for most of the
> country railroads were the only practical way to
> transport goods or people), and seemed oblivious
> to the public interest.  Those who controlled
> them appeared able to set any rates they
> wanted--one Vanderbilt famously commented that he
> would charge "all the traffic will bear"--that is,
> everything he could get without losing the load,
> without regard to the railroad's costs for the
> service.  At a time when more Americans were
> farmers than anything else, that meant that the
> railroads controlled people's livelihood--profits
> for farming did not depend on how good the crop
> was or what the price for it was at a commercial
> center where it could be sold--they depended on
> what the railroad would charge to get it to that
> center.  For most farmers, especially on the
> plains and in the west, where there was usually
> only one railroad available, that was something
> that was beyond their control.  It's not
> surprising that regulation began in the states of
> those areas before it became national.  Americans
> generally did not like the idea that a few wealthy
> people could control their lives in that
> fashion.  The comparison was to medieval "robber
> barons," minor nobility who imposed obnoxious
> charges for letting goods pass through their
> territories.

I strongly disagree.  The average rail charge for moving freight fell dramatically in the 20 year period from 1867 to 1887.  In 1887 it was half what is was in 1867.  (Ripley, "Railroad Rates and Regulation, 1912)  This is understandable.  The rail network was being built out and competition increased.  Rail technology improved, reducing cost.  Put the two together and you get a rapid rate decline.

The idea that a farmer was captive is a strawman.  It ignores what the railroad really sells.  What is sold is "Time and Place Utility".  That is having a product where it's needed when it's needed.  To stay with the farm example I'll cite hog transportation.  Chicago was "Hog Butcher to the World."  An Iowa farmer might have had only one rail line to get his hogs to Chicago.  But, the folks in Chicago didn't care where the hog came from.  They just needed good, healthy hogs to turn into pork chops.  So the rail line serving Iowa had to be competitive with railroads serving Wisconsin, Indiana, Illinois, etc.  (The rates did go down.  That's a fact.)  Oh sure, the railroads tried to colude and keep the rates up.  That was not illegal then.  It didn't work.  Railroad economics improve with volume and that made for an incentive to get more volume by lowering the rates.  That incentive for volume overcame any agreements about rate levels.

Railroads face two types of competition.  1) Route.  This is where most people quit thinking.  If one railroad has the only route between two points they'll claim "Monopoly".  This ignores the second type of competition which is just as real.  2) Market.  This was what I wrote about with the hog example.  The railroad has to compete with other routes that can deliver the product from different origins.  If you think about it, railroads have always faced a lot of competition.  Still do.  But you have to think about it.

Economic regulation of transportation was a disaster.  As to "Robber Barrons", who did they rob?  Rockefeller and Vanderbilt did a whole lot of good for the American public.  They did get rich doing so, but so what?  Rockefeller, for example, made it possible for people to have affordable decent lighting at night for the first time in history.  He certainly wasn't robbing the people who enjoyed his kerosene for lighting.  Vanderbilt improved transportation by sea and land.  Just what did he do wrong?

 

Nomad Wrote:
-------------------------------------------------------
> I'm seeing the term used more and more on TO, most
> recently a couple threads down about
> re-regulation:

The real "Robber Baron" is the nation's school system that sends students one on their way without teaching the term that is the in-practice basis of US-style Capitalism (there are other Capatalist systems)--that is: harvest as much money as one can from the gullible and give as little as possible in return. 



Edited 1 time(s). Last edit at 01/19/19 13:24 by RRBaron.

ts1457 Wrote:
-------------------------------------------------------
> Robber barons also built infrastructure which the
> economy needed.

Yep, including $600 air plane toilet seats to LA Metro's proposed LINK-US "Flying Saucer" landing base behind Union Station. 



Edited 2 time(s). Last edit at 01/19/19 13:25 by RRBaron.

RRBaron Wrote:
-------------------------------------------------------
> ts1457 Wrote:
> -------------------------------------------------------
> > Robber barons also built infrastructure which> the
> > economy needed.
>
> Yep, including $600 air plane toilet seats to LA
> Metro's proposed LINK-US "Flying Saucer" landing
> base behind Union Station. 

You are completely out of context here.

One other term that I think should be defined to avoid confusion is "Corporate Raider" which I think people sometimes mix-up with Robber Barons.

Greyhounds Wrote:
-------------------------------------------------------

> I strongly disagree.  The average rail charge for
> moving freight fell dramatically in the 20 year
> period from 1867 to 1887.  In 1887 it was half
> what is was in 1867.  (Ripley, "Railroad Rates
> and Regulation, 1912)  This is understandable. 
> The rail network was being built out and
> competition increased.  Rail technology improved,
> reducing cost.  Put the two together and you get
> a rapid rate decline....

Thank you for the insightful response.

I love the term "time and place utility". I have used it myself on occasion, but I do not think that I have seen anyone else use it since I was taking Transportation Economics.

Looking at competition in broad terms still useful today.

ts1457 Wrote:
-------------------------------------------------------
> Robber barons also built infrastructure which the
> economy needed.
>
> For a more balanced treatment, see Maury
> Klein's, The Life and Legend of Jay Gould.

Yep, they built it all themselves! with their own hands! thank you robber barons!

im sorry, i dont see anyone in this thread mentioning the land grants. ie the Pacific Railroad Act of 1862. and the violations of the terms of the land grants and the corruption, fraud and pork barrel politics that was part of that and its aftermath. to me that is an important part of the story.



Edited 1 time(s). Last edit at 01/19/19 18:44 by bbcc.

bbcc Wrote:
-------------------------------------------------------
> ts1457 Wrote:
> -------------------------------------------------------
> > Robber barons also built infrastructure which the
> > economy needed.
> >
> > For a more balanced treatment, see Maury
> > Klein's, The Life and Legend of Jay Gould.
>
> Yep, they built it all themselves! with their own
> hands! thank you robber barons!
>
> im sorry, i dont see anyone in this thread
> mentioning the land grants. ie the Pacific

Jay Gould was not involved in the building of the UP, but he did acquire control and turned it around in 1874.

The story of that era has a lot of complexities.

They had their problems but they built the West by connecting it to the East on steel rails.
They also spent heavily on helping people, like Andrew Carnegie who created America's 
free library system and many others like Bill & Melinda Gates, Warren Buffett, etc.,
who are spending their fortunes to help others.
Of course we still have crooks who don't pay their builders, complain about immigrants while marrying two of them
and bringing in their relatives, never apologize, evade the draft, etc., etc.
We live in an imperfect world.

Bill Deaver
Tehachapi, CA

For some insight into the populist perception, you might read The Octupus by Frank Norris, a thinly disguised attack on the rate setting and land sales of the Southern Pacific.
This won't fill your head with facts, but it captures the impressions of much of the general population that huge corporations were exploiting the small farmer and working class.
Not terribly different than the perceptions of miners, ranchers, and farmers throughout the US and Canada.

railstiesballast Wrote:
-------------------------------------------------------
>.
> This won't fill your head with facts, but it
> captures the impressions of much of the general
> population

...and therein lies the problem.

Thomas J. DiLorenzo wrote about the robber barons in a way that does provide facts, including many fascinating details of early US railroad history. It can be found here:

https://mises.org/library/truth-about-robber-barons

MojaveBill Wrote:
-------------------------------------------------------
>
> They also spent heavily on helping people, like
> Andrew Carnegie who created America's 
> free library system

As a library enthusiast, I am appreciative of Carnegie's library legacy.  However, the reality was that he severely exploited his workers.  When you have a chance, read about the Homestead Steel Strike of 1892.
.

MojaveBill Wrote:
-------------------------------------------------------
> They had their problems but they built the West by
> connecting it to the East on steel rails.
> They also spent heavily on helping people, like
> Andrew Carnegie who created America's 
> free library system and many others like Bill &
> Melinda Gates, Warren Buffett, etc.,

Interesting discussion, with informative links in this thread...

But ultimately, it's irrationality at issue here. Silicon Valley made a villain out of Bill Gates. I witnessed dumb business decisions based on that emotion many times. Warren Buffett publicly took a side in politics, and suddenly he becomes a villain, damn his belief in capitalism. In that regard, I'm underwhelmed by the behaviors of some TO members.

In the context of this thread, looks like the "robber barons" are limited to those involved with the Central Pacific, Southern Pacific, and Union Pacific? 

> We live in an imperfect world.

railstiesballast Wrote:
-------------------------------------------------------
> For some insight into the populist perception, you
> might read The Octopus by Frank Norris, a thinly
> disguised attack on the rate setting and land
> sales of the Southern Pacific.
> This won't fill your head with facts, but it
> captures the impressions of much of the general
> population that huge corporations were exploiting
> the small farmer and working class.
> Not terribly different than the perceptions of
> miners, ranchers, and farmers throughout the US
> and Canada.

"The Octopus" is a work of fiction.  The author, Norris, needed a villain to make a story up.  He used a fictional railroad which people took for the Southern Pacific.

The SP was, in fact, very helpful and accommodating to settlers.  The railroad wanted to develop California agriculture and in acted in ways to help do so.  It's not wise to learn history from a work of fiction.