The Prospering Fathers Commentary , July 1999 THERE HAS been a serious flaw in American historical writing that is only now beginning to be corrected. American historians have rightly celebrated the passionate moral purpose of the Pilgrim Fathers, decisive in forming the matrix of the nation's character. They have, with equal justice, canonized the Founding Fathers, that extraordinarily varied and talented group of men who, combining the best of Enlightenment values with the hard-won lessons of the English tradition of empirical statesmanship, gave the new nation a model Constitution and a splendid start toward its high-risk experiment in republican self-government. But a third key group in the country's development--the Prospering Fathers, as I call them--have never really received their due. In the period between the end of the Civil War and the onset of World War I, this collection of entrepreneurial individualists, united only by their colossal energy, native shrewdness, and belief in their country's future, transformed a predominantly agricultural society into an industrial and financial superstate, laying the foundations of the nation's geopolitical supremacy and of what has rightly been called the American Century. Not only have these men failed to be canonized, they have been, to the contrary, demonized, and dismissed collectively as "robber barons." Around their works and days there has gathered a deep encrustation of acidic mythology, advanced during their own time by "crusading"--i.e., unscrupulous--journalists and long accepted as truth by historians who might have been expected to know better. As time marches on, however, it has become harder and harder to maintain this corrosive view. The deeds of the Prospering Fathers are now a century old, and that century, if we exclude the horrific gash of the still-inexplicable Great Depression, has been mostly a saga of wealth-creation and wealth-distribution unique in world history. The huge increment produced by the United States made it possible to fight and win two world wars against autocracy and totalitarianism, to underwrite freedom, democracy, and the rule of law everywhere, to invest in new technologies that are now spreading at stupefying speed and, at the same time, to give the American people, who have more than doubled their numbers--as well as all those around the world who have followed the path the Prospering Fathers trod--an affluence never dreamed-of before. So whom did the barons rob? All the more reason, then, to hail two recent and quite complementary studies: Ron Chernow's Titan: The Lift of John D. Rockefeller(*) and Morgan: American Financier by Jean Strouse.([dagger]) Neither Chernow nor Strouse is a hagiographer. Theirs are true portraits, warts and all; but together they go some way toward redressing the historical balance. WHAT DID the Prospering Fathers have in common? By achieving enormous economies of scale, they turned the luxuries of the rich into the necessities of the poor, and thereby reduced the real price of almost everything. Andrew Carnegie was one exemplar of the type. Using chemists to find out what actually happened inside a steel furnace, he was able to raise production and cut costs so dramatically that steel soon replaced iron as the primary metal. The rapid and benign consequences of this feat were experienced in almost every aspect of life, from farm machinery (and productivity) to construction, making skyscrapers possible and high-quality housing cheap. The closing of the Iron Age (as it were) and the opening of the Steel Age also cut the cost of rails and locomotives. Edward Harriman, another Prospering Father, took advantage of that fact, rationalizing the system and making it not only cheap but safe. Equally huge strides were registered in fuel costs. Henry Clay Frick, Carnegie's protege, played a major role in the steel revolution by cutting coking bills. But, as Ron Chernow shows, it was John D. Rockefeller who pounced on the new fuels provided by crude oil, achieving a temporary monopoly of as much as 80 percent of world production and refining. No industry in history has ever profited so much as oil refining from economies of scale, or done so much for the ordinary consumer. Right at the outset of Rockefeller's empire-building, he was able to reduce by 70 percent the cost of kerosene, the staple of housewives throughout the nation. Even more important in the long run was the competition that cheap oil offered to solid fuel in the generation of electricity. The electrical age began in earnest around 1900, rapidly making California the richest state in the union and in time transforming the Far West into one of the world's most efficient industrial zones. Cheap petroleum contributed still more to the automobile revolution, a revolution introduced by the last of the Prospering Fathers, Henry Ford. Thanks to vertiginous economies of scale, the sturdy, reliable, safely driven, and easily maintained car created by Ford soon became cheap, too. By putting the automobile within the means not only of most farmers but of the workers who produced it, Rockefeller and Ford ended the isolation of the farming families who made up half the nation and set industrial workers on the road to comfort and even affluence. THE METHODS employed by men like Rockefeller to achieve their temporary monopolies were ruthless--and they were resented. As Chernow faithfully reports, Rockefeller was none too gentle in putting inefficient producers out of business. One of his victims was the father of Ida Tarbell, the first "investigative journalist," and she took her revenge by spending most of her life exposing and denouncing the excesses of Standard Oil. In an image that persists, she branded Rockefeller a monster. The hostile journalists soon stirred up the politicians, among them old-money grandees like Theodore Roosevelt, who, taking a particular objection to Edward Harriman, denounced him as a "malefactor." Thus was detonated a populist revolution that fed off a sore spot in the American character, the conflict between bigness and democracy. Loving the advantages of bigness, Americans have also always wanted the voices of the "people" to be heard above its uproar. Rockefeller's quest for a large-scale oil industry genuinely scared a lot of Americans, not all of whom, like Tarbell, were parti pris. In 1879, a grand jury in Pennsylvania indicted Rockefeller for conspiracy and extortion. For 30 years, he became, in strict law, a fugitive from justice, and had to be extremely careful to avoid extradition from the states where he lived, made his money, or enjoyed himself. If he built and sustained an empire, and became the richest man in the world, he did so against a constant campaign of political and legal opposition, much of it bitter and highly personal. I would guess that more legal actions were taken, and (later on) more corrective laws passed, against him than against any other man in history. That, of course, is one reason why his business crimes, real or imaginary, have been brought so thoroughly to light. Chernow goes into them with energy. Suspiciousness of bigness was not confined to "little people." It also loomed large in the demonology of intellectuals, not least in the legal profession. When chain stores were created by the disciples of the Prospering Fathers, pushing smaller and less efficient competitors to the wall while driving down retail costs, progressive legal minds challenged the idea that large-scale enterprises would benefit ordinary families. Their view was given for all time by Supreme Court Justice Louis D. Brandeis, who was speaking with both the chain stores and Standard Oil in mind: I have considered and do consider that the proposition that mere bigness cannot be an offense against society is false, because I believe that our society, which rests upon democracy, cannot endure under such conditions. This was not so much an argument, however, as an article of political faith, and one more likely to be held by a well- paid judge than by a working-class housewife on a tight budget. But Brandeis's doctrine did and no doubt still does find favor among lawyers and professors. Rockefeller was the first major victim of the antitrust legislation to which this doctrine gave birth: Standard Oil, in its pristine form, was broken up. Of course, the legal progressives were never able to defeat outright the Prospering Fathers and their disciples and descendants, for another forensic groundwork had been laid down early in the 19th century by the first great Chief Justice of the Supreme Court, John Marshall. His rulings, which made large-scale capitalist enterprise in the U.S. not only possible but profitable, were graven in granite. What the progressives were able to do was to put big business perpetually on its guard, to force it to watch its step, to calculate legal consequences at every stage, and to muster the resources to fight court battles as part of routine operations. Over the decades, all this has proved mightily beneficial to the legal profession; since the costs have naturally been written into retail prices, whether consumers have benefited is another question altogether. A classic instance today of this continuing trench warfare is the Microsoft case. In the last quarter-century, Bill Gates, a latter-day Prospering Father, has built up from nothing the largest company in the world, right at the forefront of technology (as were Carnegie Steel and Ford Motors and Standard Oil in their day) and with a total value equal to the gross national product of a medium-sized country like Turkey. The cost of communicating information is falling steeply and continuously, and there can be no doubt that Gates has had a great deal to do with that fact.