[In his book The Robber Barons], Josephson missed the distinction between market entrepreneurs like Vanderbilt, Hill, and Rockefeller and political entrepreneurs like Collins, Villard, and Gould. He lumped them all together. However, Josephson was honest enough to mention the achievements of some market entrepreneurs. James J. Hill, Josephson conceded, was an “able administrator”, and “far more efficient” than his subsidized competitors. Andrew Carnegie had a “well-integrated, technically superior plant”; and John D. Rockefeller was “a great innovator” with superb “marketing methods”, who displayed “unequaled efficiency and power of organization”.
Most of Josephson’s ire is directed toward political entrepreneurs. The subsidized Henry Villard of the Northern Pacific Railroad, with his “bad grades and high interest charges” show that he “apparently knew little enough about railroad-building”. The leaders of the Union Pacific and Central Pacific, Josephson notes, “carried on [their actions] with a heedless abandon … [which] caused a waste of between 70 and 75 percent of the expenditure as against the normal rate of construction”. But it never occurs to Josephson that the subsidies government gave these railroads created the incentives that led their owners to overpay for materials and to build in unsafe areas. He quotes “one authority” on the railroads as saying, “The Federal government seems … to have assumed the major portion of the risk and the Associates seem to have derived the profits” — but Josephson never pursues the implication of that passage.
Burton W. Folsum, “How the Myth of the ‘Robber Barons’ Began — and Why It Persists”, Foundation for Economic Education, 2018-09-21.
March 16, 2026
QotD: Political entrepreneurs and federal subsidies
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