Railroad

The U.S. railroad barons of the mid-to late-nineteenth century loomed over the nation's economy. Unfettered by rules and unrestrained by lawmakers and judges, the handful of railroad owners and executives could do virtually whatever they wanted. The vast fortunes they built and control they exercised not only helped to expand national frontiers but also ushered in the market controls that now limit the creation of trusts and monopolies.

The railroad barons were colorful men. Probably the most notorious was Jay Gould (1836–1892). A onetime tannery operator from New York with little education, Gould gained control of the Erie Railroad while still in his early thirties. His methods included a number of unlawful or unethical practices: issuing fraudulent stock, bribing legislators, starting price wars against competitors, betraying associates, using his newspaper to cause financial ruin, and manipulating the gold market. Gould even managed to dupe the U.S. Treasury, causing the 1869 STOCK MARKET panic. At the time of his death, he was worth $77 million.

The barons were passionately monopolistic. As a director of the Union Pacific Railroad, Edward Henry Harriman (1849–1909) gobbled up western competitors until he controlled the entire Pacific Coast. But he could not out-gobble James J. Hill (1838–1916), the immensely successful Canadian immigrant whose Great Northern Railway linked the North to the West. Harriman's vicious stock battle with Hill led to a mutually satisfying truce: a short-lived MONOPOLY called the Northern Securities Company, which the U.S. Supreme Court dissolved in 1904.

The barons' heyday began to decline at the turn of the century with increasing public outrage over unpredictable ticket prices and fluctuations in the stock market tied to the railroads. Increasing federal pressure, through laws, regulation, and court orders, ended their reign. By 1907, when the INTERSTATE COMMERCE COMMISSION denounced Harriman and other financiers for trying to destroy rival railroads, the age of the "robber barons" was over.