ENTREPRENEURS vs. THE STATE
A New Look at the Rise of Big Business
in America, 1840-1920
Burton W. Folsom, Jr.
Reston, Va.: Young America's Foundation, 1987
144 pp., $16.95
It would have been nice if we could have had industrialization without having to put up with the industrialists. At least, it must seem so to readers of college textbooks in American history. For generations we have been taught that the great entrepreneurs were greedy and rapacious at best and downright vicious at worst. They inflicted on the nation an "ordeal" of social and economic transformation so wrenching that it nearly tore the country apart. At the same time they corrupted our democratic political institutions and created a de facto plutocracy. Fortunately, heroic and selfless Progressives, New Dealers, and other forward-looking defenders of the downtrodden masses have countervailed against the unmitigated perniciousness of the classic captains of industry and their unworthy scions.
This portrait is less a caricature than you might think. As Stanford historian David Kennedy, coauthor of a best-selling textbook, has written, "Most American academic historians have thought of themselves as the political heirs of the Progressive tradition." They have written their textbooks accordingly. For the Progressives, much of social, economic, and political life boiled down to a matter of the People versus the Trusts--little people versus big business. Good and evil divided along the same line. This perspective has become deeply embedded in the way historians usually tell the story of American industrialization and economic growth during the late nineteenth and early twentieth centuries.
Now comes Burton W. Folsom, Jr., with a book disputing the received wisdom. The standard tale, he maintains, fails to distinguish two fundamentally different kinds of entrepreneurs. As a result, it goes wrong on many other aspects of the story.
The two kinds
Yes, the great entrepreneurs, almost by definition, all had a keen desire to become rich. This elemental fact, however, does not justify the common description of them as greedy. Greed suggests, if it does not actually signify, selfishness. But many of the great entrepreneurs are still remembered mainly because of their philanthropy: Their names are known to generations now benefiting by virtue of the charitable foundations, universities, libraries, museums, even cities that they founded or fostered. Carnegie, Vanderbilt, Rockefeller, Scranton, Stanford, Ford, Duke, Johns Hopkins--nearly anyone can make a long list of examples. Before his death, John D. Rockefeller gave away more wealth to charities--some $550 million--than any American before him had possessed. So an inordinate desire to make money, far from indicating selfishness, might have been--and no doubt often was--consistent with extraordinary altruism.
What matters to Folsom, however, is neither the great capitalists' desire for wealth nor the raw fact that they got it. The crux is how they got rich. Two quite different avenues presented themselves. They could earn their wealth in the market by offering consumers
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