What social issue was raised by the philanthropic activities of many American business leaders during the Gilded Age?

A robber baron is one of America’s successful industrialists during the 19th century, which was also known as the Gilded Age. A robber baron is a term that is also sometimes attributed to any successful businessperson whose practices are considered unethical or unscrupulous. This behavior can include employee or environmental abuse, stock market manipulation, or deliberately restricting output to charge higher prices.

• A robber baron is a term used frequently in the 19th century during America's Gilded Age to describe successful industrialists whose business practices were often considered ruthless or unethical.
• Included in the list of so-called robber barons are Andrew Carnegie, Cornelius Vanderbilt, and John D. Rockefeller.
• Robber barons were accused of being monopolists who earned profits by intentionally restricting the production of goods and then raising prices.
• On the other hand, some of the most famous of these tycoons became noted philanthropists later in life, giving away hundreds of millions of dollars to a variety of worthy causes.

The first known uses of the phrase “robber baron” described feudal lords in medieval Europe who robbed travelers, often merchant ships along the Rhine River as they passed nearby. The term appeared in American newspapers in 1859. Its modern use stems from Matthew Josephson’s The Robber Barons.

Robber barons were widely despised and considered rapacious monopolists during their lifetimes. However, later biographies and historical reviews about the Gilded Age’s American robber barons cast a more complicated and favorable light.

A chief complaint against the 19th-century capitalists was that they were monopolists. Fear over the robber barons and their monopoly practices increased public support for the Sherman Antitrust Act of 1890.

Economic theory says a monopolist earns premium profits by restricting output and raising prices. This only occurs after the monopolist prices out or legally restricts any competitor firms in the industry. However, there is no historical evidence that natural monopolies formed before the Sherman Antitrust Act.

Many so-called robber barons—James J. Hill, Andrew Carnegie, Cornelius Vanderbilt, and John D. Rockefeller—became wealthy entrepreneurs through product innovation and business efficiency. Of the goods and services they provided, supply grew, and prices fell rapidly, greatly boosting Americans’ standards of living. This is the opposite of monopolistic behavior.

Andrew Carnegie gave over $350 million to charity during his lifetime, including over $56 million to build 2,509 public libraries around the world.

Among common criticisms of the early robber barons included poor working conditions for employees, selfishness, and greed. Some robber barons—including Robert Fulton, Edward K. Collins, and Leland Stanford—earned their wealth through political entrepreneurship.

Many wealthy railroad tycoons during the 1800s received privileged access and financing from the government via extensive use of lobbyists. They received monopolistic special licenses, per-mile subsidies, huge land grants, and low-interest loans.

Working conditions in 19th century America were challenging, to say the least. While robber barons took advantage of their workers, they sometimes offered better working conditions than the norm of the day. Rockefeller and Ford, for example, paid higher-than-average wages, including bonuses for innovation or exceptional production. Managers often received long vacations at full pay.

Some tycoons rank among the most noted philanthropists of all time. Rockefeller donated around 10% of every paycheck he ever earned. He gave almost $550 million to charity and championed biomedical research, public sanitation, medical training, and educational opportunities for disadvantaged minorities.

Railroad tycoon James J. Hill publicized and provided free education about crop diversification, along with free seed grain, cattle, and wood to local communities. He would transport immigrants at reduced rates if they promised to farm near his railroads.

There was a time in U.S. history when the business magnates and titans of industry boasted more wealth than even today’s top technology innovators and visionaries.

During America’s Gilded Age — which spanned most of the latter half of the 19th century, from around 1870 to 1900 — the inflation-adjusted wealth and impact of America’s most towering figures far overshadowed what we see today.

The wealth of people like John D. Rockefeller, Cornelius Vanderbilt, Henry Ford, and Andrew Carnegie would by today’s standards be measured in the hundreds of billions of dollars — far more than tech giants like Elon Musk, Bill Gates, Mark Zuckerberg, and even Jeff Bezos, the wealthiest individual in the world as of 2019.

Wealth so vast can often highlight the financial inequality of an era. It’s this idea of grandeur in the face of unresolved social concerns that led Mark Twain to coin the phrase “Gilded Age” in his 1873 novel The Gilded Age: A Tale of Today. The title suggested that the thin veneer of wealth for the elite masked broader issues for many in the lower and middle classes.

But the progress made in the United States during the Gilded Age can’t be denied. As part of the Second Industrial Revolution, the country underwent an impressive economic expansion — led by the day’s larger-than-life figures of wealth and power. Much of this growth was courtesy of railroads — which now spanned from coast to coast — as well as factories, steel, and the coal mining industry.

Big business boomed, with technology such as typewriters, cash registers, and adding machines helping to transform how people worked. And the economic explosion included not only industrial growth, but also a growth in agricultural technology such as mechanical reapers.

In a time of such great expansion and fewer regulations surrounding wealth and business practices, circumstances were perfect for the rise of a class of extremely wealthy individuals who made up a very small percentage of society. They had the power and means to create opportunities and jobs for the many, though with less social prioritization on workers’ rights, issues like discrimination, exploitation, and low wages marked the era.

Still, it’s impossible to overstate the impact these individuals had on America’s development. With technology booming and immigrants flocking to the United States seeking better opportunities for themselves and their families, they left their mark on the United States — and on history.

Captains of Industry and Robber Barons

The wealthy elite of the late 19th century consisted of industrialists who amassed their fortunes as so-called robber barons and captains of industry. Both can be defined as business tycoons, but there was a significant difference in the way they made their fortunes.

The term “robber baron” dates back to the Middle Ages and carries a negative connotation. Robber barons typically employed ethically questionable methods to eliminate their competition and develop a monopoly in their industry. Often, they had little empathy for workers.

Captains of industry, however, were often philanthropists. They made their wealth — and used it — in a way that would benefit society, such as providing more jobs or increasing productivity.

John D. Rockefeller

Born in 1837, John D. Rockefeller became one of the richest men in the world as the founder of the Standard Oil Company. In 2018 dollars, Rockefeller’s net worth is said to eclipse $400 billion — nearly three times the 2018 estimated net worth of Jeff Bezos, the founder of Amazon.com and the wealthiest individual in the world.

Standard Oil dominated the oil industry, controlling roughly 90% of the refineries and pipelines in the United States by the early part of the 1880s.

While he has faced some criticism historically for how he accumulated his wealth, Rockefeller’s charitable efforts paint him as a philanthropic captain of industry. Over the course of his life, his donations to charitable causes exceeded $500 million (unadjusted for inflation).

Andrew Carnegie

Andrew Carnegie served as a great example of an American rags-to-riches story. Born to a poor Scottish family, he and his parents immigrated to the U.S. when he was 13. He built his fortune by investing in the steel industry and became the owner of Carnegie Steel Company, which by 1889 was the largest steel company in the world.

Despite some criticism of how some workers at Carnegie Steel were treated, Carnegie himself was extremely active in terms of philanthropy. In his efforts to contribute to society, he established the Carnegie Endowment for International Peace, the New York Public Library, and a college that would become part of Carnegie Mellon University.

He also wrote “The Gospel of Wealth,” an article that argued that the wealthy have a responsibility to contribute to the greater good of society.

J.P. Morgan

John Pierpont Morgan was a financier from a wealthy family and is considered by many to have been among the robber barons during America’s Gilded Age.

At face value, Morgan contributed greatly to American industry. He invested in Thomas Edison and the Edison Electricity Company; helped to create General Electric and International Harvester; formed J.P. Morgan & Company; and gained control of half of the country’s railroad mileage. He also created the first billion-dollar company, U.S. Steel. At one point in his life, he was a board member of as many as 48 corporations.

However, Morgan engaged in some unethical and anticompetitive practices to ward off competition. For example, he was believed to head a money trust that controlled the banking industry and was commonly considered a figurehead of Wall Street. He also created a monopoly by slashing the workforce and their pay to maximize profits while eliminating the competition. Workers’ wages were often as low as a dollar a day or less, and conditions for employees were poor, with increased fatalities even as wages grew.

When confronted with the possibility of regulations that could threaten his bottom line, he and other robber barons of the time contributed money to ensure that a business-friendly presidential candidate, William McKinley, was elected in 1896.

Despite the numerous negatives associated with how Morgan built his wealth, some of his actions did benefit the United States and society. For example, his wealth was so vast that he was able to help bail out the federal government twice during an economic crisis, first in 1895 and again in 1907.

Henry Ford

Automaker Henry Ford was a captain of industry who is considered to have treated his workers well. He believed that well-paid workers would be happier and more efficient. For that reason, he instituted a $5-a-day pay rate, which was twice as much as other auto manufacturers paid.

In addition, during a time when workers were required to work 10 hours a day, six days a week, Ford scheduled his workers for eight-hour days, five days a week.

Ford was known to be generous with his wealth in terms of charitable contributions. He donated personal funds to organizations that he created, such as the Henry Ford Hospital for the working poor who could afford to pay only some of the cost of their medical care. Over the course of his life, he donated approximately $14 million to this institution.

Other organizations created by Ford included the 80-acre Valley Farm for orphaned boys; a school for African American children in Georgia; and a Detroit trade school. He also paid for work camps for boys during the Great Depression.

In addition to his charitable efforts, Ford was a known pacifist. He was part of a peace ship to Europe that hoped to put an end to World War I.