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History of the wealthy families of America

Our quest to trace the history of the wealthy and powerful families of America, takes us back to the origins of white settlements on the North American continent. During the first half of the 17th century, what is now called the Old East of the Unites States was populated by peaceful Indian tribes, in their generous and extensive way, which was so uncommon for people from the densely populated Old Continent. Land was plentiful, forests on a scale that had not existed in Europe for a thousand years, and it was left to the imagination of every pioneer, to gather the magnitude of natural resources and the opportunities that arose from trading these in Amsterdam, London and other cities for gold. True, the first settlements were adventuresome and occasional Indian raids could prove fatal, yet no land on earth promised so large rewards to the brave and steady and time was decidedly in favor of the settlers.

The motivations of the first settlers were diverse; some were adventurers, thrilled by the discovery of a New World, others fled Europe to practice their religion freely, still others merely sought fortune - but all thrived to establish a presence in America. Soon, there were leaders in all parts of the Colonies, men who understood better than others, how to wrest control over the land and resources from the Indians and how to keep a large part of the prize for themselves and their families. They were master organizers and strong persuaders, well connected with the established powers or popular with the common men, like John Winthrop who established the Boston settlement in Massachusetts (1630), Roger Williams who founded Providence in Rhode Island (1636) or William Penn, the founder of Pennsylvania (1683). While many of these men were real leaders and pioneers, others like Kiliaen Van Rensselaer acceded to wealth in the Colonies by their already established position in the Old World.

Thus as soon as the first settlements were firmly established, large fortunes were made or increased by the leaders of the new colonies. The origins and nature of the thereby created wealth depended on the natural conditions, the political system of the respective colonies and density of settler population reached after the initial period. In New England, land permitted self sustaining farming and was generally owned by the settlers, larger fortunes were made through trading of beaver skins and other resources by the enterprising shipping merchants. In the South, the successful establishment of plantations fueled population growth and the ascent of planters to an aristocratic lifestyle, a tendency further enhanced by the introduction of slavery. In New York, where settlement was slower, the systems of patroonship and manor lordship allowed for huge land tracts, along with feudal rights, to be granted to the able and well connected. Thus, the landed gentry of New York and New Jersey, first represented by the patroons of the Dutch West India Company then by the manor lords instituted by the English Crown, are among the first families in America who can be classified as detainers of large fortunes.
 

The Gilded Age - Industrial revolution in America

The saga of American wealth creation, both for the nation and for its enterprising capitalists, reached its apotheosis during the Gilded Age, a period roughly delimited by the end of Civil War and the beginning of World War I.

In America, this period was characterized by seemingly boundless economic expansion and the emergence of a new nation, which had completed the conquest of its vast Western territories and taken the lead among other nations, in industry and trade.

America had always been a continent of opportunity, a promising land for the adventurous capitalist as well as for the poor immigrant. Yet, during the Gilded Age, the rapid transformation from an agricultural and mercantile economy to industrialism, presented unprecedented opportunities to daring speculators and inventive entrepreneurs.

As the United States economy transformed itself and grew under the leadership of new tycoons, America's established mercantile society once again transformed itself under the impact of the nouveau riche, opportunistic industry leaders or speculative railroad promoters.

What were then the forces, which brought such lasting change and created so many American fortunes, of proportions never seen before and hardly matched in later times ? How did these fortunes measure up to the longer established family wealth, built by the equally daring shipping merchants or the silently accumulated city real estate holdings ? And, most stringently, who where these capitalists, we know by their names of Vanderbilt, Gould, Rockefeller or Morgan and how did they build up their huge fortunes ?

This second book of "A Classification of American Wealth" covers the exciting period of the Gilded Age and sketches the origins of the large 19th century fortunes which were built by the people variously qualified as the tycoons, the moguls, the magnates or the robber barons.

There is a widespread myth, that Civil War and more precisely war profiteering was at the origin of most of the large fortunes made during the Gilded Age. This is wrong, especially on the issue of war profiteering.

It is true that some of the outstanding capitalists who rose in the Gilded Age, benefited from better than usual profits due to war demand and subsequently went on to build their large fortune. Examples include John Davison Rockefeller, who was a commission merchant in Cleveland during the war and Philip Danforth Armour, who had tried himself as a gold-seeker in California.

Rockefeller used the above average wartime profits to finance his investment in Samuel Andrews' oil refinery, which led to the creation of Standard Oil and his huge fortune. But John D. Rockefeller was an astute businessman who also knew how to borrow money to finance promising projects. It is more than probable that such a man would have found a way to finance his visions, even without the war induced profits of his commission house. Moreover, most (Northern) businesses benefited from the war demand and this could hardly be considered profiteering.

Armour more directly profited from Civil War or more precisely from his correct evaluation of the final three months of the conflict. Rightfully predicting a series of Union victories, which would result in the Confederate surrender, Philip Danford Armour sold pork short in New York City and made his first million in the process. Having founded his wealth on pork, Armour then went to Chicago, where he built up the greatest pork packing house in partnership with his brother Herman Ossian Armour. Here again, the war had defined an environment, where an outstanding opportunity presented itself to a daring speculator. It must be assumed that such a man would have found a way to incept his fortune in another environment too.

It is also true that the Secession War influenced political and economic factors in such ways as to enable certain capitalists to rise from virtually nowhere to national prominence. The building of the first transcontinental railroad and the emergence of industrialists like Singer and McCormick are examples.

A railroad to the Pacific had been projected for many years, especially after California grew rich and populated, as a consequence of the gold rush. Many routes to the Pacific had been surveyed, but a government financing scheme repeatedly failed in Congress because the interested parties were unable to decide on a route. As a result of Secession, the main opponents on what became the Union Pacific route where no longer in Congress and in 1861, the Pacific Railroad Act lay the ground for the first US transcontinental railroad. The subsequent fortunes of the Thomas C. Durant and Ames, as well as the Pacific Quartet (Leland Stanford, Charles Crocker, C.P. Huntington and Mark Hopkins), were based on this monumental construction project. Then again, the transcontinental railroad would have finally been built anyway, maybe by other men and at (slightly) lower profits.

Finally, it has been widely insisted that the disruption of normal labor conditions during the war, in conjunction with the increased demand for food and clothing, was directly responsible for the rise of the McCormick Harvester and the Singer Sewing Machines fortunes. Again the logics are quite clear. The more soldiers the Union armies needed left less farmers to grow more grain needed to supply the campaigns. The McCormick reaper was the technological solution to this problem. A similar reasoning holds for Singer's sewing machine. But again, it can easily be argued that the war was just the catalyst, an acceleration factor of a movement, which was already under way, when it occurred. And again, this cannot be considered war profiteering.

Thus the direct impact of Civil War and war profiteering were not the major factor in the building of the large Gilded Age fortunes. It was more, the combined impacts of the opening of the Western frontier, the discovery of rich mineral resources (much needed by emerging industries), the increasing population (both through immigration and natural growth) and the ability to attract talents and capital, which created the unprecedented opportunities. It was only natural, that such a nation would also produce or attract enterprising men (and women) to seize these opportunities and thereby build large fortunes.

The first expression of the Gilded Age actually occurred more than ten years before Civil War. It started with the discovery of gold on John August Sutter's farm in Central California. The event ended California's peaceful existence as a distant agricultural colony, a seemingly worthless prize won as a side effect of a more proximate war. It precipitated America into a frenzy, which was never seen before and would be so characteristic of the Age of Moguls. In the Sacramento of the early 1850's, fortunes were made and lost by the day. Thousands of hopeful fortune-seekers enriched the visionary shipping magnates who organized faster service to the Pacific Coast.

Fortune eluded most of them and rather rewarded the astute merchant or banker for his trading sense, than the miner for his courage and hard work. Speculation was paramount and fed an ever increasing inflow of adventurers, laborers and entrepreneurs. The mining bonanza started with the gold rush of the Forty-Niners in California and extended to Nevada and the other Western territories, creating a new economy, in what was once the forgotten Pacific Coast of North America. The large mining fortunes were not made from the gold of California in the 1850's, but rather from the silver and lead of Nevada in the 1870's and from copper in other states still later.

Fabulous mining bonanza kings included the Big Four of the Comstock Lode : John William Mackey; James Graham Fair, James Clair Flood and William Shoney O'Brien. Mining fortunes laid the foundation for California and the West Coast's economy and later radiated on the whole nation's economy, as the mining bonanza kings and their descendents invested their silver or copper profits in enterprises of national interest.

After organizing with James G. Fair the Bank of Nevada in San Francisco, John William Mackay joined New York press lord James Gordon Bennett in the Commercial Cable Company, which laid a transatlantic cable and challenged the Western Union Telegraph Co. George Hearst, whose mining fortune stemmed from the Homestake and a share in Marcus Daly's Anaconda, bought the San Francisco Examiner and gave it to his son to manage. Using the millions he inherited from his father, William Randolph Hearst later built one of the major tabloid newspaper chains in the Twentieth Century.

Railroads were the field were many of the greatest Gilded Age fortunes were built. With the opening of the West, railroad construction reached record proportions just after Civil War and during the 1870's and 1880's. Railroad mileage rose from 35'000 miles in 1865 to over 163'000 in 1890, almost a fivefold increase. Railroads became the knit which held together the growing nation, creating by their very existence opportunities for entrepreneurs in other fields.

In 1865, railroads had been around for a generation and the Eastern trunk lines, which would soon make the fortune of the first great railroad tycoons, were already in existence. Started with municipal and state aid by local merchants, the Baltimore & Ohio Railroad had crossed the Appalachians and become a profitable business, already firmly in the hands of Johns Hopkins and John Work Garrett. Hopkins was a self-made liquor merchant and Garrett the son of an established merchant banker. Both men became multi-millionaires from their investment into the B&O. Further North, the Pennsylvania Railroad was started in a similar way and also had found its leaders, in the persons of John Edgar Thomson and his able vice-president Thomas Alexander Scott.

In 1853, a loose group of scattered railroads were merged to form the New York Central, the first significant railroad consolidation in America. The promoters of this scheme, men like Erastus Corning and Dean Richmond, became wealthy capitalists, although not major tycoons. Their railroad would become the nucleus of a system belonging to the richest railroad tycoon ever, a man who hade already made a fortune in the steamship business.

After the outbreak of Civil War, Cornelius Vanderbilt left the steamship business, sold most of his ships to the Union Navy and started his career of a railroad tycoon. In a number of short campaigns, he acquired the New York & Haarlem, the Hudson River and the New York Central railroads and consolidated them into a through system, running from New York to Buffalo. He later acquired the Lake Shore & Michigan Southern and completed his system through to Chicago. In the process he built himself a fortune of 105'000'000 $ and became the richest man in the world.

Through their Credit Mobilier construction company, the builders of the Union Pacific Railroad, including Thomas Clark Durant and the Ames brothers of Boston, made a fortune of some $ 16 million. By holding to their shares for a longer time and monopolizing the traffic in California, the Pacific Quartet (Stanford, Hopkins, Huntington and Crocker) made many times more from the shorter Central Pacific railroad, the first to cross the Sierra Nevada.

Other railroad tycoons made equally large fortunes in all regions of the United States, building other transcontinental roads, speculating on their stocks and bonds to eventually consolidate them in ever larger systems, spanning whole regions and driving towards a monopoly, which they never seemed to reach. Men like Jay Gould, Jim Fisk and Russell Sage became known as the archetypes of the robber barons, preying on their fellow citizens to extort their money in devious Wall Street speculations or corporate coups.

Many more could be cited here and will be sketched in detail in these pages : John Insley Blair, who at one time owned more railroad mileage than any other American; James Jerome Hill who quietly built the Manitoba into the Great Northern Railroad or Edward Henry Harriman, who reorganized the reputedly bankrupt Union Pacific in 1895 and from there built the largest railroad system in the West, thwarting even the great John Pierpont Morgan.

J.Pierpont Morgan was another monument of the Gilded Age. This son of a wealthy merchant banker joined forces with the Drexels of Philadelphia in 1873 to precipitate the fall of Jay Cooke, the patriot banker and Union bond broker now hopelessly entangled in the building of the Northern Pacific railroad. Morgan then became the peacemaker in the railroad wars of the 1880's, having gained the Vanderbilts' confidence in a transaction involving the sale of 100'000 New York Central shares in London and benefiting from the Drexels' introduction at the Pennsylvania.

Drexel, Morgan & Company became J.P.Morgan & Company in 1893, the nation's premier investment bank. It actively participated in the reorganization of railroads and in the consolidation of industries and public utilities. When he created United States Steel in 1901, the first American corporation with a capitalization exceeding $ 1 billion, John Pierpont Morgan wielded more power than any other American capitalist and indeed and other man in the World. Morgan creations also included General Electric, International Harvester and the reorganization of American Telephone & Telegraph Company. The Titanic was a ship of the International Mercantile Maritime trust, a corporation J.P. Morgan sponsored in 1902.

In many ways, the Gilded Age was also the age of the banker, who evolved from trade financier to railroad consolidator and organizer of industrial corporations. Morgan was the greatest and most charismatic of the great investment bankers of his time, but he was in no means the only one, and he was also not the richest. The superlative among the bankers in terms of wealth fell to the Mellon brothers of Pittsburgh. Andrew William Mellon and Richard Beatty Mellon took active participations of more than the usual token value in the enterprises they financed. They were major stockholders in the fabulously successful Gulf Oil corporation and the Aluminum Company of America. Their aggregate wealth exceeded $ 1 billion before the stock market crash of 1929.

The Gilded Age saw also the rise of the great commercial banks, most of them located in New York. Moses Taylor built the City Bank into New York's largest and made himself a 40 million dollar fortune. James Stillman, who took the presidency of the National City Bank in 1891, built its assets to the $ 1 billion mark. George Fisher Baker did not found the First National Bank of New York, but he became its largest shareholder and head from 1877 until his death in 1930. These banks later merged to form the First National City Bank of New York, nowadays known as Citicorp.

The Gilded Age also saw the establishment of Jewish banking houses in America, where they had long been absent, or at least much less influent than in Europe. August Belmont was the agent of the Rothschilds in New York and in this position, one of the most influent Jewish banker in America. The Seligmans were merchandise peddlers and clothing merchants before establishing their international banking house J & W Seligman & Company.

But the largest and most influential American Jewish banking house was Kuhn, Loeb & Co of New York. Founded by Abraham Kuhn and Solomon Loeb in 1867, the firm was later directed by Jacob Henry Schiff (1847-1920) who sided with E.H. Harriman in 1901 against J.Pierpont Morgan and James Jerome Hill in the battle for the Northern Pacific. Kuhn, Loeb & Company was related to the house of M.M. Warburg of Hamburg, Germany. The main partners of Kuhn, Loeb & Co were interrelated by marriage as was quite usual in Jewish American businesses at the time.

Like the bankers, so did the merchants evolve to superlatives in these times of rapid growth. The first of the great merchant princes was Alexander Turney Stewart, whose A.T. Stewart department store became a monument in New York City. In 1875, A.T. Stewart was the third richest man in America. Unlike Vanderbilt and Astor, Stewart had no children and therefore failed to found a dynasty. The A.T. Stewart department store was acquired by the Wanamakers of Philadelphia. Marshall Field built the largest department store in Chicago and became one of the richest Americans at the turn of the 20th century. Department stores rose in all major American cities : Macy's in New York, controlled by the Straus family; Strawbridge & Clothier in Philadelphia; Filene's in Boston and many smaller ones.

The growing population and the rising standard of living brought huge opportunities to those merchants, who understood how to supply the newly created and steadily growing demand. New retailing concepts were tried and successfully developed by the mercantile visionaires of the times. One of these concepts were chain stores, or the idea to build a specialized store in one place and then reproduce it in many other places, with central purchasing functions to leverage on volume. Frank Winfield Woolworth was the king of chain merchandising with his 5 & 10 cent stores. George Huntington Hartfort also built a very successful specialized chain with his Great Atlantic & Pacific Tea Company. Another new retailing concept was mail order, the direct ancestor of nowadays e-commerce. Richard Warren Sears and Aaron Montgomery Ward were the successful pioneers in this field.

But the Gilded Age was first of all the age of industry. During the second wave of industrial revolution, the small family manufactories and mercantile partnership gave way of ever larger industrial plants, financed and promoted by a new breed of capitalists. It was the age of the trusts, these nebulous legal creations, predecessors of the modern corporations, which so much scandalized the public by their strive to monopoly.

The first and largest trust, sometimes called the "mother of trusts", was the Standard Oil company, whose main promoter, John Davison Rockefeller, later became the richest American ever and also one of the foremost philanthropists. The basis of the Standard Oil Trust was the secret association of the major oil refiners in Cleveland, Pittsburgh, Philadelphia and New York, to bring order to the anarchy, that prevailed in the Western Pennsylvania oil regions. Under the umbrella of Standard Oil, John Davison and William Rockefeller gathered the leading oil industrialists of their times : men like Charles Pratt, J.A. Bostwick, Charles Lockhart, William Gray Warden, J.J. Vandergrift and John Dustin Archbold. Each of these men became a multi-millionaire.

Standard Oil was so fabulously profitable after the trust agreement of 1882, that the major partners had millions to invest in other enterprises, which they eagerly did. Henry Morrison Flagler developed Florida, building railroads and palatial hotels. Oliver Hazard Payne joined his brother-in-law William Collins Whitney and the latter's street railway cronies to refinance and extend the American Tobacco trust, which was founded in 1890 by the Dukes of Durham, North Carolina. Henry Huddleston Rogers first assembled the smelters trust, of which he lost control to the Guggenheims; then he participated in the amalgamation of the copper mining industry, along with William Rockefeller and James Stillman. The great John Davison Rockefeller himself heavily invested into the Mesabi iron ore range, in preparation of a consolidation in steel.

The Gilded Age was also the age of steel. Needed first for the vast extension of the country's railroad network, steel was the pillar of the U.S. industrialization during the second part of the 19th century. Technically the steel industry was based on the introduction of the Bessemer process. The champions of Bessemer steel were Andrew Carnegie and his handpicked team of partners and managers, including Henry Phipps, Alexander Holley, Captain Bill Jones, and later Charles Schwab and William Corey. One of the main Carnegie partners was Henry Clay Frick, who also dominated the coke industry at Connellsville, Pennsylvania.

Steel was one of the most capital intensive industries and only the strongest companies could support the necessary continuous modernization and extension of the plants. A profitable business and essential component of the industrial revolution, steel soon became the coveted turf of some of the major corporate consolidators. John Warne Gates built the American Steel & Wire Company, grouping most of the country's wire mills under one umbrella. He also participated with Jay C. Morse in the consolidation of three major Chicago plants into Illinois Steel. J. Pierpont Morgan hired Judge Elbert Henry Gary to manage his Federal Steel Company and the Moore brothers from Chicago created several steel product trusts.

Both the Moores and J.D. Rockefeller made attempts to takeover Carnegie Steel toward the end of the 1890's, working through Henry Clay Frick. But is was Morgan, who finally clinched the deal with Carnegie and managed to organize the giant United States Steel corporation in 1901. With a capitalization of 1.4 billion dollars, U.S. Steel was apotheosis of the trust movement. Within a few years, the giant group took over Gates' wire trust, Rockefeller's Mesabi iron properties and the Mellon's Union Sharon Steel company. Charles Schwab was made the first president of U. S. Steel, but he resigned after just three years, took over Bethlehem Steel and built it into a major rival.

With the growth of American cities and the relentless push of modern civilization to the very edges of the frontier, a new sector of services known as "public utilities" emerged. Public utilities roughly comprised telecommunications, street railways an gas or electricity suppliers. Telecommunications started with the telegraph lines, whose early promoters included Ezra Cornell and Hiram Sibley. Their Western Union Telegraph company soon had the reputation of a stable investment held by many of the richest capitalists, including the Astors and the Vanderbilts. Through a series of merger transactions, Jay Gould and Russell Sage gained control during the 1880's.

These robber barons, already among the leading railroad tycoons, soon also controlled the Manhattan Elevated railways. During the 1890's, a group of New York and Philadelphia capitalists consolidated the street railways in both cities and reaped huge profits. They were William Collins Whitney, Thomas Fortune Ryan, Anthony Nicholas Brady, Peter A. B. Widener and George Lukens Elkins. With the profits from their street railway transactions, these men took large positions in gas and electricity companies, mining enterprises, the nascent automobile industry and the American Tobacco trust. There they sided with James Buchanan Duke, who invested a sizeable part of his tobacco millions into the Duke Power utility.

The huge fortunes they derived from their mining, railroad, banking, merchandising or industrial activities, brought the American capitalists a status, second to none, including royalty. And like the kings and earls of Europe or the somewhat more modest colonial manor lords and plantation owners, the kings of fortune left their landmarks to posterity, mainly in the form of their castles and mansions. Superlative architectural expressions of great wealth were built in many places, but they tended to favor certain spots, such as Long Island and Newport R.I.

The Vanderbilt family easily outdid all other wealthy families of the Gilded Age in their architectural aspirations, although the Du Ponts of Delaware later made it to a close second. Their favorite architect, Richard Morris Hunt, built the Vanderbilts no less than five castle like mansions, including 660 Fifth Avenue, Idle Hour, Marble House, the Breakers and Biltmore, the largest of them all. A dozen other mansions rounded the set of Vanderbilt family seats, which had reputedly cost an aggregate of more than $ 100 million. Like the Livingstons a hundred years earlier, the Vanderbilts built their social prominence on the stones of their lofty country estates.

The Du Pont family's mansions were all built in the countryside of Delaware and nearby Pennsylvania in an area which is known as the "American château country". Nemours, Longwood, Winterthur, Louviers, Granogue, Montchanin, Chevannes, Owls Nest, Bellevue, Henry Clay and Guyencourt are so many lofty estates, nestled in the quiet Brandywine valley. Many of them are nowadays open for visitors, as are most Vanderbilt castles, but some are still entirely private properties.

Like the Vanderbilts and the Duponts, other wealthy families built their mansions preferably in the countryside close to their hometowns, in Newport or in Florida. John Davison Rockefeller's "Kyukuit" and Jay Gould's "Lyndhurst" are examples of the first type. "The Elms" of Edward Julius Berwind and Theresa Fair Oelrichs "Rosecliff" and Ogden Goelet's "Ochre Court" are famous Newport mansions. James Deering's "Vizcaya" and Henry Morrison Flagler's "Whitehall" were famous Floridian palaces. Many more could be cited here.

But the great capitalists of the Gilded Age also left more public minded legacies. Many of them ended a lifelong passion of art collectors by leaving their collections to a museum, sometimes also endowing the necessary buildings and running costs. The most notable art collectors and donators were J. Pierpont Morgan, Henry Osborne Havemeyer, Andrew William Mellon and his mentor Henry Clay Frick. But Gilded Age fortunes would go on nurturing art endowments for generations, as in the case of the Guggenheims or the Wideners.

Some of the greatest magnates just left a sizeable part of their fortune to philanthropic foundations, to fund worthy endeavors for generations to come, along the guidelines established by the donors. Andrew Carnegie devoted the last two decades of his life spending the money he had made before. John Davison Rockefeller did likewise in what some would later term as an attempt to restore his image and shed the cloak of the villain, he had inherited from Jay Gould. Other large endowments were made by the Harknesses of Standard Oil, James Buchanan Duke and the widow of money king Russell Sage. In their philanthropic moves, these capitalists followed the examples set by the wealthy men of the earlier mercantile era, men like Amos Lawrence, Stephen Girard and George Peabody.

The Gilded Age ended sometimes in the first third of the 20th century, Some cite the 15th of April 1912, the night when the ocean liner Titanic sank. Others mention World War I or the stock market crash of October 24, 1929. All these events certainly had an impact on the factors which put an end to the Age of Moguls in America. The Titanic disaster taught mankind that there were still limits to where it could go. World War I started a process in which the power of the federal government was increased against the power of the tycoons, a process which would be furthered by the depression which followed the stock market crash of 1929. But what really put an end to the Gilded Age or the age of the moguls, was the introduction of income and estate taxes during the Wilson administration. Corporate and income taxes rendered wealth accumulation slower and more difficult, whereas the estate taxes prevented the perpetuation of wealth in the hands of the founding families.

America In The 20th Century

If one technology had to be singled out to mark the beginning of the Twentieth Century and the ensuing modern American Way of Life, it would be the automobile. No invention of that time brought more change to mankind, and America, with its long distances and wide open spaces was more eager to adopt it than any other nation in the world. Cars, as horseless carriages first a curiosity, became an essential factor in the development of our nation, both in relation to consumption and as the powerful industry they created.

The automobile was a key factor of social emancipation, as it permitted the individual (farmer, small businessman and common consumer) to by-pass the highways of commerce, which at turn of the 20th century were controlled by an oligarchy of railroad and steamship magnates. Together with increased government regulation, the popularization of the automobile (cars and trucks) ended the predominance of the large railroad trusts in America (and elsewhere) and contributed to the establishment of a new social order : the emergence of the Middle Class.

This development was not that obvious in the beginnings though. Although the first steam carriage appeared in America as early as 1861 (built by Sylvester H. Roper in Roxbury, Massachusetts), it would take another thirty years until functional electric (William Morrison's) or gasoline (Frank Duryea's) carriages appeared on America's streets. The establishment of an actual automotive industry, as an offspring of the wagon and carriage manufacturing business, came with the Duryea Motor Wagon Company (of Springfield, Massachusetts) in 1895, the first in America to be organized with the purpose of manufacturing gasoline powered cars.

The Winton Motor Carriage Company of Cleveland, Ohio followed in March 1897 and the Olds Motor Vehicle Company of Lansing, Michigan in August of the same year. It would take several years for both companies though to build a significant number of gasoline powered automobiles.

More important, from an industrial standpoint, was the organization of the Electric Vehicle Company in Hartford, Connecticut which involved bicycle tycoon Albert A. Pope and a manufacturer of electric storage batteries : Isaac L. Rice. Within two years this company produced 500 electric and 40 gasoline carriages under the "Columbia" brand, essentially used as taxicabs in New York and other cities.

During a winter blizzard in New York City, all traffic was halted except Isaac Rice's electric carriages, which managed to operate on the sidewalks. This attracted the interest of street-railway magnate William Collins Whitney, who promptly acquired the business, added the motor carriage department of the Pope Manufacturing Company and recapitalized it all at $3'000'000.

As an important sideline deal, the traction group also acquired the rights to a patent, granted in November 1895 to George B. Selden of Rochester NY, for his design of a gasoline powered automobile. With its huge capitalization (brought to $20 million by 1902) and the rights attached to the Selden Patent, the Electric Vehicle Company was geared to become the dominant factor in the nascent American automobile industry.

Why it came otherwise and how the American automotive industry escaped control by the oligarchy of Eastern capitalists, to the benefit of the Midwest and more specifically Detroit, is essentially the story of two men, who rose to become America's leading automobile tycoons. Over a period of 25 years (1895-1920), considered the formative stage of the American automotive industry, many if not most of its pioneering businessmen orbited with their activities, in a way or another, around these two leaders : Henry Ford and William Crapo Durant.

These two, in physical appearance, character and background so different men shared a vision for the future of the automobile, a hang to grass-roots popularity and apprehension towards Eastern bankers and capitalists. Henry Ford was tall, thin and austere, while Billy Durant was undersized, jovial and charming. Ford's parents were simple although not poor farmers, whose forbears had immigrated to Michigan from Ireland, whereas Billy Durant's grandfather, Henry Howland Crapo, was an established merchant and realtor in New Bedford, who moved to Michigan to manage his investments and rose to be governor of the state.

Henry Ford was an engineer, the archetype of automotive pioneer, who tinkered on his Quadricycle in a backyard workshop of his house. Durant was a salesman, persuader and to some extent organizer, who cared little for technical details and much for people : customers, business partners and the general public. Both men liked the spotlight and popularity, fame and fortune brought them; the introverted Henry Ford using it to convey his ideas, while the extroverted Billy Durant simply made friends.

In a way only history could set coincidences, both men had their decisive years in 1908, 1919 and 1947. Henry Ford launched his famous Model T, the car which made his success, in 1908 and Willie Durant founded General Motors in that same year. Both reached the peak of their power within their companies in 1919, Ford when he bought out his minority shareholders for an aggregate $105'820'894.57 and Durant, whose position as president and largest shareholder, enabled him to direct the company at his discretion, or almost, after having re-conquered it from the hold of a banking syndicate in 1916. Both men had personal fortunes exceeding $100 million in 1919, putting them in the league of America's richest people. Durant stumbled over his own speculative nature and lost control of General Motors along with the major part of his fortune in the post war recession of 1920, while Henry Ford weathered the storm and eventually became a billionaire. Both men died less than a month apart in 1947.

It is around these two towering figures, that most of the remaining automobile producers, parts suppliers and managers, developed their businesses and oriented their careers in the first decades of the Twentieth Century.

After building his Quadricycle in 1896, Henry Ford gained recognition as one of the most promising automobile constructors in Detroit. In these days, Detroit was a bustling city of some [116'000] people, heavily engaged in metal works, carriage and wagon making, engine and railcar production, as well as tobacco, flour milling, brewing and chemicals. Stoves, cast in the abundant Michigan iron were among its major products. It's economic and social elite was made up of frontier entrepreneurs or their descendants*, always eager to invest into a promising new venture. Under the sponsorship of Detroit mayor William C. Maybury, the city's elite was induced to finance Henry Ford's first manufacturing venture, called the Detroit Automobile Company and capitalized at $150'000.

The venture failed and was closed after almost 60% of its capital had been wasted in pointless development costs, but after winning a race against Alexander Winton on Grosse Pointe's first racetrack, Ford was again sponsored by a group of Detroit's wealthy capitalists, this time under his own name. Henry Ford again failed to satisfy his backers with the development and manufacturing of a functional passenger car and was fired in 1902. But this time, William Murphy and the other investors did not liquidate the company. Instead they turned to Henry Martyn Leland, whose Leland & Faulconer machine shop was the most proficient in the Midwest. Leland and his son Wilfred joined the company, which was renamed "Cadillac" and built it into one of America's most admired and successful automobile manufacturers.

Meanwhile Ford left to do more racing and to found yet another company, again bearing his name, in 1903. And another group of Detroit capitalists, led by Henry Bourne Joy invested into the automobile factory a disgruntled Winton owner, James Ward Packard, had started in 1899. In 1903, Packard was moved to Detroit and joined Cadillac as a premium brand of high quality cars manufactured in the nascent motor city of America.

Pioneer Ransom Eli Olds merged his Olds Gasoline Engine Works with the Olds Motor Vehicle Company in 1899 and, after a disastrous fire destroyed his factory and ten out of eleven models, started to produce his remaining "Curved Dash" runabout as the first popular car in ever increasing numbers. The fire at Olds Motor Works also brought the Dodge Brothers the opportunity to convert their bicycle factory into Detroit's leading automobile parts manufacturer. In 1901, Olds ordered 2000 engines and in 1902, 3000 transmissions, from the Dodge brothers.

John Francis and Horace Elgin Dodge then joined Henry Ford in his third automotive venture both as parts suppliers and founding shareholders. In time, the alliance with Ford would make both Dodge brothers multi-millionaires. With their Ford dividends, the Dodges established their own car manufacturing plant in 1914, making Dodge a strong contender in the American automobile market almost overnight.

When David Dunbar Buick sold his successful enameling business to devote his time and money to the development of a motor car, William Crapo Durant was already the country's leading manufacturer of horse-drawn carriages and a millionaire. More accurately, the manufacturer was his associate, Josiah Dallas Dort, who took care of production while Durant toured the country to set up sales outlets and acquire additional plants. As his cash resources run out, Buick turned to Benjamin Briscoe, whose Briscoe Manufacturing Company supplied Olds with radiators. Briscoe, like Durant more of a business developer than a manufacturer, did not manage to turn Buick around and sold it to the Flint Wagon Works, who in turn approached Durant.

Using his sales skills and financial persuasion, Billy Durant managed to build up Buick into one of America's foremost automobile producers within a few years after taking over in 1904. In the meantime Ford had succeeded in 1906 to gain control, if not yet absolute, of the Ford Motor Company and thus imposed his vision of a low priced car for the masses. In Lansing, Ransom Eli Olds had left the company that bore his name after a dispute with his financial backers, involving the very same issue as Ford's, as to the market to be targeted by their cars. Oldsmobile consequently dropped the Curved Dash in favor of heavier and more expensive cars. It fell back and lay low in the production race for almost two decades, until the pent-up demand for middle priced cars of the Roaring Twenties enabled it to gain momentum among the various divisions of General Motors. Olds founded his second automobile company, named it Reo and set out to produce a popular line of cars and trucks.

After unloading Buick, Benjamin Briscoe formed an automobile company with Jonathan D. Maxwell, an engineer who had worked for the Olds Motor Works. Their Maxwell-Briscoe Motor Company was an immediate success and Briscoe was the first of the Midwestern automobile tycoons, who tapped the [J.P.] Morgan bank to sell its bonds. Building on his elusive relations to Wall Street, Benjamin Briscoe attempted to merge his companies with Durant's Buick, Ford and Olds' Reo in January 1908, but the merger failed, because of Morgan's excessive requirements towards Durant as well as Ford's and Olds' insistence on receiving cash.

But the attempt stimulated Billy Durant's imagination and pushed him to found General Motors, using Buick as a cornerstone and adding in a short time, Oldsmobile, for which he paid in stock and Cadillac, which involved the largest cash transaction in the automotive industry to that date. Together with Cadillac, Durant also acquired the services of Henry Martyn Leland, dean of Michigan machinists and his equally able son Wilfred. The Lelands remained in charge of Cadillac until 1917, when they left and formed the Lincoln Motor Company to manufacture aircraft engines. After the war they started to produce a fine luxury car, but failed in the post-war depression of the early 1920s. Lincoln was taken over by Henry Ford, who may have enjoyed the hour of revenge towards the man [Henry Martyn Leland] whom he held at least partially responsible for an early personal failure.

Besides automobile factories, William C. Durant also assembled a large number of auto parts manufacturers under the umbrella of his General Motors Corporation, most of whose founders became multi-millionaires. The most famous were Albert Champion, Charles Stewart Mott, Alfred Pritchard Sloan, Charles Franklin Kettering and the Fisher Brothers. Ford in turn purchased bodies from Walter O. Briggs and Edward G. Budd and wheels from John Kelsey and Clarence B. Hayes. Other parts suppliers blossomed with the steady expansion of the American automotive industry.

Finally, as a result of the huge demand generated by the automobile industry, three families of rubber manufacturers, who henceforth specialized on automobile tires, each built a fortune of some $20 million (as measured in 1919). These were the Seiberlings (Goodyear), the Goodriches and Harvey Samuel Firestone, who was also a personal friend and fellow wanderer of Henry Ford. One of Ford's grandsons actually married a granddaughter of Harvey Firestone.

Almost from its earliest days, the automobile industry was a fertile playground for engineers and managers, many of whom founded companies of their own or acquired established companies and lead them to new heights. Prominent examples of such manager-turned-entrepreneurs are Durant's disciples at General Motors, Charles W. Nash and Walter P. Chrysler. Nash, after leaving General Motors, purchased the Thomas B. Jeffery Company, renamed it and grew it into a profitable corporation. Walter P. Chrysler saved Maxwell, used it as a corner stone for his own Chrysler Corporation and with the latter took over the Dodge Brothers Company in 1928 to become the number two car producer in the USA during the 1930s and 1940s.

Other examples include a group of Olds managers and engineers who founded Hudson in 1909 (Roy D. Chapin, Howard E. Coffin, Frederick O. Bezner and Roscoe B. Jackson) and Errett Lobbean Cord. A former Moon retailer, Cord joined the Auburn Automobile Company in 1924 as vice-president and general manager, turned it around and built it into a remarkable group of automotive and aviation companies. Although his automobile brands (Auburn, Cord and Duesenberg) disappeared as many others in the 1930s, his Aviation Corporation of Delaware (AVCO) survived and expanded, although it had to divest its air transportation business, including American Airlines.