A Classification of American Wealth
History and genealogy of the wealthy families of America - Sponsors

     The Trusts 

Introduction      A list of major industrial trusts or corporations organized between 1882 and 1904      A list of other industrial trusts or corporations organized between 1882 and 1904 The rise of Standard Oil, John Davison Rockefeller and his associates        Rise of a Baptist capitalist : John Davison Rockefeller        Birth of the Standard Oil Company        Standard Oil : the Trust Agreement of 1882        The Standard Oil families The Dukes of American Tobacco NEW  Kings and Princes of Steel  NEW

If the Gilded Age was the era of railroads, industrialization and frenzied finance, the real characteristic of this period was the unprecedented concentration of wealth and power in the hands of a few capitalists and promoters. Neither the railroads, nor industry or banking were invented in the period between 1865 and 1914, generally accepted as the time limits of what was called the Gilded Age. The new element which drove the concentration of wealth was consolidation in search of economies of scale and the strive for monopoly.

When the great Cornelius Vanderbilt acquired both the New York & Haarlem and the Hudson River railroads, he achieved a monopoly on railroad transportation between New York City and Albany. This he later parlayed into a controlling interest of the New York Central Railroad, which he promptly merged with his Hudson River railroad, thereby establishing a through line between New York and the Great Lakes. His interest in the Erie Railroad, which ran a parallel line along the Southern border of New York state, was entirely motivated by the intention to extend his monopoly. What Vanderbilt did or sought to do in New York, the Pennsylvania Railroad did in Pennsylvania and other railroads did elsewhere. Mergers created larger and more efficient systems and a reduction of competition, which in turn promised higher profits. Thus, when the new generation of industrialists started to expand their scope of activity from local factory owners to national operators, they merely followed the railroads in their economic logics.

The concepts of pooling and artificial price fixing, were not invented during the Gilded Age, but the period was characterized by the typical short economic cycles, the boom and bust cycles, which favored their application. In times of rapid growth, high profits tended to attract an excess of investors and overcapacities were rapidly built up. When the excessive offer hit the markets, prices had to sink and spelled doom over the concerned industries. Leading firms then often tried to maintain high prices by pooling and collectively reducing production. Such pools (or cartels) were more or less loose and the looser they were, the less they were effective. Only in a few cases did these cartels succeed to control prices effectively for a prolonged period. One such example is the Gunpowder Trade Association, which was organized by the leading gunpowder manufacturers, including E.I. Du Pont de Nemours, after the end of Civil War threatened the industry, which then naturally suffered from overcapacity.

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