Shafideen Odunewu
The Myth of the Robber Barons
The term, “robber baron”, in the American vernacular, is used to portray an individual,
especially during the late 19th century, who amassed their wealth by employing exploitative and
unethical means. According to Duke University professor Michael Munger, most Americans
today believe, “that they got so rich because they built monopolies that kept everyone else poor
so they could, in essence, “have it all.” 1 In historian Burton W. Folsom Jr.’s book, The Myth of
the Robber Barons, the common notion that industrial leaders of Gilded Age America including
names such as Carnegie, Vanderbilt and Rockefeller were savage exploiters of wealth and power
is opposed. Folsom argues that these individuals can be categorized into two classes: market
entrepreneurs, who “tried to succeed…primarily by creating and marketing a superior product at
a low cost”, and political entrepreneurs, who “tried to succeed…primarily through federal aid,
pools, vote buying or stock speculation”2. In today’s day and age, the insights provided by
Folsom may serve as considerably beneficial as the presence of monstrously wealthy individuals
continue to rise into economic and political power.
The main idea of Folsom’s work is that market entrepreneurs such as Cornelius
Vanderbilt and James J. Hill played a critical role in American economic expansion by reducing
costs, improving efficiency, and generating competition. Contrastingly, political entrepreneurs,
Buckley, Bob. “Duke University Professor Michael Munger Discusses the Myth of the Robber Baron.” Duke
University professor discusses the myth of the robber baron, July 7, 2023. https://myfox8.com/spotlight/buckleyreport/duke-university-professor-discusses-the-myth-of-the-robber-baron/.
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Burton W. Folsom, The Myth of the Robber Barons (Herndon, VA: Young America’s Foundation, 1991), [1].
which may even be used to describe companies like those involved in government-subsidized
railroads, manipulated the system purely for personal gain, feasting on taxpayer dollars and
enfeebling economic progress. He explains that the negative ideology regarding all industrialists
as “robber barons” is historically inaccurate and unfairly dissolves the positive impact of freemarket capitalism.
Folsom bolsters his argument through a discussion of James J. Hill, who built the Great
Northern Railway without government aid, in comparison with government-supported railroad
companies, liable of frequent mismanagement of funds and inferior railroad system production.
Folsom writes, “Congress spent $150,000…they gave loans: $16,000 for each mile of track of
flat prairie land $32,000 per mile for hilly terrain, and $48,000 per mile in the mountains” 3.
Without scruples, the Union Pacific and California Pacific Railroad companies did their best to
capitalize of the government funding by building unorganized and shoddy tracks. Not without
opposition from other subsidized railroad companies, James J. Hill became the individual to be
described in history as the one who finally completed the Great Northern Railway. Folsom
contends that the true beneficiaries of market entrepreneurship were regular American citizens,
who gained access to cheaper goods and services. As Vanderbilt quipped, “If I could not run
a steamship alongside of another man and do it as well as he for twenty percent less than it cost
him I would leave the ship” 4.
Folsom defends his viewpoints through historical records, juxtaposing entrepreneurs who
succeeded independently and those who depended on federal aid. Early in the book, Folsom
examines Cornelius Vanderbilt’s steamboat methodologies, depicting Vanderbilt as a proponent
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Burton W. Folsom, The Myth of the Robber Barons (Herndon, VA: Young America’s Foundation, 1991), [18]
Burton W. Folsom, The Myth of the Robber Barons (Herndon, VA: Young America’s Foundation, 1991), [5]
of lowered prices and improved services, dragging opponents into innovation rather than reliance
on government-granted monopolistic privileges. Congruently, railroad builder and entrepreneur
James J. Hill, who built an efficient, financially stable railroad while government-funded
railroads like the Union Pacific suffered from corruption and inefficiency is highlighted among
those who is falsely represented as a robber baron.
Folsom also utilizes economic data to bring attention to the coherence of market
entrepreneurs. He differentiates between the financial prosperity of privately funded market
strategies with the blunders of government-approved projects, displaying how “Congresscoaxing” businessmen often gave precedence to short-term gains in regard to long-term
sustainability. Furthermore, he references modern editorials and business records to portray
public conceptions and economic impacts.
An additional source of support for Folsom’s claims is The American Yawp, which
provides supplementary insight into Gilded Age industrialization. Titled “Life in Industrial
America”, Chapter 18 of The American Yawp details the evolution of monopolies and the federal
government's expanding role in economic supervision. As an unbiased source, The American
Yawp raises awareness of the potential benefits of industrial expansion, writing, “ By late fall
1879, Edison exhibited his system of power generation and electrical light for reporters and
investors. Then he scaled up production. He sold generators to businesses.”5. The American Yawp
also, appraises the despotism of capitalists, hinting at a deficiency in Folsom’s heroic portrayal
of market entrepreneurs. In appraisal of Folsom, the source quotes, “Even admirers conceded
that he [Rockefeller] achieved his wealth through often illegal and usually immoral business
Jacob Betz et al., “Life in Industrial America,” David Hochfelder, ed., in The American Yawp, eds. Joseph Locke
and Ben Wright (Stanford, CA: Stanford University Press, 2018).
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practices. Journalist Ida Tarbell had made waves describing Standard Oil’s long-standing
ruthlessness and predilections for political corruption."6.
According to Folsom, the debate over government intrusion on economic matters
stretches far beyond the Gilded Age and into broad economic policy. Treasury Secretary Andrew
Mellon reflects on taxes and government revenue by saying, "The problem of government is to
fix rates which will bring in a maximum amount of revenue to the Treasury and at the same time
bear not too heavily on the taxpayer or on business enterprises." He believed that 25 percent was
about as much as rich people would pay in taxes before they rushed to tax shelters.7 This notion
is congruent with Folsom’s argument that exorbitant government interference skews free-market
progression and ultimately impedes economic efficiency. By bringing to attention how tax
policies influence economic behavior, Mellon's perspective augments the broad discussion on the
balance between economic freedom and government regulation.
Folsom’s stance on the “robber barons” is compelling in its juxtaposition between
market and political entrepreneurs, boldly disputing the shallow narrative of industrialists as
consistently oppressive. His sources effectively demonstrate how free market competition
benefited the working class, an outlook mostly hidden in popular historical interpretations. On
the contrary, his analysis seems to diminish the broad ramifications of unmonitored capitalism,
especially its social and labor-related impacts. For instance, while James J. Hill did operate an
Jacob Betz et al., “Life in Industrial America,” David Hochfelder, ed., in The American Yawp, eds. Joseph Locke
and Ben Wright (Stanford, CA: Stanford University Press, 2018).
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Burton W. Folsom, The Myth of the Robber Barons (Herndon, VA: Young America’s Foundation, 1991), [110]
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efficient and self-funded railroad company, employees of this industry still faced deplorable
conditions and economic instability.
Moreover, while the foundation of Folsom’s assessment of political entrepreneurship is
sound, he overestimates the ideals of market capitalism without completely addressing events
where market entrepreneurs engaged in non-competitive methods. The American Yawp offers a
more balanced view by reviewing the labor movements and government interventions that arose
in response to corporate overshoot. This proposes that while Folsom’s core is useful, it does not
entirely account for the intricacies of industrial capitalism.
The Myth of the Robber Barons provides an intriguing reconsideration of America’s
industrial trailblazers, distinguishing between entrepreneurs who flourished through competition
and those who ravenously consumed the funds allocated by government subsidization. His
claims are thorough, substantial and backed by historical evidence, however, his depiction of
market entrepreneurs is sometimes heavily romanticized. Through incorporation of
supplementary viewpoints from The American Yawp, it is evident that while Folsom’s critique of
federally backed entrepreneurship is legitimate, his dismissal of more overarching concerns
including those of labor and regulation limits the book’s main effect. Regardless of the strengths
and shortcomings The Myth of The Robber Barons, it remains an integral contribution to the
conversation of economic history and the effect of entrepreneurship in America’s development.