The Myth of the Robber Barons is more about politics then what we were taught. By blaming free market capitalism, they shielded the real Robber Barons who were truly harming the middle and lower classes, from responsibility.
Wealth is unlimited, thus, when the rich make more money, someone else doesn’t necessarily have to lose money. It doesn’t have to be a win/lose situation. So, when economists say this, what they are saying is that wealth is based on productivity. The more an individual and society produces the more prosperous that individual and society will be. In 1900, The U.S. was the wealthiest per capita nation in the world and more importantly we had the wealthiest middle class in the world. Why? We had the most productive middle class in the world and the wealthy were also some of the wealthiest in the world. Poor people and even the rich, from literally all over the world came here to try to get a piece of that prosperity. Understand that in 1913 the middle class paid no income taxes on their labor and government was small as a percentage of gross Domestic Product (GDP). The first Federal individual Income tax was the Revenue Tax Act of 1913 and it was only on the very wealthy.
So, When Were Taxes Implemented?
Most of the taxes we pay today have been around for less than half of our country’s history. One of the oldest is the estate tax, which was enacted in 1797 but was then repealed and reinstituted over the years, often in response to the need to finance wars. The modern estate tax was implemented in 1916 and the gift tax came about in 1924. The federal income tax was enacted in 1913, and corporate income taxes were enacted slightly earlier, in 1909. A Brief History on Taxes in the U.S. This History of Taxation gives us a pretty good reference as to when some of the Federal and State taxes we have today were placed into effect.
It’s taxation and regulation that makes us all less prosperous and the politician have been trying to cover this up for as long as government has existed.
So, were there really any Robber Barons? The answer is Yes there were, but it’s the political entrepreneurs, not the free market entrepreneurs that hurt a society. Those that manipulate the government to either gain a direct benefit or discourage competition by others. Much of the regulation written today is not to actually regulate business but to regulate competition and the government is very clever at providing it, so that it is not easily observed or understood.
The best examples of political entrepreneurs are the government contractors like those in the military industrial complex. But almost every industry has them. Big sugar and Big Tobacco are highly subsidized today as is big pharma. The government may give benefits to them in diffident ways, but our system is full of these manipulations by the government and big business in collusion.
The first major subsidies to industry were the direct Federal subsidies to some of the railroad companies as they were expanding westward. The Republican led Congress started placing high tariffs on southern farm goods in the early 1900s, prior to the Civil War to subsidize the expansion even though some railroad companies were successfully doing it without subsidies. Those companies who used political influence to garner these subsidies are a good example of political entrepreneurs. Abraham Lincoln became famous partly because, he as an Attorney represented these same railroad interests, even having his own railcar to travel on. He and his cronies also land speculated along the routes, knowing in advance where the lines were going to be established. This was discovered purely by accident by a woman writing a book on the history of the railroads, finding the contracts and bill of sales with Lincoln’s name and signatures on them. “In 1859 Abraham Lincoln and a young railroad surveyor, Grenville Dodge, both purchased investment property along the Platte River Valley, speculating that the transcontinental eastern terminus would win government approval at that location. On November 4, 1864, the now President Abraham Lincoln issued his executive approval to Thomas Durant, allowing the Union Pacific Railroad to begin their eastern terminus at Omaha, through the same location where Lincoln and Dodge had cleverly invested in land five years earlier.” The Capitalist Who Supported Lincoln What this shows, capitalists are using socialism and government subsidies and/or other unethical practices to profit. Can we even call them capitalists? They are really socialists in capitalist clothing.
As economist Thomas DiLorenzo shows in his books The Real Lincoln and Lincoln Unmasked, good old honest Abe was not so honest and the wealthy special interests have gone to considerable lengths to cover it up, as he also shows in his book.
Below is the summary of a book by Burton W. Folsom, who is a professor of history at Hillsdale College in Michigan and senior historian at the Foundation for Economic Education in Irvington, New York. He is a regular columnist for The Freeman and has written articles for The Wall Street Journal and American Spectator, among other publications.
The Myth of the Robber Barons: A New Look at the Rise of Big Business in America
This is the writeup on the book on the Amazon website.
“The Myth of the Robber Barons describes the role of key entrepreneurs in the economic growth of the United States from 1850 to 1910. The entrepreneurs studied are Cornelius Vanderbilt, John D. Rockefeller, James J. Hill, Andrew Mellon, Charles Schwab, and the Scranton family. Most historians argue that these men, and others like them, were Robber Barons. The story, however, is more complicated. The author, Burton Folsom, divides the entrepreneurs into two groups market entrepreneurs and political entrepreneurs. The market entrepreneurs, such as Hill, Vanderbilt, and Rockefeller, succeeded by producing a quality product at a competitive price. The political entrepreneurs such as Edward Collins in steamships and in railroads the leaders of the Union Pacific Railroad were men who used the power of government to succeed. They tried to gain subsidies, or in some way use government to stop competitors. The market entrepreneurs helped lead to the rise of the U. S. as a major economic power. By 1910, the U. S. dominated the world in oil, steel, and railroads led by Rockefeller, Schwab (and Carnegie), and Hill. The political entrepreneurs, by contrast, were a drain on the taxpayers and a thorn in the side of the market entrepreneurs. Interestingly, the political entrepreneurs often failed without help from government they could not produce competitive products. The author describes this clash of the market entrepreneurs and the political entrepreneurs. In the Mellon chapter, the author describes how Andrew Mellon an entrepreneur in oil and aluminum became Secretary of Treasury under Coolidge. In office, Mellon was the first American to practice supply-side economics. He supported cuts on income tax rates for all groups. The rate cut on the wealthiest Americans, from 73 percent to 25 percent, freed up investment capital and led to American economic growth during the 1920s. Also, the amount of revenue into the federal treasury increased sharply after-tax rates were cut. The Myth of the Robber Barons has separate chapters on Vanderbilt, Hill, Schwab, Mellon, and the Scrantons. The author also has a conclusion, in which he looks at the textbook bias on the subject of Robber Barons and the rise of the U. S. in the late 1800s. This chapter explores three leading college texts in U. S. history and shows how they misread American history and disparage market entrepreneurs instead of the political entrepreneurs. This book is in its seventh edition, and is widely adopted in college and high school classrooms across the U. S.”
This is quite incriminating to our educational system as an additional source of historical lies and coverups to hide the political entrepreneurs from being exposed. If you think this kind of corruption only started in the 20th century, you obviously aren’t reading the history now being uncovered nor did you know even the publishing companies were all highly controlled for the most part by wealthy special interests, up until recently. The internet and now the ease of self-publishing is allowing authors and historians to exchange information like no other time in history, at very low costs with even the books themselves are getting cheaper and cheaper to buy.
Today we are in a proverbial war of words and the truth will eventually prevail, but it will not be easy to get the true voices heard. The amount of money being confiscated from the American people is almost beyond comprehension though the plethora of taxes and redistribution of wealth polices, so there is a great deal of motivation to cover this up. The true Robber Barons, socialists in capitalist cloths are still at it under the guise of the public good. We have lost the vision of our founding fathers of limited government and the protection of our rights and property. Our government simply takes what they want when they want it, and there is literally no recourse against their actions. Political entrepreneurs, as Burton Folsom brilliantly describes are destroying our once great nation, perhaps now unrepairable.