The Myth of the Robber Barons

by Burt Folsom

  54Hitchcock, History of Scranton, 2:53-55, 30-32, 5-7, 188-91; Scranton City Directory, 1920, 1921.

  Notes to Chapter Four

  Charles Schwab and the Steel Industry

  1Charles M. Schwab, Succeeding With What You Have (New York: Century Co., 1917), 39-41.

  2Robert Hessen, Steel Titan: The Life of Charles M. Schwab (New York: Oxford University Press, 1975), 4-12 (quotations on pages 10 and 11).

  3Ibid., 13-16, 21; Eugene G. Grace, Charles M. Schwab (n. p., 1947), 6.

  4Harold Livesay, Andrew Carnegie (Boston: Little, Brown and Co., 1975), 101, 165-66.

  5Hessen, Schwab, 70; Joseph Frazier Wall, Andrew Carnegie (New York: Oxford University Press, 1970), 665.

  6Wall, Carnegie, 532-33; Livesay, Carnegie, 117-18.

  7Hessen, Schwab, 28-30, 41-42, 60.

  8Ibid., 31, 38, 74.

  9Wall, Carnegie, 330-38; Livesay, Carnegie, 101.

  10Livesay, Carnegie, 103.

  11Wall, Carnegie, 329-32, 337, 341-42.

  12Livesay, Carnegie, 150, 165-66; Hessen, Schwab, 69-70.

  13Livesay, Carnegie, 187-88.

  14Hessen, Schwab, 123.

  15lbid., 125-27 (quotation on page 127). The Finance Committee at U. S. Steel rejected Schwab's request for more ore land. I assume that Gary approved of this decision.

  16Ibid., 121, 133-40, 299. l7Ibid.t 119-22, 138.

  l8Ibid., 147-62.

  l9Raymond Walters, Bethlehem Lang Ago and Today (Bethlehem: Carey Printing Co., 1923), 64; William J. Heller, ed., History of Northampton County, Pennsylvania, and the Grand Valley of the Lehigh, 3 vols. (Boston: American Historical Society, 1920), 1:44; Joseph M. Levering, A History of Bethlehem,

  Pennsylvania, 1741-1892, with Some Account of Its Founders and their Early Activity in America (Bethlehem: Times Publishing Co., 1903), 722-24; Alfred Mathews and Austin N. Hungerford, History of the Counties of Lehigh and Carbon, in the Commonwealth of Pennsylvania (Philadelphia: Everts and Richards, 1884), 690, 704-05; John W. Jordan, ed., Encyclopedia of PennsylvaniaBiography, 32 vols. (New York: Lewis Historical Publishing Co., 1914-1967), 6:2139-42.

  20John Fritz, The Autobiography of John Fritz (New York: J. Wiley and Sons, 1912), 173-74; Hessen, Schwab, 164-66.

  21Hessen, Schwab, 165-66.

  22Ibid., 167-68; Walters, Bethlehem, 88.

  23Hessen, Schwab, 170-72, 177-78, 252; Walters, Bethlehem, 88.

  24Hessen, Schwab, 169.

  25Ibid., 171.

  26Ibid., 185.

  27Ibid., 226-27, 270, 272, 276.

  28Ibid., 172-73.

  29Ibidd., 173-75, 182-84. 30Ibid., 186-87, 267-69.

  3llbid., 230, 265-66; New York Times, April 14, 1915; Heller, History of Northampton County, 276; and Robert Hessen, "Charles M. Schwab, President of United States Steel, 1901-1904," Pennsylvania Magazine of History and Biography 96 (April 1972), 203.

  32Hessen, Schwab, 236-44 (quotation on page 236). 33Ibid., 240-44 (quotation on page 244).

  34My understanding of the armor-plate business in general, and how it affected Bethlehem Steel in particular, has been greatly enriched by reading Hessen, Schwab, 42-58, 217-26, 307-10. Reading Hessen has led me to several key sources on the armor-plate issue.

  35Andrew Carnegie to Josephus Daniels, December 9, 1913, Box 497, Josephus Daniels papers, Library of Congress. See also Robert Seager, "Ten Years Before Mahan: The Unofficial Case for the New Navy, 1880-1890," Mississippi Valley Historical Review,60 (December 1953), 491-512.

  36For the point of view of the steel companies, see Eugene G. Grace to Josephus Daniels, April 19,1913, Box 497, Daniels papers; Andrew Carnegie to Daniels, December 9,1913, in Ibid.; Statements by Senators Boies Penrose and Warren G. Harding in the Congressional Record in Ibid.; New York Herald, January 28, 1911, in Ibid. For the point of view of the critics of the steel companies, see Benjamin Tillman to Daniels, May 22,1913, in Ibid.; T. B. H.

  Stenhouse to Daniels, September 24, 1913, in Ibid.; Statement by Representative Clyde Tavenner in Congressional Record, in Ibid.

  See also Melvin I. Urofsky, Big Steel and the Wilson Administration (Columbus, Ohio: Ohio State University Press, 1969), 117-51; Hessen, Schwab, 42-58, 216-26; Josephus Daniels, The Wilson Era: Years of Peace, 1910-1917 (Chapel Hill: University of North Carolina Press, 1944), 351-63; Francis B. Simkins, Pitchfork Ben Tillman: South Carolinian (Baton Rouge: Louisiana State University Press, 1967), 511-13.

  37Benjamin Tillman to Josephus Daniels, May 22, 1913; Josephus Daniels' Response to Senate Resolution, July 12, 1913; Andrew Carnegie to Josephus Daniels, December 9, 1913, all in Box 497, Daniels papers. See also Urofsky, Big Steel, 136, 142-43.

  381906, for example, the government took bids for 8000 tons of armor plate. The Carnegie division of U. S. Steel bid $370 per ton, Bethlehem Steel bid $381, and Midvale Steel bid $346. The Navy department divided the contract among all three after U. S. Steel and Bethlehem Steel agreed to Midvale's $346 per ton price. The next year all three companies submitted identical bids of $420 per ton. These $420 per ton bids continued until 1912, and the armor contracts were always divided among all three companies. See extracts from the Report of Hon. Josephus Daniels, Secretary of the Navy, December 1, 1913; Armor Contracts as Awarded for Increase of Navy to Date, January 26, 1915; Eugene Grace to Josephus Daniels, April 19, 1913; Claude Swanson to Woodrow Wilson, March 21, 1916, all in Josephus Daniels papers, Boxes 497 and 498, Library of Congress.

  39Benjamin Tillman to Josephus Daniels, May 22, 1913; Eugene Grace to Daniels, April 19, 1913; Extracts from the Report of Hon. Josephus Daniels, Secretary of the Navy, December 1, 1913; Claude Swanson to Woodrow Wilson, March 21, 1916, in Josephus Daniels papers, Boxes 497 and 498. See also Benjamin Tillman to Woodrow Wilson, January 5, 1916; March 9, 1916, April 29, 1916, and May 21, 1916; and Josephus Daniels to Wilson, April 12, 1913; Charles Schwab and Eugene Grace, "Should the Government Destroy Private Armor-Making Industries?" April 5, 1916, in Woodrow Wilson papers, microfilm reel 259, Library of Congress.

  40Tillman's speech to the Senate is in Congressional Record, 64th Congress, 1st session, February 8, 1916. Woodrow Wilson to Benjamin Tillman, January 6, 1916, in Wilson papers, microfilm reel 259.

  41See two articles by Charles Schwab and Eugene Grace. One is untitled; the other is "Should the Government Destroy Private Armor-Making Industries?" April 5, 1916, both in Wilson papers, microfilm reel 259.

  42Daniels, Wilson Era, 360; Hessen, Schwab.

  43C. F. Adams, Secretary of the Navy, to the Chairman of the House Committee on Naval Affairs, National Archives, Record Group 80, Entry 13, Box 141; Claude A. Swanson, Secretary of the Navy, to Henry Wallace, National Archives, Record Group 80, Entry 13, Box 55; William D. Leahy, Acting Secretary of the Navy, to Senator Gerald P. Nye, National Archives, Record Group 80, Entry 13, Box 176. See also George Marvell to Josephus Daniels, February 9, 1921, Daniels papers; and Roger M. Freeman, The Armor-Plate and Gun Forging Plant of the U. S. Navy Department at South Charleston, West Virginia (n. p., 1920).

  44Hessen, Schwab,244.

  45Ibid, 279-80.

  46Ibid., 282; Jude Wanniski, The Way the World Works (New York: Basic Books, 1978), 116-48; Don McLeod, "The History of Protectionism Proves the Value of Free Trade," Insight (June 30,1986), 11-14.

  47Hessen, Schwab,280-82. 48Ibid., 288-90, 292.

  49Ibid.t 132-33, 285-86, 290-91, 296, 298-300. ., 293-303.

  Notes to Chapter Five

  John D. Rockefeller and the Oil Industry

  1Allan Nevins, Study in Power. John D. Rockefeller, 2 vols. (New York: Charles Scribner's Sons, [1940] 1953), 1:672,208. Nevins was the first historian to look at the wealth of primary source material in the Rockefeller papers (now located in Tarrytown, N.Y.). His thousand-page biography is still the standard work on Rockefeller and was indispensable to me. For differing points of view, see Jules Abels, The Rockefeller Billions: The Story of the World's Most Stupendous Billions (New York: Macmillan Company, 1965); Peter Collier and Davi
d Horowitz, The Rockefellers: An American Dynasty (New York: New American Library, 1976), 3-72; Ferdinand Lundberg, The Rockefeller Syndrome (Secaucus, N.J.: Lyle Stuart, 1975); and David Freeman Hawke, John D,: The Founding Father of the Rockefellers (New York: Harper and Row, 1980).

  2Grace Goulder, John D, Rockefeller: The Cleveland Years (Cleveland: Western Reserve Historical Society, 1972), 17-25.

  3Ibid., 26-27; Nevins, Rockefeller, 1:43, 100-02.

  4Nevins, Rockefeller, 1:132.

  5Ibid., 1:103, 186-91; Goulder, Rockefeller, 59-73.

  6For a good discussion of the beginnings of the petroleum industry, see Harold F. Williamson and Arnold R. Daum, The American Petroleum Industry: The Age of Illumination, 1859-1899 (Evanston, 111.: Northwestern University Press, 1959), 27-114.

  7Goulder, Rockefeller, 59-80; Nevins, Rockefeller, 1:199,167-69,173, 205.

  8Williamson and Daum, American Petroleum Industry, 82-194.

  9Nevins, Rockefeller, 1:183-85, 197-98.

  10lbid., 1:183-86, 268-70,289; Williamson and Daum, American Petroleum Industry, 342-68; John D. Rockefeller, Random Reminiscences of Men and Events (Garden City, N.Y.: Doubleday, Doran, and Co., 1933), 88.

  11Nevins, Rockefeller, 1:666. 12lbid., 1:256, 296-97.

  I3lbid., 1:115,175,279, 487. See Ida M. Tarbell, The History of the Standard Oil Company, (New York: Harper and Row, 1966); and Henry Demarest Lloyd, Wealth Against Commonwealth(Englewood Cliffs, N.J.: Prentice-Hall, 1963).

  14Nevins, Rockefeller, 1:277-79, 555-56, 671-72.

  I5lbid., 1:306-37; Williamson and Daum, American Petroleum Industry, 342-68.

  16Rockefeller, Random Reminiscences, 55-76.

  17Nevins, Rockefeller, 1:366.

  I8lbid., 1:380.

  I9lbid., 2:76; 1:277-79.

  20lbid., 2:2-4, 96ff; Williamson and Daum, American Petroleum Industry, 630-47.

  21Williamson and Daum, American Petroleum Industry, 589-613; Nevins, Rockefeller, 2:3.

  22Nevins, Rockefeller, 2:29-30.

  23The Russo-American oil war was a crucial part of Rockefeller's career. My three sources for this episode, which is described in the next six paragraphs, are Ralph W. Hidy and Muriel E. Hidy, Pioneering in Big Business, 1882-1911 (New York: Harper and Brothers, 1955), 130-54; Nevins, Rockefeller 1:397, 505, 666; 2:102-04, 125-26; Williamson and Daum, American Petroleum Industry, 509-19, 630-47.

  24Nevins, Rockefeller, 2:125-26.

  25Ibid., 2:115.

  26Hidy and Hidy, Pioneering in Big Business, 137.

  27Nevins, Rockefeller, 1:237.

  28Ibid., 1:397, 186, 395, 627-29.

  29Ibid., 1:627-29.

  30lbid., 1:623; 2:245-75; Hessen, Schwab, 24, 63-64.

  31Nevins, Rockefeller, 2:295-96, 90-93; Raymond P. Fosdick, John D, Rockefeller, Jr.: A Portrait (New York: Harper and Row, 1956), 35.

  32B. F. Winkelman, John D. Rockefeller: The Authentic and Dramatic Story of the World's Greatest Money Maker and Money Giver (Philadelphia: Universal Book and Bible House, 1937), 309.

  33Nevins, Rockefeller, 1:190, 237, 627; 2:427.

  34Ibid., 2:366-68.

  35Armenteno, Myths of Antitrust, 75-85; John S. McGee, "Predatory Price Cutting: The Standard Oil (N. J.) Case," Journal of Law and Economics 1 (October 1958), 137-69; Hidy and Hidy, Pioneering in Big Business, 671-718.

  36Nevins, Rockefeller, 2:479.

  37Ibid., 2:435. The Bible verses are Luke 6:38,1 Timothy 6:10, and Malachi 3:10.

  38E. Richard Brown, Rockefeller Medicine Men: Medicine and Capitalism in America (Berkeley: University of California Press, 1979); Alvin Moscow, The Rockefeller Inheritance (Garden City, N. Y.: Doubleday and Co., 1977), 101-08; Rockefeller, Random Reminiscences, 137-62; and Nevins, Rockefeller, 2:300-27, 386-402.

  39Nevins, Rockefeller, 2:292-94, 199-200; Rockefeller, Random Reminiscences, 24-29.

  40Fosdick, John D. Rockefeller, Jr., 8-10; Nevins, Rockefeller, 2:199-200.

  41John K. Winkler, John D.: A Portrait in Oils (New York: Blue Ribbon Books, 1929), 226. For a recent biography of Rockefeller, see Ron Chernow, Titan (New York: Random House, 1998). For my critical review, see "Rockefeller Biography Has Serious Flaws," The Detroit News (July 22, 1998), HA.

  Notes to Chapter Six

  Andrew Mellon and the 1920s

  1Andrew Mellon, Taxation: The People's Business (New York: Macmillan, 1924), 16.

  2New York Times, December 17, 1929, p. 1. U. S. Bureau of the Census, Historical Statistics of the United States (Washington: Government Printing Office, 1975), 1107. See also Benjamin G. Rader, "Federal Taxation in the 1920s: A Reexamination," The Historian33 (May 1971), 432; and Roy G. Blakey and Gladys C. Blakey, The Federal Income Tax (London: Longmans, Green and Co., 1940), 516.

  Contemporary accounts of Mellon tended to treat him as either a saint or a devil. A hostile biography of Mellon is Harvey O'Connor, Mellon's Millions: The Life and Time of Andrew Mellon (New York: The John Day Co., 1933). For a friendly biography, see Philip H. Love, Andrew W. Mellon: The Man and His Work (Baltimore: F. Heath Coggins and Co., 1929). Two more recent and more scholarly studies are David E. Koskoff, The Mellons (New York: Thomas Y. Crowell Co., 1978); and Lawrence L. Murray III, "Andrew Mellon: Secretary of the Treasury, 1921-1932: A Study in Policy" (Ph. D. dissertation, Michigan State University, 1970).

  3Thomas Mellon, Thomas Mellon and His Times (Pittsburgh: W. G. Johnston and Co., 1885), 72, 77.

  4Ibid., 164; O'Connor, Mellon's Millions, 21-22, 26, 29-30, 32, 35, 49-51, 54; William Larimer Mellon, Judge Mellon's Sons (Pittsburgh: n. p., 1948), 28-32.

  5Koskoff, The Mellons, 67-69, 172-76.

  6Two useful books on Gulf Oil and Alcoa are Craig Thompson, Since Spindletop; A Human Story of Gulfs First Half-Century (Pittsburgh: n. p., 1951); Charles C. Carr, Alcoa, An American Enterprise (New York: Rinehart, 1952).

  7Love, Andrew Mellon, 37.

  8Mellon, Judge Mellon's Sons, 396-438; Koskoff, The Mellons, 165-67,172-76, 182-83, 260.

  9Bureau of the Census, Historical Statistics, 1104.

  10Robert Higgs, Crisis and Leviathan: Critical Episodes in the Growth of American Government (New York: Oxford University Press, 1987), 97-103; Blakey and Blakey, Federal Income Tax, 2-20. Useful biographies of the Progressives are Harry Barnard, Independent Man: The Life of James Couzens (New York: Charles Scribner's Sons, 1958); Richard Lowitt, George W. Norn's: The Persistence of a Progressive, 1913-1933 (Urbana: University of Illinois Press, 1971); David Thelen, Robert M. LaFollette and the Insurgent Spirit (Boston: Little Brown and Co., 1976). There are also many histories of the Progressive movement and of the 1920s. See, for example, Arthur S. Link and Richard C. McCormick, Progressivism (Arlington Heights, Dl.: Harlan Davidson, 1983).

  11Bureau of the Census, Historical Statistics, 1104,1106,1108,1110; Blakey and Blakey, Federal Income Tax, 71-103. There are several good studies on the federal income tax. See, for example, Jerold Waltman, "Origins of the Federal Income Tax, Mid-America 62 (October 1980), 147-60; and John F. Witte, The Politics and Development of the Federal Income Tax (Madison: University of Wisconsin Press, 1985).

  12Blakey and Blakey, Federal Income Tax, 104-21; Higgs, Crisis and Leviathan, 150.

  13Mellon, Taxation, 129. The continuity between Wilson's desire to cut taxes and the Republican Mellon Plan is explored in Lawrence L. Murray, "Bureaucracy and Bi-Partisanship in Taxation: The Mellon Plan Revisited," Business History Review 52 (Summer 1978), 200-25.

  14Murray, "Andrew Mellon," 111-17; Mellon Taxation, 13.

  15Mellon, Taxation, 73-83. See also Andrew W. Mellon, "The Business of Taxation," Forum 71 (March 1924), 346-47; Andrew W. Mellon, "High Surtaxes and Municipal Securities," The American City Magazine 30 (March 1924), 239-40.

  16Mellon, Taxation, 199-202. The building of civic centers and football stadiums does, of course, create temporary jobs and generate some local revenue.

  17Ibid. 78, 94, 104; Carr, Alcoa, 23-49, Thompson, Since Spindletop, 9-46. Other people also argued this idea that high
taxes helped larger, established businesses perpetuate monopolies. Otto H. Kahn of the Citizen's National Committee said "high surtaxes unavoidably tend to diminish competition and to intrench [sic] and fortify those who are in established positions." New York Times, February 24, 1924, p. 4.

  18Mellon, Taxation, 9,16-17, 79-81, 96-97. See also Andrew W. Mellon, "Taxing Energy and Initiative," The Independent 112 (March 29, 1924), 168.

  19Mellon, Taxation, 32; Andrew W. Mellon, "What I Am Trying to Do,"World's Work 47 (November 1923), 73-76. The Democrats in 1924 offered the Garner Plan, which would have cut taxes on those earning under $56,000, but would have left the tax rate on the rich at 50 percent. This approach allowed the Democrats to make the following popular appeal: "There is not a person in the country getting an income of less than $56,000 a year who is not better treated by the Democratic than by the Republican scheme." See Herbert Claiborne Pell, Jr., "Taxing the Middle Class," Forum 71 (March 1924), 349-53 (quotation on p. 351). See also Homer Joseph Dodge, "Which Tax Plan Do We Want?" The Independent 112 (March 29, 1924), 169-70.

  20O'Connor, Me/ton's Millions, 120.

  21Ibid., 235.

  22Koskoff, TheMellons, 190-91.

  23Ibid., 191; Mellon, Judge Mellon's Sons, 408.

  24Mellon, Taxation, 16, 69-76; Blakey and Blakey, Federal Income Tax, 219.

  25Mellon, Taxation, 9, 54, 61-62.

  26Belle Case LaFollette and Fola LaFollette, Robert M. LaFollette (New York: Macmillan, 1953), 1: 178, 480-81, 2: 743-47; Robert LaFollette, La-Follette's Autobiography (Madison: University of Wisconsin Press, 1968), 124; Blakey and Blakey, Federal Income Tax, 88, 137, 146, 180, 185, 358, 379; and New York Times, December 15, 1929, p. 1 and 2,

  27Mellon, Taxation, 111-24.

  28Bureau of the Census, Historical Statistics, 1104. Love, Andrew Mellon, 317; Blakey and Blakey, Federal Income Tax, 540.