John D Rockefeller (1839-1937) was America's first billionaire and there are about 2,350 dollar billionaires in the United States in early 2021 — Forbes Real-Time Billionaires — there are many more on this list than annual listings as it reflects the latest value of shareholdings.
Rockefeller became a billionaire in 1916 and that is equivalent to $24bn today but his net worth in reflecting economic power was 2% of 1916 US GDP while Bezos's wealth is 0.9% of estimated 2020 US GDP of $21tn.
The weekly pay of full-time bakers in New York in 1916 was $23 or annually $1,200. As of Jan 31, 2021, the average annual pay for a tradesman in New York is $60,000 a year — 50 times the 1916 level. Adjusted for inflation, the 1916 annual earnings are valued at $30,400 in 2021.
Forbes has Jeffrey P Bezos (b. 1964), the founder of Amazon in 1994 as the richest person in the world with a net worth of $195bn (Bezos gave his ex-wife $36bn worth of shares in 2019 which at the time made her the world's 22nd wealthiest person).
Jeff Bezos's mother divorced her husband when he was very young and his father Ted Jorgensen (b. 1944) had no further contact with her or his son (Jorgensen was told he was Jeff Bezos's biological father in 2012). His mother Gise married Mike Bezos, a Cuban immigrant, in 1968.
South African-born Elon Musk is the No. 2 richest person at $184bn thanks to Tesla’s (an electric car) rocketing share price — which rose more than ninefold over the past year. Bernard Arnault & family — the founder of the French luxury products group LVMH (Louis Vuitton Moët Hennessy) is the 3rd richest in the world with a net worth of $153bn.
Bill Gates and Mark Zuckerberg are 4th and 5th with respective net worths of $123bn and $98bn.
Life is much better for many Americans than Rockefeller could enjoy in 1916 but there is still a huge gulf of inequality in the US.
Optimism vs. Pessimism: "You've never had it so good"
44% of US workers in low-paid jobs with median hourly pay of $10
The Silicon Sultans
Sam Walton, the founder of Walmart, the retail giant, was believed to be America’s richest man with a net worth of about $8bn when he died in 1992. The dollar value would be $15bn today.
The Guardian reports that the S&P 500 index – the barometer of corporate America – ended 2020 up more than 18%, an extraordinary outcome given the market crash of March. But two-thirds of that gain was entirely down to the increases in value registered by the six Fangam (Facebook; Amazon; Netflisk; Apple; Alphabet owner of Google; Apple and Microsoft) stocks.
The gains are eye-watering. Amazon’s share price is up 62% over the past year, valuing the business at $1.7tn, $650m more than a year ago. Apple's stock is up 70% over the same period, an increase which has taken its valuation up by more than $1tn, to $2.3tn.
Warren Buffett, the renowned investor is the only non-digital related leader in the top 10 of the richest people in the US.
Six Walton family members are worth a combined $218bn.
Robber barons
The original robber barons operated in the Rhine valley, as the river had been Europe’s principal highway for 1,000 years.
When Emperor Frederick II died in 1250, there was no agreement on a successor as Holy Roman Emperor and the key Rhine Gorge between Bingen and Koblenz, became a battleground for unauthorised toll gathers, who became known as robber knights. The complacent archbishops of Trier had rich ecclesiastical domains as they relied on the revenues they derived from authorised levies on river traffic.
Wonder who were the robbers?
The informal group of robbers eventually got out of control and they engaged in stealing cargo and ships. The interregnum lasted to 1273 and by 1282 the robber barons or robber knights (German: Raubritter) were driven from their castles and many were executed.
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| Burg Rheinstein was one of the castles occupied by the robber barons. |
Cornelius Vanderbilt (1794-1877) the great steamship and then railroad magnate was the subject of an editorial by Henry J Raymond, editor of the New York Times on February 9, 1859. His nickname was “Commodore,” which he liked. Raymond (1820-1869) was the first editor and owner of the NYT, which was founded in 1851.
Raymond criticised Vanderbilt for taking a big monthly payment from the Pacific Mail Steamship Company in return for Vanderbilt’s foregoing competition on the sea lanes to California.
“Like those old German barons who, from their eyries along the Rhine, swooped down upon the commerce of the noble river and wrung tribute from every passenger that floated by,” Raymond wrote, “Mr. Cornelius Vanderbilt . . . has insisted that the Pacific Company should pay him toll, taken of all America that had business with California and the Southern Sea, and the Pacific Company has agreed to his demand.”
While Raymond did not call Vanderbilt a robber baron, the term became a metaphor for the American capitalist of the latter part of the 19th century who was perceived to have become wealthy through the exploitation of natural resources, governmental influence, or low wage scales.
The irony was that Vanderbilt preyed on a monopolist just as the German barons did.
The tycoons of the age were henceforth robber barons or captains of industry.
In October 1882, William Henry Vanderbilt (1821-1885), the eldest son of the "Commodore," was aboard his private railroad car on a trip to the Mid-West when a young freelance reporter got into Vanderbilt's car.
Vanderbilt explained why he was running a train at a loss because Pennsylvania Road was also running a train on the same line.
“But don’t you run it for the public benefit?” Clarence Dresser asked.
“The public be damned!" Vanderbilt said. "What does the public care for the railroads except to get as much out of them for as small a consideration as possible. I don’t take any stock in this silly nonsense about working for anybody’s good, but our own because we are not.”
“The public be damned!” was on the front page of every newspaper in the country within 24 hours.
Michael Kinsley (born 1951) is an American political journalist and commentator, who first wrote: “A gaffe is when a politician tells the truth,” in a 1984 issue of The New Republic.
Vanderbilt claimed to have been misrepresented but his gaffe chimed with his public reputation.
The railroad tycoon had claimed to be the richest man in the world just like his father.
Anderson Cooper, the CNN broadcaster, is a son of Gloria Laura Vanderbilt (1924-2019), and the great-great-great-grandson of Cornelius Vanderbilt.
‘'The Gilded Age: A Tale of Today' was a satirical novel written by Mark Twain and Charles Dudley Warner, which was first published in 1873. The book’s title became synonymous with graft, materialism, and corruption in American public life in the years after the end of the Civil War.
Richard Hofstadter (1916-1970), a renowned American historian and in his series of essays published in 1948 as 'The American Political Tradition,' Chapter VII is titled 'The Spoilsmen: an Age of Cynicism.' He wrote:
"In the years from Appomattox to the end of the nineteenth century, the American people settled half their continental domain, laid down a vast railroad system, and grew mighty in the world on their great resources in coal, metals, oil, and land. There is no other period in the nation’s history when politics seems so completely dwarfed by economic changes, none in which the life of the country rests so completely in the hands of the industrial entrepreneur.
In business and politics, the captains of industry did their work boldly, blandly, and cynically. Exploiting workers and milking farmers, bribing congressmen, buying legislatures, spying upon competitors, hiring armed guards, dynamiting property, using threats and intrigue and force, they made a mockery of the ideals of the simple gentry who imagined that the nation’s development could take place with dignity and restraint under the regime of laissez-faire."
On May 15, 1911, the Supreme Court declared Standard Oil’s monopoly illegal. It was ordered to divest its subsidiaries and it was also forbidden to re-establish its monopoly. After 41 years of operation, the company was no more.
John D. Rockefeller who had been involved with the Standard Oil Trust since 1863, which through the crushing of competitors, mergers with other firms, and use of favourable railroad rebates, it controlled the refining of 90 to 95% of all oil produced in the United States by 1880.
On that late Monday afternoon in May 1911 Rockefeller was playing golf with a Father J.P. Lennon, a Catholic priest, on his estate in Westchester County’s Pocantico Hills, New York.
According to Ron Chernow's 1998 book, 'Titan: The Life of John D. Rockefeller Sr.' the most notorious of the robber barons reacted to the news from the Supreme Court with studied nonchalance.
["Father Lennon," he asked, "have you any money?" The priest said no and asked why. "Buy Standard Oil," Rockefeller said."]
Chernow noted that all those who thought the demise of Standard Oil would be a punishment for Rockefeller were in for a nasty surprise. He held so many of the subsidiaries’ shares, that when the companies began to be traded as independent entities from December 1911, his fortune went from a net worth of $300m to a billion dollars.
The Supreme Court had helped to mint America's first dollar billionaire.
The Monopolists
The Standard Oil Company's near-monopoly was efficiently run and in its early years, it began cutting prices to increase market share. For example, it cut the price of oil in half between 1865 and 1870. Overtime Standard Oil developed contracts with railroad companies that allowed it to ship oil across the country for very low prices.
Amazon has about half the retail e-commerce and cloud services business in the United States. While it's dominant in its sectors, it's not a monopoly — Amazon's business sectors.
Amazon got its public stock exchange listing in 1997 and it first reported a profit in the fourth quarter of 2003. Reporting losses has never been a problem for Bezos as it was a strategy to build the business. Wall Street supported it over the years.
Microsoft has almost 80% of the PC operating system market while Google and Facebook offer "free" services to most of their respective markets.
The big firms boost their innovation through acquiring startups and in the case of Snapchat which refused to sell to Facebook, the latter then launched a copycat version.
Ida Tarbell (1857-1944) rankled Rockefeller with her magazine series on Standard Oil that was published as a book in 1904. In 1917 Rockefeller's only son John D Rockeffeler Jr (1854-1960) persuaded his father to give interviews to William O Inglis, a New York newspaperman, to put the record straight, in his view, for the family archive.
The oil tycoon had improved his public image with his philanthropies and a publicist advised him not to use words such as trust, monopoly, oligopoly, or cartel.
Begining in 1917 Inglis spent an hour each morning until 1920, interviewing Rockefeller at 'Kykuit,' his Georgian mansion on the Pocantico Hills.
Inglis notes that he raised a claim by Tarbell that in 1872 the thirty-two-year-old Rockefeller had taken over the Cleveland refineries by threatening to crush rivals who refused to join his cartel.
“It’s twaddle, poisonous twaddle, put out for a purpose," Rockefeller said. "As a matter of fact, we were all in a sinking ship if existing cut-throat competition continued, and we were trying to build a lifeboat to carry us all to the shore. You don’t have to threaten men to get them to leave a sinking ship in a lifeboat."
The tycoon often used religious imagery to suggest that he had noble motives.
"The Standard [Oil Trust 1870-1911] was an angel of mercy, reaching down from the sky, and saying 'Get into the ark. Put in your old junk. We'll take all the risks.'”
The old buccaneer had memory lapses!
Ron Chernow, Rockefferer's biographer, noted “He felt that politicians were basically parasites who would shake down businessmen. I mean, all of this bribery he saw as extortion; that is, the politicians shaking him down, rather than his paying off the politicians. . . . I think he regarded these payments really as a business expense.”
The last big antitrust case involving technology was against Microsoft which was seen as crushing Netscape, one of the first web browsers.
In June 2001 an appeals court ruled that Microsoft had repeatedly broken federal antitrust laws.
Bill Gates, the Microsoft co-founder, in April 2002 did not accept the claims against his company.
The New York Times noted:
[Mr. Gates's attitude may be in keeping with his role as an executive who personifies his company perhaps more than anyone since John D Rockefeller did Standard Oil early in the 20th century. Mr. Rockefeller, nearing 70, played a sweet old man with a conveniently bad memory when he took the witness stand in 1908 during the government's antitrust case against Standard Oil. And he refused to even read a subsequent Supreme Court decision ordering his company's breakup.
''Microsoft is still Bill Gates writ large,'' said Ron Chernow, a business historian and author of ''Titan,'' a Rockefeller biography. ''These are men who have an almost Messianic faith in their mission. The very qualities that make them great businessmen make it very difficult for them when a certain measure of contrition is called for.''
If Rockefeller's intention was to bring cheap oil to the masses, Mr. Gates sees Microsoft as the custodian of a stable computing platform that gives both users and software developers a crucial sense of security that applications — from word processors to games — will work as they expect.
What is good for Windows is good for computer users, he maintained, and the best way to build an operating system is solely for Microsoft to determine.]
