Robber Barons

ALTHOUGH WHITE-COLLAR crime and unethical business practices are certainly not unique to American companies, there is a prolifically fertile landscape for the roots of such behavior in the country's indefatigable pursuit of capitalism, its unapologetic emphasis on success and the accumulation of material wealth, and the precedence set by America's early capitalist tycoons.

Howard Abadinsky, one of America's foremost scholars on organized crime, goes so far as to characterize the capitalist pioneers of the United States—men like John Jacob Astor, James Fisk, Leland Stanford, John D. Rockefeller, Cornelius Vanderbilt, and J. Pierpont Morgan, among others—as the “antecedents” to organized crime in the country. “While contemporary organized crime has its roots in Prohibition (1920 to 1933), unscrupulous American business entrepreneurs provided role models and created a climate conducive to its growth.” These so-called robber barons transformed the wealth of the American frontier into vast financial empires, amassing their fortunes by monopolizing such essential industries as oil, railroads, liquor, cotton, and other textiles. In turn, these monopolies were built upon the liberal use of tactics that are today the hallmark of organized crime: intimidation, violence, corruption, conspiracies, and fraud.

John Jacob Astor, America's first robber baron, made his fortune exploiting the fur trade with Native Americans.

Based partially on characterizations provided by Abadinsky, a description of the some of America's earliest tycoons, and the qualities that have earned them the label of robber baron, includes the following profiles.

John Jacob Astor (1763–1848), a fur magnate, amassed a fortune through the monopoly held by his American Fur Company over the trade in central and western United States during the first 30 years of the 19th century. This monopoly was achieved, in part, by crushing rivals and systematically[Page 694] cheating Native Americans of fur pelts. When his competitors complained to the government, Astor's agents resorted to violence. With his riches, Astor routinely paid off politicians to protect his business interests. At the time of his death, Astor was considered the richest person in the country.

James Fisk (1834–72) was one Wall Street's first great financiers, accumulating much of his fortunes by fraudulent stock market practices. Fisk invested much of the considerable money he made from smuggling Southern cotton to Northern mills during the Civil War into Confederate bonds. He then swindled European investors by selling short when the fall of the Confederate Army was imminent, but before Europe learned the Confederate currency had collapsed.

In 1866, he formed the brokerage firm Fisk and Belden, and the following year he and his colleagues protected their control over the Erie Railroad by issuing fraudulent stock. Along with his associates, Fisk attempted to corner the gold market by inflating the price, which was accomplished by bribing public officials to keep government gold off the market. The venture brought them vast sums but led to a securities market panic that began on September 24, 1869, a day that has long been remembered as Black Tuesday. At the time, the negative repercussions of the gold hoarding shook the economy and the scandal-plagued government of Ulysses S. Grant.

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