The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan Invented the American Supereconomy

The organization of the St. Louis Bridge project offers a fine example of Carnegie’s methods. Railroad bridges were entrepreneurial ventures, usually financed by bond sales, which were repaid from railroad leases. The St. Louis Bridge Co.—primary owner Andrew Carnegie, silent partners Tom Scott and J. Edgar Thomson—clinched the St. Louis contract i

As houses grew in size, it became normal to take in boarders, even in middle-class areas; boarding, indeed, became the standard housing for single people in cities, and they were often treated almost as family members. Farmhouses followed similar designs—the farmer complaining that his house was “bigger than the barn” was a stock joke.

New York farmers and grain merchants were the big losers, but the chances of Congress requiring the roads to raise rates from the west were approximately zero.* What farmers did care about, on the other hand, was rate volatility, since the perennial price wars frequently caused a violent seesawing of tariffs. The Eastern Traffic Association, the la

The rollup was also managed with great stealth. An express condition of the first round of acquisitions is that they were to be kept secret. All of the acquired companies retained their management teams and their names, and, at least nominally, their own stock. Each of them then pursued a regional acquisition strategy in its own name and with its o

With no way to cover their shorts, firms up and down Wall Street faced bankruptcy, as did the banks who had been financing their positions; Harriman had no choice but to back off the fight, so Morgan and Schiff could unwind their positions and forestall a crash.

It could take weeks, or even months, to complete a transaction, so the merchant was exposed to changes in the gold/greenback exchange rate during that time. If gold fell (or the greenback rose), the merchant’s gold proceeds might not cover his greenback debts. The New York Gold Exchange was created to help merchants protect against that risk. Using

Carnegie jumped to his feet to claim the same share as Cambria, since the ET was the largest and most efficient plant in the industry. Otherwise, he announced, “I shall withdraw from [the pool] and undersell you all in the market—and make good money doing it.” Carnegie had bought shares in all the other companies—all but the ET were publicly traded

Still, large-scale immigration—5.2 million immigrants in the 1880s alone, on an 1880 population base of 50 million—exerted constant downward pressure on entry-level wages. (But upward mobility was quite high among some immigrant groups. German immigrants in Poughkeepsie moved up the occupational ladder more than twice as fast as native-born workers

Bid rigging produced extraordinary margins: in the late 1890s the companies collected $345–420 per ton of armor (a compromise after the Russia–Bethlehem embarrassment) against production costs of perhaps $150. With that kind of money at stake, what patriot could pass up the chance to defraud his fellow citizens?

All the lines had singled out the boom in cattle transport as a superior earnings opportunity, and most were making large investments in stock cars and stockyards. Swift was not a wealthy man, but he scraped up the money for ten cars and found a Canadian railroad willing to carry them. They were an instant success, allowing large markdowns over loc