KSP Review of “The First Tycoon” in DMN

by admin on May 17, 2009

‘The First Tycoon’ by T.J. Stiles: a

look at the life of America’s first corporate titan

12:00 AM CDT on Sunday, May 17, 2009

By KASEY S. PIPES / Special Contributor to The Dallas Morning News
Kasey S. Pipes, a former speechwriter for George W. Bush, is the author of Ike’s Final Battle: The Road to Little Rock and the Challenge of Equality.
On Jan. 27, 1870, the New York Central & Hudson River Railroad convened its first stockholders’ meeting. The merger of the previously separate rail companies marked a watershed moment in American history: the beginning of the giant corporation in American economic life. And it was made possible by one man: Cornelius Vanderbilt.

Long before Gates, Walton or Perot, there was Vanderbilt. The first great corporate titan in American history, the Commodore’s reputation has largely evolved into a caricature. It started with Mark Twain, a contemporary whose satire suggested the Commodore had no soul. But it was sealed by Matthew Josephson, whose 1934 book, The Robber Barons, cast Vanderbilt as a leading villain in a cast of rogues who stormed the economic stage in the late 1800s.

In recent years, Ron Chernow has reassessed J.D. Rockefeller and Jean Strouse has re-examined J.P. Morgan. Now, T.J. Stiles recasts Vanderbilt not as a villain, but as a visionary whose surreal life was matched only by his stunning legacy.

In The First Tycoon Stiles does more than trace the journey of a man; he tracks the evolution of a country. The Commodore’s career began in steamboats when America still operated as a largely agrarian society. Later, as the railroad titan, he literally helped transport America into the industrial age. Above all, the king of the railroads was an agent of change.

First, he changed the way America conducts business by creating the giant corporation. As Stiles writes:

“By consolidating two companies of great size and financial health, it created a single behemoth on an unprecedented scale. This new entity, the giant corporation, would spread into manufacturing, as seen first in Standard Oil and later in other industries, beginning with a great wave of mergers from 1895 to 1904; eventually it would dominate every other sector of the economy as well.”

From that point forward, the American economy would feature economies of scale that helped reduce prices and increase productivity. It also helped create a managerial middle class as more Americans began to work for the new giant corporations.

Vanderbilt also changed American finance. When he first ascended to the presidency of the New York Central, he decided to do more than build railroads, according to Stiles. Instead, “he would be a creator of the invisible world, a conjurer in the financial ether.” In March 1867, his plan to essentially create stock splits (increasing the amount of stock by issuing new shares) was approved to much outrage in the financial world. In the 20th century, it became a common Wall Street practice.

And Vanderbilt changed American law. Earlier in his career, his steamboat operation was so successful that the owners of a rival company sued. In the Supreme Court case, Gibbons vs. Ogden, the court upheld the federal government’s right to regulate commerce and overturned a state law that gave Vanderbilt’s competitors a virtual monopoly.

Stiles writes vividly of the Commodore’s life and times, showing his personal failings but focusing on his professional successes. His book is blessed with timing, as the recent market collapse might create interest in a man who laid the foundation for so much of corporate America. And this thorough and thoughtful book serves as an important corrective that unmasks the Vanderbilt caricature and reveals a more nuanced, complex and interesting portrait.

Kasey S. Pipes, a former speechwriter for George W. Bush, is the author of Ike’s Final Battle: The Road to Little Rock and the Challenge of Equality.

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