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American Tycoons

Tycoon. The word comes from Japan, where it means the equivalent of shogun. But long ago America confiscated the title. It was in the U.S. that tycoons became paragons of power and influence. American tycoons swung deals, not swords, and changed the
From the Print Edition:
J.P. Morgan, Mar/Apr 00

Tycoon. The word comes from Japan, where it means the equivalent of shogun. But long ago America confiscated the title. It was in the U.S. that tycoons became paragons of power and influence. American tycoons swung deals, not swords, and changed the business landscape forever. The Gilded Age was the greatest era of tycoons. At the end of the nineteenth century, the Industrial Revolution was in full swing and every emerging market seemed to have at least one power broker ready to corner it. No antitrust laws stopped monopolies.

No income tax sapped personal wealth. Men were free to form trusts and build great monuments with their riches. To be sure, tycoons had already existed, but new technology created a boomtown. The courts and taxes did their best to remove tycoons from the playing field, breaking up the great trusts and making it harder to pass wealth through generations. What arose was an age of managers. Corporate power was consolidated by the likes of General Motors' Alfred Sloane--great businessmen but not really tycoons. F. Scott Fitzgerald seemed to think that the tycoon phenomenon had run its course when he wrote about a movie mogul in The Last Tycoon. Not by a long shot. The Electronics Age has ushered in a new round of tycoons itching to take over computer and communications markets.

Herewith, we've assembled a list of the nation's great tycoons. What do they have in common? It isn't higher education. Most of our choices never graduated from college, although five have their names on universities. The two who went to Harvard dropped out. It isn't technical preeminence. Astor never set a fur trap. Rockefeller never dug an oil well. Gates didn't design his operating system. Tycoons are set apart by their ability to change the world and their belief that the world should be theirs. Add a ravenous work ethic and you have a fair description of the men who follow.


When Andrew Carnegie was a boy in Dunfermline, Scotland, his mother impressed upon him a favorite credo: "Look after the pennies, and the pounds will look after themselves." That tenet would guide Carnegie throughout his life. In 1848 Carnegie's father, a skilled weaver, lost his career to the power loom, and the family sought opportunity in America, settling near Pittsburgh. The 12-year-old Andrew started as a bobbin boy in a textile mill, then ran telegraph messages. Pennsylvania Railroad superintendent Thomas Scott hired 17-year-old Carnegie as an assistant. The young apprentice repaid his boss by boosting the railroad's profits with cost-cutting measures that would become his hallmarks: he increased the flow of freight on the lines, lowered costs with revolutionary cost-accounting techniques, and cut wages.

By 24, Carnegie was running the western branch and investing his own money in oil, iron and other companies. (During the panic of 1873, Scott would ask Carnegie for financial help. Carnegie turned him down.) By his mid-30s, Carnegie was a wealthy man with an affinity for iron and the metal of the future, steel. He built his own steel mills using the latest technology and hiring the best employees. He secured every facet needed for steelmaking, from iron deposits and coal mines to railroads and ore ships. He plowed his profits back into the business and continued to cut costs. Extremely competitive, the diminutive (5-foot-2-inch) Steel King was soon outproducing, underbidding and crushing rivals, while supplying low-priced rails and bridges to burgeoning America.

Carnegie Steel became the largest steelmaker in the world. Carnegie's business techniques belied his public persona. Son and nephew of social reformers, Carnegie portrayed himself as a friend of the working class, publicly supporting eight-hour workdays (the standard was 12) and union labor. Yet his workers labored at blast furnaces 12 hours a day, seven days a week for a Carnegie-reduced wage of 14 cents an hour. In 1892, Carnegie's partner, Henry Clay Frick, crushed Carnegie Steel's last union in bloody clashes at its Homestead steel plant outside Pittsburgh. The public was horrified, and Carnegie tried to blame Frick.

In 1901, Carnegie sold out to financier J. P. Morgan for a stunning $480 million, with Carnegie's $250 million cut making him one of the richest men in the world. Whether it was his relatives' reformist influence or a Presbyterian regard for the Final Judgment, Carnegie embarked on philanthropy with the same zeal he had brought to building his empire. Declaring that "the man who dies rich dies disgraced," Carnegie disbursed $350 million of his $400 million fortune, building more than 2,500 libraries and other institutions before his death in 1919.--Terrence Fagan


In 1855, a devout young Cleveland Baptist took a bookkeeping job with a local merchant and found it so fulfilling to pore over the minutiae of accounts that he thereafter celebrated the anniversary of his first payday as joyfully as his own birthday. John D. Rockefeller was so convinced that it was his providence to become rich through figures that he would later say, "God gave me my money."

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