Leland Stanford – Robber Barron or Captain of Industry
Leland Stanford – Robber Barron or Captain of Industry
Robber Baron’s are Captains of Industry who are looked down upon for succeeding at the expense of others and at the expense of moral integrity. To firmly attach a label to any given person or people is difficult because the distinction between a robber baron and a captain of industry alternates with the point of view from which you hold. Leland Stanford and the Big Four of the Central Pacific Railroad are perfect examples of how there are contrasting arguments about their proper titles in history. Leland Stanford was the president of the Central Pacific Railroad (CPRR or CP) with Collis Huntington, Mark Hopkins, and Charles Crocker as his main colleagues. These four men are looked at in history as both dignified captains of industry who main true the rags to riches stories of America, and unethical robber barons who stopped at no cost, monetary or human, to attain their goals.
Leland Stanford was born to a family of seven children, before himself. He himself was not particularly bright in his early schooling and worked as a farm boy with very minor business ventures involving selling chestnuts in Albany. He was involved early on in the gold rush but with little success, he changed from mining to business. “He then entered into business with two of his brothers who had gone to California in 1849 when the gold rush began. He had become sufficiently wealthy within four years to be regarded as one of the leading citizens of the mining region.”
With success behind him he moved to California and pursued a political career which was largely unsuccessful in terms of winning offices, but victorious in spreading his name. He lost the Free Soil Party treasurer position and the governors office early on. However, inside five years he was able to establish a strong relationship with Lincoln and upon his return to Sacramento in 1861, led the Republican Party and elected governor for a two-year term. A year earlier he had been selected the president of the CPRR. (Emord and Bushong)
Stanford’s involvement in the railroad industry, specifically the CPRR can be attributed to Collis Huntington who recruited both Stanford and Crocker after creating his partnership with Hopkins. Huntington was a businessman who found himself in San Francisco in 1849. Seven years later he and Hopkins who owned a store together were convinced to undertake the work on the first transcontinental railroad by Theodore Judah, a rich man of California. Hopkins was the treasurer in charge of all economic decisions and known by his colleagues as “one of truest and best men that ever lived”. Crocker was key in completing the entire project seven years ahead of schedule. (Emord and Bushong)
The big four became quickly known as very affluent men who were the top businesspeople of the west coast. All four were of backgrounds that did not seem to hold promise for their futures. It was by their hard work and perseverance that they were able to prosper. A quick glance at their intricate history might lead one to see that they were all self made men and that there is no reason to believe that their assets were ill-gained. Behind the political mask and beneath the public stock lies evidence, however, that points to the reason that Stanford and the rest of the big four are considered among the worst robber barons of the time.
The CPRR was obviously important to the country, but the business practices imposed during this time were far from ethical. Bribery was extremely common in the business of the railroad. Huntington went beyond not denying the fact that bribery existed, but wrote on the need for bribery to exist. “If you have to pay money [to a politician] to have the right thing done, it is only just and fair to do it… If [a politician] has the power to do great evil and won’t do right unless he is bribed to do it, I think… it is a man’s duty to go up and bribe” (DeLong)
About $80 million was the capital for the project and it included $25 million from the Government and the rest in bonds. The money was divided $50 million to the CP Credit and Finance Corporation (CPCFC) and the rest sort of vanished, mostly into pockets of those who controlled the destiny of the money. (DeLong) Beyond the $30 million that was conveniently unaccounted by the CPCFC was profit that came from the business that the big four did after they secured interest in their now successful venture.
“…[it] is [some]thing to note about the turn of the century robber barons: even though the base of their fortunes was the railroad industry, they were for the most part more manipulators of finance than builders of new track. Fortune came from the ability to acquire ownership of a profitable railroad and then to capitalize those profits by selling securities to the public. Fortune came from profiting from a shift–either upward or downward–in investors’ perceptions of the railroad’s future profits.” (DeLong)
This is how the big four was able to make a great deal of their money. They knew more or less the upcoming economic trends because they controlled how much the company had, or led the public to believe they had. They could then know when to buy and when to sell.
Aside from the business of the railroads, there was a deep human rights issue that was simply ignored for the sake of getting Pullman sleeper cars across the nation as soon as possible. The white workers quickly realized that the backbreaking work of laying a railroad was not designed for them but rather a menial job for foreigners and immigrants. The solution to the quickly diminishing labor force was the introduction of Chinese people to work the rails. Both Huntington and Stanford were in agreement that the Chinese, after their previous accomplishment being the Great Wall of China, would be the perfect solution to their labor shortage. Irish workers were universally opposed to sharing their space with Chinese people because after all, the Irish had spent generations on generations in America while the Chinese were simply newcomers who would poison society.
The Chinese proved to be both extremely diligent as well as disposable. Early in the quest across the Sierra-Nevada mountain range, they were very knowledgeable about the gunpowder used and they knew well the dangers of it. However, upon the use of nitroglycerin, things began happening much faster and with less caution. This was the source of loss of thousands of Chinese workers’ lives. The Chinese were treated poorly and paid less than the Irish. The conditions were hazardous and the quality of life was diminished for them. This can easily be pointed to as a reason that the big four might have been considered unethical for letting this happen. (Emord and Bushong)
Its undeniable that the development of the West and the success of the country could not have happened without the CPRR and the Big Four, but the machiavellian question arises, does the end justify the means? The answer is no. That is not to say that the transcontinental railroad was unimportant. The loss of life was in order to move things along quicker. The expense was not at all justified by the arrival of the line seven years early. The dirty business practices of the big four was not done in the best interest of the company. In fact all shareholders, the largest single one being the United States government, lost out because of the poor management of money in the company. Stanford and the rest all died with more money than they could spend. Leland Stanford, Collis Huntington, Mark Hopkins and Charles Crocker were at their overall best among the greatest robber barons of the 19th century.
(1)DeLong, J. Bradford, “Robber Barons” University of California at Berkeley, and NBER
(2) Folsom, Burton W., The Myth of the Robber Barons
(3) Bailey, Thomas A., Kennedy, David M., Cohen, Lizabeth. The American Pageant. Eleventh ed. Houghton Mifflin Company: New York. © 1998