The term "robber baron" first appeared during feudal times, when it described a nobleman who robbed people passing through his domain. The concept was used much later during the Gilded Age (1860-1899) of American history, to refer to a handful of people who governed the business world by taking total control of the industrialization of the United States, a process also known as the Industrial Revolution.
Robber barons took power when the American Civil War (1861-1865) was drawing to its close and everything was in place for a wide-scale industrial expansion. Technological achievements had substantially improved manufacturing processes, while the population was growing on the back of an influx of immigrants, which provided a sustainable and cheap labor force. The country was rich in resources with a strong infrastructure, which saw the nation connected for the first time through a railway system.
The lack of governmental control over business made the competition problem acute, with the need to maintain low prices pushing small enterprises out of the market. The industrialists of that age saw the opportunity of tackling the competition issue by forming pools and trusts, securing themselves a stable market for their products. The robber barons took advantage of this expansion to build their empires.
Among the most prominent organizations founded by industrialists was the Standard Oil Company Trust, formed by John D. Rockefeller (1839-1937). The establishment of thet Trust came 10 years after the so-called Cleveland Massacre, a process of horizontal expansion that saw Rockfeller's Standard Oil Company acquire the majority of petroleum refineries in Cleveland. Other big establishments run by robber barons included the Carnegie Steel Company, set up by Scottish-American Andrew Carnegie (1835-1919), along with the United States Steel Corporation, the empire built by wealthy financier John Pierpont Morgan (1837-1913).
The robber barons became famous for the bold way they formed and ran their businesses, with many of them daring to use innovative technologies. For example, Carnegie applied a steel-making process discovered by British inventor Henry Bessemer (1813-1898) at his steel plants. Later, Carnegie's steel mills introduced the Siemens-Martin process, another innovative steel-making method.
Part of the fame of the robber barons stemmed from abusive practices concerning the workforce, where the barons were accused of exploiting and underpaying their employees. A good example demonstrating this point was the Homestead Strike in 1892. Thirty-five people died and up to 60 were severely injured during clashes between guards, who were reportedly hired by the management, and employees at the Carnegie Steel Company mill in Homestead, Pennsylvania. Despite the four-month strike, the union movement in the steel industry was brought to an end.
Public opinion of the robber barons was not completely negative, as many of them acted as philanthropists. Railroad entrepreneur Cornelius Vanderbilt (1794-1877), considered by many to be the first true robber baron, is regarded as the founder of the Vanderbilt University (formerly Central University) at Nashville, Tennessee, thanks to his generous donations to the institution. Carnegie provided funding to 2,509 public libraries and built music halls, such as Carnegie Hall in New York. He also set up the Carnegie Institute of Technology, presently known as Carnegie-Mellon University. In 1905, he founded the Carnegie Foundation for the Advancement of Teaching, while in 1910 he established the Carnegie Endowment for International Peace.
Morgan was a trustee of the Metropolitan Museum of Art and of the American Museum of Natural History to which he donated many great collections. Gustavus Swift (1839-1903), famous for his meat empire, was among the founders of St. James Methodist Episcopal Church in Chicago and was a donor to the University of Chicago, Northwestern University, as well as the Young Men's Christian Association (YMCA).
The end of the era of robber barons came along with the introduction of a raft of legislative measures that hampered building up extreme wealth. In 1889, Kansas passed the first state anti-trust legislation. By 1900, 27 states had enacted similar regulations. In 1888, Senator John Sherman (1823-1900) introduced an anti-trust measure in the Senate, which was passed by the Congress two years later. The Sherman Anti-Trust Act prohibited any trade-restrictive formation and made monopolization a federal crime. Woodrow Wilson (1856-1924) who served as President from 1913 to 1921, introduced legislation for income taxes and estate taxes, preventing the swift growth of monetary fortune.