#437 The Tycoons: Carnegie, Rockefeller, Gould & Morgan

David Senra (0:00)

Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan were all in their late 20s or early 30s, all on the first rungs of their careers in the waning days of the Civil War.

In an age of outsized business leaders, no others played so great a role in shaping and channeling the American boom. They forced the pace, drove the transition to ever larger scales, and imposed personal stamps on the national economy that persisted well into the 20th century.

They were quite different people. Carnegie, Rockefeller, and Gould tapped into the national predilection for speed, the obsession with moving ahead, the tolerance for experimenting to create one of history's purest laboratories of creative destruction. Most businessmen of the time believed in orderly markets and gentlemanly fair profits. But these three came with flaming swords. That's a great line. Morgan was the regulator, always on the side of reigning in what he called ruinous competition, most especially of the kind regularly unleashed by the other three. The American steel industry was settling into a comfortable cartel when Carnegie commenced his career of disruption. Carnegie's plans were always the biggest, the most automated, the most focused on pushing prices down. He had the simplest of business mantras, cut costs, take share, gain scale. Profits would take care of themselves. Jay Gould was a provocateur, a master of public security markets as no one before him, and few since, always attacking, always pushing the possible to precarious new heights.

Gould's arena was railroads and the telegraph, the critical infrastructure of his period.

Rockefeller may have been the greatest visionary and the supreme manager. He took over world oil markets so quickly that it was over before most people noticed. He taught the world its first lesson in the power of large scale distribution. These four are the founding fathers of the American industrial superpower. That was an excerpt from the preface of the book that I'm going to talk to you about today, which is The Tycoons, How Andrew Carnegie, John D. Rockefeller, Jay Gould and J. P. Morgan Invented the American Super Economy. And this book was written by Charles R. Morris. So originally, when I picked up this book, I thought I was going to read a biography about four tycoons. What the book is really about is using the life and career of these four tycoons to explain this massive expansion and growth in the American economy that occurred after the Civil War. And the author makes the case that these four tycoons played a role in building out the economy on which all modern businesses actually rest. And so, I want to, he has a few good quotes here, right before Lincoln dies. And it really sets up the difference between, when I think about where this story is, it's like the difference between almost like a start-up and like an incumbent. America at the time is obviously younger, hungrier, way less money than most of Europe. And Abraham Lincoln talks about the difference in the mindset that Americans had at this point. Obviously, all four of the people that we're going to talk about today had this mindset as well. And it really reminds me of one of my favorite maxims, which is that belief comes before ability. And so Abraham Lincoln says, we here in America think we discover and invent and improve faster than any European nation. So they do a good job of contrasting throughout the book the way that Americans were thinking about building their economy, creating and inventing new technology, building companies compared to their counterparts in Europe. And so what he does, what the author does here is throughout this entire book, you know, he kind of weaves in these stories of, again, the young version. What I love is there's pictures of the book in here of like Carnegie, J. P. Morgan, Rockefeller and Gould. And I was thinking about them as like the older pictures that you see that they're way more prevalent online when they were maybe 50, 60, 70 years old. And there's actually pictures in there where they're, no, this is Carnegie when he's 30 This is Rockefeller when he was 25

So I pulled out a couple, basically what I thought was most interesting is this description, these short descriptions of who they were as people and how they ran their business. And then the author does a great job of comparing and contrasting. Carnegie built one of the most successful companies of all time. Rockefeller built one of the most successful companies of all time. There's some ideas that they shared, but there's also vastly different approaches. I think that's one of the most valuable things of reading the book and hopefully you getting out of this episode. So we're going to jump right into Carnegie. When Lincoln died, Andrew Carnegie was turning 30 and was already wealthy, although he'd been a factory bobbin boy hardly a decade and a half before and had yet to even settle in on a career. John D. Rockefeller was only 26, but his Cleveland oil refinery was one of the largest and most profitable in the country, and he may have already formed his design of taking over the entire industry. Jay Gould was 29 and was trying his hand as a railroad turnaround specialist. J. P. Morgan was 28 quietly learning his trade within his father's banking network. These four would become the greatest of a generation of outsized business leaders. By their sheer intelligence, their ambition and their forcefulness, they laid down the channels that other people followed. They were never friends. Carnegie, Rockefeller and Gould personified the unlimited entrepreneurial opportunities suddenly opened by America's vast resources and its freedom from constraints of class. For the man of fierce business ambition and massive talent, it was the one place and perhaps the one time where he could push as far as he could possibly go.