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

 Part 1 : Colonial and Mercantile America  Part 2 : America in the Gilded Age
 Part 3 : America in the Twentieth Century  Encyclopedia of American Wealth

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   Part II-Chapter 11 :  The Trusts  > Index and Introduction  :  Previous  1 - 2 - 3 - - 5 - 6  Next  

The steel merger, which created the largest company of the world, was the apotheosis of the trust movement and a monument to America's greatest financier of the Gilded Age : John Pierpont Morgan. The banker and railroad pacificator had already a name in industrial consolidation, having merged the Edison manufacturing units with Thomson & Houston to form General Electric in 1892. Morgan's credit in organizing the US Steel Corporation was essentially related to the mobilization of the huge financial means it took to float securities with a par value of 1'370'000'000 $ without breaking the market. Morgan, who stood behind the Federal Steel Company and the National Tube Company, also managed to unite all major players in his steel trust, these being the Carnegie Company, the Moore Group, Gates' American Steel & Wire Company as well as Rockefeller's iron ore properties in the Mesabi range. Elbert Henry Gary from Morgan's Federal Steel became chairman of the board, Charles Michael Schwab of Carnegie Steel became president and the directors included J.P. Morgan, John D. Rockefeller and J.D. Rockefeller jr , Henry H. Rogers, Marshall Field, Nathaniel Thayer jr, William H. Moore, Peter A.B. Widener and Henry C. Frick.

Unlike Standard Oil or Consolidated Tobacco, the United States Steel company, despite its huge capitalization, was nowhere near achieving a monopoly position, as several major competitors (including Lackawanna Steel, Jones & Laughlin, the Crucible Steel Company of America and others) were left out. New combinations soon appeared and threatened the steel trust in its very existence. After clashing numerous times with the conservative Gary over corporate policies, Schwab left US Steel after a three year tenure, took over Bethlehem Steel and built it into a major competitor. His successor William E. Corey also left after a few years to take over a competing concern. John Warne "Bet-A-Million" Gates was involved in the creation of Republic Iron & Steel after he had unloaded his wire trust to United States Steel. And Henry Clay Frick, while still a director, teamed with the Mellons of Pittsburgh to create the Union-Sharon Steel company, which they also unloaded on the steel trust.

Under the presidency of Theodore Roosevelt, who succeeded the elected William McKinley after his assassination in 1901, the US government started to take a stronger stand against the trusts. As a consequence of these actions, the following major trusts were ordered to dissolve : Northern Securities (Western railroads) in 1904, Standard Oil and American Tobacco in 1911. The split-up parts continued to prosper and in many cases became greater than their parents had ever been. But with the gradual retirement and dilution of the founding interests, the resulting oligopoly of strong companies characterized a new and more competitive environment, which eventually benefited both, the general economy and the stronger of the competing firms. Industries, where competition gave way to regulation, like the railroads, generally declined, although this decline may be essentially due to more general macro-economic changes. The trusts were the predecessors of our modern corporations and they played a role in the economic growth of this country. The multi-million dollar fortunes they made to their organizers and promoters were part of the Gilded Age and should not be seen in a different way than the billion dollar fortunes more recently derived from successful enterprises in the field of high technology

The Trusts  > Index and Introduction  :  Previous  1 - 2 - 3 -- 5 - 6  Next  

The Mining Bonanza Kings

The Railroad Barons

The Trusts



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