Myth of the Robber Barons

Myth of the Robber Barons

            In the book, “The Myth of the Robber Barons,” Burton Folsom brilliantly describes the era of American business between 1840 and 1940. Folsom outlines how academia has been misinterpreting the real nature of American business history. The book was published in 2011 by young American publishers. Folsom puts his ideas in a seven chapter plot discussing issues in American business history and giving mathematical statistics as evidence to support his claims. Folsom uses several interesting facts in his book to pass information that would otherwise not appear to be in existence. Folsom catches the readers unaware concerning the existence of specific facts. Folsom’s main arguments revolve around bringing into light the truth behind American business history, supported by statistical evidence and put down in seven chapters.

The main arguments presented by Mr. Folsom in “The Myth of the Robber Barons” were primarily aimed to imply that the taxes and federal interventions can impede economic growth, desire for entrepreneurship and prosperity. First, Folsom states that the introduction of federal subsidies increases costs and allows for corruption among political corporations those engage in entrepreneurship. Folsom goes on to give examples of former corporations that became inefficient after accepting subsidies from the federal government. Folsom gives the example of Cornelius Vanderbilt who successfully built a steamship industry without the help of any government subsidy and yet outperformed the competitors who had benefitted from subsidies: “With government incentives, [Cornelius] had no need to reduce his costs from year to year. His expenses however doubled in 1852”[1]. In the disagreement with the need for federal subsidies, Folsom outlines the two main types of entrepreneurs in America; “political entrepreneurs and market entrepreneurs”[2]. Another argument raised by Folsom is on the misconceptions that existed about American tycoons. Folsom gives the history of James Hill and the way he built the Great Northern railway without the assistance of a government subsidy. James Hill grew to beat all his competitors who had chosen to go for expensive routes due to the availability of subsidies.

Another argument raised by Folsom is that the cutting of taxes gave the intended outcome of increasing revenues in the American entrepreneurial spirit. Folsom was driven by the strategy used by Andrew Mellon in cutting taxes. For example, the First World War led to a dramatic increase in taxes although the citizens understood that the hike was just triggered by the war. However, the taxes did not go down after the end of the war, and the citizens were concerned. The high tax rates forced wealthy families to decide to go for tax-exempt government bonds at the expense of declaring their income. The strategy was beneficial to the families, but the government lost significantly in terms of revenue collections. Folsom believes that the high tax rates on the wealthy class of citizens were as a result of trying to lift the burden that had hit the low-class citizens due to the strategy employed by wealthy families to go for bonds. Mellon’s strategy of cutting taxes would have been interpreted to be a strategy to lift the burden from the rich and place it on the poor. However, Folsom argues that Mellon’s strategy considered all classes of citizens and the less able citizens were made to pay the least possible tax of a half percent. Folsom believed that high tax rates acted to discourage the employment of a capital to revenue-generating enterprising thus harming the economy. Lastly, Folsom argues that the role of entrepreneurship in the economy cannot be replaced for a different venture. For example, the growth that was motivated by the various would be achieved if the corporate pioneers decided to choose a different investment path. Folsom believes that the entrepreneurs of the late 19th set the stage for America’s prosperity and early 20th century and the creation of jobs was significant.

Folsom is confident in providing statistical evidence to support the arguments made. The use of statistical evidence proves the strength of Folsom’s arguments. Folsom uses facts that appear to the readers as a surprise because the facts do not appear to have been in existence until Folsom presents the evidence to support the facts.  For example, very few scholars would support the idea that Mellon’s strategy of cutting taxes could improve taxes. Folsom comes in to prove that the cutting of taxes encourages investors to direct their capital into the more profitable enterprises without the fear of paying more taxes. The hiking of taxes is seen as a strategy to give the government more revenue but turns out to be a failed mission in the long run. Wealthy entrepreneurs will always find strategies to evade taxation, and the worst that can happen to a government is when entrepreneurs decide to put their money away from taxation: “…Vanderbilt found strategies to cut costs”[3]. Also, Folsom uses interesting topics to capture the attention of readers and pass crucial information in so doing. The issue of the success of the Great Northern railway is used by Folsom to show the ability to grow a successful enterprise without relying on government subsidies. The evidence provided by Folsom is the success that John Rockefeller enjoyed due to his generosity and the willingness to slash prices to encourage customers. Folsom aimed to change the perception that had been created by scholars on upcoming academicians about the pioneer entrepreneurs. Initially, the entrepreneurs were presented as selfish monopolies who were only interested in coining wealth to the side. However, Folsom reveals that the strategies employed by different entrepreneurs were beneficial to the government, customers and enterprises.

One of the statistical evidence given to support an argument is a tax report presented by Folsom in a table. Folsom tries to prove the point that cutting taxes would work to increase the revenues collected. The evidence shows how tax rise acted dramatically to lower the revenues in previous years. The table gives the revenues and taxes for incomes above $300000 between 1916 and 1921. The gradual increase in taxation over the period is accompanied by a gradual decrease in the incomes above $300000. The incomes drop from 1296 in 1916 to 246 in 1921. The value of the incomes also dropped from $990 million to $153 million in 1921. Folsom uses evidence that cannot be refuted.

Folsom’s work is not a fictional book and thus has not added opinions to make the arguments any convincing. Folsom has only used the information brilliantly to pass the intended message conveniently. Folsom would not have a better way to express his opinions than the way he has already done. The availability of evidence has reinforced the knowledge of the readers and left them more intelligent. Folsom has used the available information to cover a wider area of knowledge by talking against the beliefs of academicians. Folsom is successful in instilling the knowledge that early entrepreneurs were not ‘thieves’ as most people tend to be deceived into believing. The input of the early entrepreneurs is well presented to reflect the roles they played in saving revenues for the federal government despite the many challenges faced during the period: “… Entrepreneurs are always needed to create wealth, which forms a basis where other people can have the chance to build on what they started…,”[4]  Folsom clearly states that without the entrepreneurs of the time, America would not be as prosperous as it is today. Folsom gives a clear presentation of the main points in the book to change the minds of the readers. For example, Folsom’s belief that federal aid and taxes did not help to foster economic growth, prosperity and the desire for entrepreneurship is supported by sufficient evidence to win in changing the readers’ understanding concerning history. Also, the use of evidence from real American history has served a crucial role in reinforcing the new beliefs concerning American history. Folsom’s investigation is done by looking at both sides of American history and thus removes the gap that would be left by relying on opinions motivated by individual goals and requirements: “the only best way to formulate any debate to study both sides and all the facts”[5]. The pioneer entrepreneurs would still be seen as ‘thieves’ were it not for the investigation done by Folsom.

In sum, Folsom’s main arguments revolve around bringing into light the truth behind American business history, supported by statistical evidence and put down in seven chapters. The main arguments imply that an increase in taxation and overreliance on government subsidies acts to disadvantage economic growth. Folsom does not seem to use convincing opinions in the book since the information is based on real history and not fiction. Generally, Folsom uses real evidence to achieve the goal of changing the perception of the readers’ concerning American business history.

Works Cited

Folsom, B. W. (1991). The Myth of the Robber Barons: A New Look at the Rise of Big Business     in America. Young Americas Foundation.

Hayden, Benjamin. “Book Review: “The Myth of the Robber Barons” by Burton Folsom.” 2011.

[1] Folsom, B. W. (1991). The Myth of the Robber Barons: A New Look at the Rise of Big Business in America. Young Americas Foundation.

[2] Folsom, B. W. (1991). The Myth of the Robber Barons: A New Look at the Rise of Big Business in America. Young Americas Foundation.

[3] Folsom, B. W. (1991). The Myth of the Robber Barons: A New Look at the Rise of Big Business in America. Young Americas Foundation.

[4] Folsom, B. W. (1991). The Myth of the Robber Barons: A New Look at the Rise of Big Business in America. Young Americas Foundation.

[5] Hayden, Benjamin. “Book Review: “The Myth of the Robber Barons” by Burton Folsom.” 2011.