More on this book
Community
Kindle Notes & Highlights
by
T.J. Stiles
Read between
January 11 - February 15, 2012
The culmination of the Erie War, culturally speaking, would come in July 1869, with the publication in the North American Review of one of the most influential essays in American history: “A Chapter of Erie,” by Charles F. Adams Jr.
**
The famous “L'état, c'est moi” of Louis XIV represents Vanderbilt's position in regard to his railroads.
American institutions and values stemmed from a largely rural, agricultural past in which businesses were limited in size and personal in nature. Corporations had arisen as a means of financing large public works without inflating the size and cost of government—yet they were also private property.
Journalists often claimed that railroads “bought” or “owned” state governments, but corrupt officeholders squeezed corporations as much as they obeyed them.
Of all the forms of stress that afflict human beings, one of the worst is loneliness, especially after the loss of a spouse.
Wealth, like mass, exerts a gravitational pull, attracting power, social recognition, and more wealth.
On April 18, 1868, in the midst of the Erie War, Vanderbilt beckoned to a thirty-year-old businessman from Ohio, a pious, long-faced oil refiner with a pinched mouth named John D. Rockefeller. Together with Henry Flagler, he had recently formed the Standard and Excelsior Oil Works in Cleveland.
By 1868, petroleum products were a leading export, much of it shipped from New York.
than doubled in the decade after the Civil War. When Andrew Carnegie left the Pennsylvania Railroad in 1865, he invested in an iron mill, a bridge-building concern, a sleeping-car company, and other businesses that fed his former employer's voracious appetites—and helped turn Pittsburgh into a smoke-shrouded manufacturing center.
Young Rockefeller often attended to his company's interests in New York at an office on Pearl Street, where he received the Commodore's request for a meeting at noon on April 18. He refused to go. “We sent our card by the messenger,” Rockefeller wrote to his wife in Cleveland, “that Van might know where to find our office.” The response showed Rockefeller's confidence; with so many routes to port, he knew the strength of his bargaining position.
The committee duly reported a bill to the assembly to authorize the conversion of the scrip into stock. At the same time, a bill advanced to allow Vanderbilt to consolidate the Central with the Hudson River, to create a unified railroad from St. John's Park in Manhattan to the shores of Lake Erie. This second act would prove even more momentous than the enormous scrip dividend, for it would create a corporation on an unprecedented scale. Long envisioned as a practical matter (Dean Richmond had proposed the same thing years earlier), it promised to end the most troublesome fragmentation of the
...more
efficiency, and reduce costs to shippers and consumers. More broadly, it represented the abandonment of the older, local purposes which had first brought railways into existence, as a truly national network emerged. No longer semipublic bodies, railroads now functioned entirely as business enterprises, operated for maximum profit, bought and sold in the market, managed as business logic would dictate. That logic led inexorably to consolidation. The day of the giant corporation had arrived.
An important moment in American Industry...profit sits at the head of the table. Perhaps this is because American's do not like a strong Federal government.
Between 1860 and 1873, more than ten thousand miles of track were laid in the upper Mississippi states, putting 98.5 percent of all land in Illinois within fifteen miles of a railroad. Farmers in all but the most remote tracts of Minnesota, Wisconsin, Iowa, Missouri, Nebraska, and Kansas gained access to railheads, integrating them into national and international markets.
“so pray do not be deceived by the laudation you receive; more of it belongs to your millions than to you.”
Twain saw a culture grown vulgar, selfish, materialistic, and corrupt, and he didn't like it.
Liberals such as E. L. Godkin (editor of the Nation), Charles Eliot Norton (editor of the North American Review), economist David A. Wells, historian Francis Parkman, and others scorned the poor and uneducated “dangerous classes” as vulnerable to Tweed and other manipulators.
same as new democracies today.
Twain later befriended one of the richest and most ruthless of all industrialists, Andrew Carnegie, in large part because Carnegie aspired to intellectual cultivation and literary accomplishment, and thus distinguished himself from his peers.
libraries
The “best men” saw the corrupt poor and the corrupt robber barons (a term used in June 1868 by Edward Howland, and by Charles F. Adams Jr. in a private 1869 letter) as the twin causes of society's troubles.
conception that have kept employed almost armies of men.” Vanderbilt, the mayor proclaimed, “is a remarkable prototype of that rough-hewn American character which asks no greater original capital than is afforded by that independence of thought… that irresistible resolution in executing great projects, which can carve the way of every humbly born American boy to national eminence.” He was the equivalent of Benjamin Franklin, Andrew Jackson, and Abraham Lincoln.
But the creation of the New York Central & Hudson River stands as a historical landmark, showing us where the era of big business—the Vanderbilt era—well and truly began.
Gould and Fisk secretly purchased some six thousand head of livestock in the West. Then, in late June, they announced that they were cutting the Erie's livestock rates to $1 per car. The move forced the Central to follow suit, as they knew it would. Shortly afterward, Gould and Fisk boasted to the press that they had shipped their livestock over the Central at these
absurd rates, reaping a rich profit at the Commodore's expense. The Central instantly raised rates to $40 per car. It was one more example of why they irritated Vanderbilt so: they did not simply fight, they sought to humiliate him. And they succeeded.
He was in good spirits at seven in the morning on August 10 when he went down to the Congress Spring for a draught of mineral water, along with William and Augustus Schell. There he happened across Jay Gould, seemingly by chance. They sat together on a bench, “but a few feet distant from the statue of Cupid,” noted a reporter, who thought that Gould and the Commodore actually seemed warm with each other. Before they stood again, they had agreed on the basic outlines of a comprehensive settlement—one that William had discussed with Gould the previous evening. The Erie would withdraw its lawsuit
...more
same as Eric Schmidt and Steve Jobs having coffee in Palo Alto about Android
I'll tell you what's the matter—people undertake to do about four times as much business as they can legitimately undertake.… There are a great many worthless railroads started in this country without any means to carry them through. Respectable banking houses in New York, so called, make themselves agents for sale of the bonds of the railroads in question and give a kind of moral guarantee of their genuineness. The bonds soon reach Europe and the markets of their commercial centres, from the character of the endorsers, are soon flooded with them.… When I have some money I buy railroad stock
...more
sounds like today.
The Panic of 1873 started one of the longest depressions in American history—sixty-five straight months of economic contraction. In the next year, half of America's iron mills would close; by 1876, more than half of the railroads would go bankrupt. Unemployment, hunger, and homeless-ness blighted the nation.
“In the winter of 1873–74, cities from Boston to Chicago witnessed massive
demonstrations demanding that authorities ease the ...
This highlight has been truncated due to consecutive passage length restrictions.
Occupy Wall Street. It's interesting that American's do not have violent revolutions. Why?
As Vanderbilt pointed out, railroad overbuilding was an underlying economic problem, and it was exacerbated by Wall Street's craze for railway securities. When the bubble burst, the consequences were felt across the country with devastating suddenness and severity
Like housing securities in 2008
working-class quarters their distinctively fetid quality” Diseases such as cholera swept Five Points, Corlears Hook, and other impoverished neighborhoods, leading to death rates as high as 195 out of every thousand.
20%!
it would culminate in a protest by seven thousand unemployed workers in Tompkins Square in New York on January 13, 1874. The police broke it up with ruthless force. Homeless and hopeless, many of the unemployed took to the road, giving birth to a new creature on the American landscape: the tramp.
Americans move.
the trustees insisted that Vanderbilt himself be responsible for repayment. Even now, after decades of economic growth and increasing financial sophistication, this one man towered above Wall Street as America's financial prince. For Vanderbilt, it was a test of his faith in his ability to save the Lake Shore. He agreed, putting up his personal Harlem shares as collateral for the railroad's notes.
It was an accomplishment that said everything about Vanderbilt's negotiating skills and iron nerve. Impromptu newspaper interviews with the Commodore, comments by those who dealt with him, and the minutes of board meetings show him in full command as others nearly broke down in fear.
Actually it was about not being fully leveraged when a big storm hits. Cash became King and he had lots of it. That in turn came from having a defensible advantage in operations.
know anything about it. Haven't paid any attention to it.” The reporter explained that the movement—formally called the Patrons of Husbandry, which sprouted thousands of lodges, or “granges,” in the Mississippi Valley in 1873—had arisen against the railroads. “They complain generally of high and exacting tariffs, too much special railroad legislation, and of various privileges enjoyed by railroads and used for purposes of extorting unfair prices from the farmers.” “They do, eh?” the Commodore said, as he tapped the ashes loose from his cigar. “Well, as to special legislation, I
agree with them. If they are in favor of making only general railroad laws, I'll be willing to back 'em. Further than that, I don't care what the devil they do. The Central can hold its own.”
because the farvers didn't have other options, the profits went to the railroad. The railroad charged just enough to keep them alive.
In his formative years, competition had been the stuff of individualism, the egalitarian battle cry. The Jacksonians had seen strong government as the bodyguard of the “aristocrats,” as the creator of “special privileges” for the wealthy, best seen in state-chartered corporations. But two great developments had made antebellum politics obsolete: the rise of the railroads, and the Civil War. The railroads posed a double, if not triple, conundrum. They could exist only as corporations, since they were too capital intensive, too long-lived, to be personal proprietorships or partnerships. As a
...more
Monopolized will be the key word when the Fed government addresses this power with Standard Oil
Everything and everyone moved at prices set by the railroads—“a frightening life-or-death power,” as historian Irwin Unger wrote.
Seemingly omnipotent to the general public, the railroads themselves felt helpless to control rates. As discussed earlier, it was in their interest to take traffic below cost rather than lose it, since such a large percentage of their operating costs remained constant no matter how many trains they ran. This led to ruinous rate wars over “competing points”—cities served by more than one line. Railroads offered rebates to big shippers to attract business, and cut through rates well below those paid on local freight. But what the corporations saw as desperate discounting, western farmers called
...more
The war created a new paradigm in the American mind: the notion that an active government could serve as a counterweight to the railroads and other large corporations.
Vanderbilt's laissez-faire beliefs had morphed from radical to conservative without him even noticing.
Over the coming decades, J. P. Morgan would make his mark on history by taming competition through financial coordination of rival companies.
Agrarian radicals secured both “Granger laws” in western states that regulated railroad rates and the Bland-Allison silver act of 1878 (which expanded the money supply by adding silver). The Interstate Commerce Commission came in 1887, and the Sherman Antitrust Act in 1890.
Still more subtle, and perhaps more profound, was a broad cultural shift as big business infused American life. An institutional, bureaucratic, managed quality entered into daily existence—what scholar Alan Trachtenberg calls the “incorporation of America,” a cultural dimension of “managerial revolution” or “visible hand” that business historian Alfred D. Chandler Jr. identified. More and more, the national impinged upon the local, the institutional upon the individual, the industrial upon the artisanal, the mechanical upon the natural. Even time turned to a corporate beat. Time had always
...more
Vanderbilt “detested details,” and relished his leisure hours as he passed into his ninth decade.
Phillips joked that there was an easy way to get rid of his excess money. “No, there ain't,” Vanderbilt replied, “for what you have got isn't worth anything unless you have got the power; and if you give away the surplus you give away the control.” Vanderbilt looked beyond his son to build a foundation for the dynasty's third generation, by assigning tens of thousands of Harlem and Central shares to William's four sons, Cornelius, William K., George W, and Frederick W. He also brought William K. onto the Central board in place of the disgraced James Banker.
it boasted twice the passenger traffic of the Erie and 81 percent more than the Pennsylvania; and, though the Pennsylvania carried 10 percent more freight, the Central earned a significantly larger profit per ton, per mile.95
few nineteenth-century businessmen equaled Vanderbilt in his impact on American history. A handful of rival candidates come to mind—-John Jacob Astor, John D. Rockefeller Sr., Andrew Carnegie, J. P. Morgan, perhaps Jay Gould and Thomas A. Scott—but arguably none proved to be so influential at so fundamental a level over a period so formative or so long.
With his role in Gibbons v. Ogden, he helped to transform the Constitution by tearing down state-erected barriers to trade and shattering the remnants of the eighteenth-century culture of deference.
he delivered the decisive blow against William Walker, one of the most dangerous international criminals of the nineteenth century, in the face of Washington's inaction and hostility.
Vanderbilt played a significant role in the Union war effort—one
Money transformed from gold coin to gold-backed banknotes to legal-tender slips of paper and ledger entries of bank accounts. Property migrated from physical objects to the shares of partnerships to par-value stock to securities that fluctuated according to the market, that could be increased in number at will. Like a ghost, the business enterprise departed the body of the individual proprietor and became a being in itself, a corporation with its own identity, its own character, its own personhood.
