Another book with a really long title: The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan Invented the American Supereconomy .  That sure is a lot to live up to, and this book doesn’t quite get there.  Its less of a short biography of each man and more a history of what was going on during their reigns of power.

What was going on?  Railroads were being built, we discovered a way to make steel cheaply, oil exploration in the Midwest, and the American financial system began to grow.  This was an exciting time for our country, as we were creating the foundation that would throw us into the 20th century as a superpower.

What were these guys up to?

Andrew Carnegie:  A native Scotsman, we learn in the book Carnegie spent a lot of his time back in his homeland but that didn’t keep him from creating the steel empire that literally built the United States.  With his hands in both oil and railroads during the Civil War, Carnegie put Pittsburgh on the map as a hub of commerce.  After the war he left those industries to pursue the steel trade.  The details are in the book, but more or less the Pittsburgh Steelers NFL Team are called the Steelers because he created the industry there.  This is also the same Carnegie that started Carnegie Mellon University.  His steel cartel was broken up but the main remnant exists today as US Steel.  His net worth in today’s money would be close to $300 billion, eclipsing Buffet and Gates many times over.

John D. Rockefeller:  Possibly the greatest name ever conceived, Rockefeller literally was the petroleum industry until his company was broken up by the Sherman Antitrust Act.  He controlled more than 90% of the oil production, refinement, and distribution of the black gold.  His company, Standard Oil was forced to be taken apart into 37 smaller companies.  Through various mergers and acquisitions Standard lives on in ExxonMobil, BP, ConocoPhillips, Chevron, and Vaseline.  His empire still exists, its just now smaller companies.  Net worth in today’s money would be over $315 billion.

Jay Gould:  The least known of the 4 tycoons, Gould was no less ruthless.  He owned many companies during his complex life, however his legacy might be in the laws that exist today.  In the late 1800s insider trading was a legal but frowned upon practice.  Its illegal today because of his exploitations.  The declaration of bankruptcy as a business strategy was again his baby.  A master of contracts and negotiations, Gould gained control of all the major railroads heading west and thus controlled the prices.  When he died his estate was grossly undervalued at $72 million, and estimates for 2008 money are between $25 and $100 billion.

J. P. Morgan:  My favorite of the 4 because he was a banker and investment baron.  Yes the bank JPMorganChase and the investment firm Morgan Stanley are him.  Morgan inherited his bank from his father, so he did have a head start over his other tycoon brethren.  Morgan made his name by organizing cartels.  He organized the railroads so they could all fix prices and reap the profits.  It was known as Morganization.  At one point the US Treasury office was having some trouble with their money and he bailed them out.  Just like the government is backing Fannie Mae and Freddie Mac to hold them up, Morgan did this for the government .  Now thats some serious power.  He was also the first investment banker.  He orchestrated the mergers of some of the largest corporations; the before mentioned US Steel and he consolidated General Electric which is still one of the largest companies in the world.

As fascinating as this book was for me to read, it certainly isn’t for everyone.  It took me a while to read and history experts acknowledge the author, Charles Morris, didn’t really break new ground in his book.  There were stretches of 20 pages where nothing sank in, and I fell asleep many times.  Its not bad, its just heavy.

You’ll like this book if:
You love history, especially late 19th/early 20th century America.
You want to know why the US dominated the 20th century.
You’re interested in why at least half of all anti-trust and banking laws exist.
You have trouble sleeping at night.

You’ll hate this book if:
You like picture books.
You don’t know what a railroad is.
You think JP Morgan wasn’t the most powerful person of his time.
You think Carnegie Melon is a tasty tropical fruit.

Related posts:

1. The Weakonomist Reads a Book: Hedge Hunters
2. The Weakonomist Reads a Book: A Random Walk Down Wall Street
3. The Weakonomist Reads a Book: The Millionaire Next Door
4. The Weakonomist Reads a Book: Freakonomics
5. The Weakonomist Reads a Book: Confessions of an Economic Hit Man

Related posts brought to you by Yet Another Related Posts Plugin.

Liked this post? Hated this post? Hate me? Email me and let me know: Philip@weakonomics.com