Contrary to how it has been viewed for years
Burton Folsom's work offers a completely different perspective on American history. Based on their business strategies—political and market—he divides the 1900s' businesspeople into two different groups.
Actions of Political Industrialists
While the actions of political industrialists are unacceptable, the traits of market businesspeople are desirable. In different ways, both organizations helped the US attain economic greatness. The author draws important lessons from American history that readers can apply to their everyday lives.
The Contentious "Robber Barons"
The author discusses the contentious "robber barons" and their roles in society; who did not steal but acquired wealth selling quality merchandises to the 19th century’s consumers cheaply. As a result of the excellent deals they offered, a majority of the population were enticed to work with them. The book inspires readers as it tells specific stories of outstanding business people that dedicated themselves, calculated smart risks and endured through tough times without backing out. Thus, it encourages people in commerce to develop firm values that are necessary to steer one into building a business empire. It also highlights the political entrepreneurs who did not put legitimate efforts to establish their ventures. Instead, they relied on the help of the government to make their sales. Despite having that support, they could not survive since their focus was misinformed. Political entrepreneurs gave little consideration to the needs of their target niche.
An Extraordinary Book
The book is extraordinary as it endeavors to applaud the phenomenal achievements of entrepreneurs in a society that is quick to do the contrary. The book shows how business people utilized tools in their control to get a market advantage and create a favorable environment. They used technology to produce quality products at reasonably low prices. A standard feature for successful entrepreneurs in the book is their style of management that is hands-on. Notably, the business moguls made accurate market predictions and gained from significant economies of scale fueled by low prices. They built on the unique aspects that include gaining customers’ confidence, which bred loyalty to products. A balance of quality assurance and low prices characterized prosperous ventures.
The Birth of a New Breed of Entrepreneurs
The years preceding the 1900s were characterized by businesses that had adopted a fixed system since few or no options existed. With time, the birth of a new breed of entrepreneurs was witnessed, as recounted by the author. Old business systems ran obsolete for failure to keep up with competition brought in by innovative entrepreneurs. Interest groups that influenced government attempted to prevent a free market from taking over the economy. However, the readings show that the political entrepreneurs eventually succumbed to the pressures of eliminating monopolies. Despite challenges experienced, market forces did not relent. Resilient determination possessed by market entrepreneurs notably superseded the greed of selfish political businesses.
Cornelius Vanderbilt's Business Strategy
Readers get to know about Cornelius Vanderbilt’s business strategy that assisted him to defeat Fulton NNY/NJ steamship-transport that had enjoyed a business monopoly for a while. His decision to offer similar services at reduced prices, purchase larger ships with enhanced speed, and build a reputation of punctuality made the venture successful. His cruise had “a beam engine which was more powerful than Collin’s traditional side-lever engines” (Folsom pg. 9).
Customers automatically opted for cheaper services considering it was more time efficient. Also, the entrepreneur developed a more comprehensive profit margin when he introduced a large ship carrying more people with a constant amount of fuel. Therefore, he factored in both the needs of the customers and his own in decision making. Cornelius was not only smart in business, but he also took up a role in social responsibility. For instance, his willingness to have the Confederate submarine sunk during a civil war in the United States portrays a selfless businessman.
Andrew Carnegie's Success Strategy
The author writes about Andrew Carnegie whose success strategy was focused on mitigating on the costs incurred in his corporate activities. Notably, he utilized the steel shavings that a rival company threw away. Consequently, Andrew’s firm increased its profit margin by lowering the rate of overheads incurred in production. That way, the business was able to take part in charitable activities in the community that typically builds loyalty in the firm’s brand. Low production costs also enabled also to price its goods lower than that of competitors. On the contrary, more expenses incurred by rivals made it impossible for them to rate products lower than Carnegie’s. Competing businesses had the option of improving their production technologies to mitigate on costs, or be forced out of business. The constant strive to offer the best quality of services cheaply fueled the drive for efficiency.
James J. Hill's Innovation
The audience also learns about James J. Hill who managed to build the "Great Northern Road without government interference," unlike his competitors (Folsom pg. 30). Unable to catch up with James, other entrepreneurs with political influence pushed for a monopoly arrangement that typically discourages fair competition among industry players. Others used federal aid and built uneconomical railroads. Hill conducted a personal research on the shortest route using a horse and constructed a road based on that.
His innovation helped him discover that using coal as the fuel was cheaper than the fuel utilized by competitors. The failure to catch up phased out Hill’s competitors from the industry. Readers are exposed to Hill’s extraordinary determination towards innovation that a majority of the players in the rail industry could not keep up with. That is regardless of some competitors having access to government support and funds.
John D. Rockefeller's Creativity
John D. Rockefeller’s input is also featured as readers get to learn about how his creativity assisted in better lives. He came up with a Standard Oil that helped to light up homes at night. Therefore, activities that had previously been limited to daylight would also be done at night. In addition to innovation, the writer highlights the importance of an entrepreneur creating efficiency in his productions. He points out Rockefeller’s initiative to reduce the number of drops of solder and have the oil sealed. Notably, that move served to give value by preventing possible contamination of the oil. The price of the bottle remained the same for affordability, and the reduced oil drop unit would cater for the cost incurred in sealing services. The author paints the picture of a smart businessperson that makes informed decisions that consider the needs of all parties.
Andrew Mellon's Contribution
Andrew Mellon’s contribution in recreating a favorable business environment for entrepreneurs is also featured in the book. As a dealer in aluminum and oil, his position as the Secretary of Treasury served to improve entrepreneurs’ welfare. His advocacy for a decrease in the income tax levied on all corporate groups stimulated economic growth in the 1920s. According to the writer, the revenue recorded at the treasury grew significantly after the new tax cuts were affected. The author shows the positive effects of cognisant decision making. For instance, all stakeholders get an equal advantage in the long-run.
Contrast of Political Entrepreneurs and Market Industrialists
The book notably paints the business environment in the 1900s that saw the economy in the United States experienced tremendous growth. Unlike political entrepreneurs, the market industrialists positively helped to build America’s steel, railroads, and oil industries globally. They relied on the gaps present in the market, gained an advantage and established their firms on the needs and preferences of the American people. On the other hand, political businesspeople abused taxpayers’ money and influence to gain selfishly and interfere with the commercial activities of the market entrepreneurs. The author outlines the contrast in the affairs of the two groups.
Disputing the Textbook's Outlook
The author disputes the textbook’s outlook of the barons and also the rise of the United States in the late 1800s. He considers that as a twisted interpretation of the American history since it does not criticize political entrepreneurs who caused more harm. Business success is defined by the ability to save the amount of money that consumers pay for a good or service and also reduce the time they spend executing tasks. Therefore, it is absurd that remarkable entrepreneurs were previously termed as robber barons.
The Book That Revolutionizes Views
The book revolutionizes the view of the businesspeople of the 18th and 19th centuries and their contributions to America’s economic growth. It views the individuals that were previously considered robber barons for what they correctly are, from an economic perspective. Each chapter in Folsom’s writings recounts the contribution of a businessman to the commercial glory of the United States. The stories in the book are short, yet detailed.
Work cited
Folsom, Burton W. The Myth of the Robber Barons: A New Look at the Rise of Big Business in America. Young Americas Foundation, 1991.
