"The Gilded Age of Bankers"

From Ahead of the Herd:
As a general rule, the most successful man in life is the man who has the best information

Between 1865 and 1898 the US economy grew at the fastest rate in its history with real wages, wealth, GDP, and capital formation all increasing rapidly:

• Wheat production increased by 256%
• Corn production increased by 222%
• Coal production increased by 800%
• Miles of railway track increased by 567% - railroad mileage tripled between 1860 and 1880 and had tripled again by 1920
• American steel production surpassed the combined total of Britain, Germany, and France

There were several reasons why the US economy grew so fast in the period between the end of the Civil War and the turn of the century, among them were:

• The opening of the Western frontier
• The discovery of rich mineral resources
• The increasing population
• The ability to attract capital

A modern industrial economy based on a new national transportation and communication network was being created. By the beginning of the 20th century per capita income and industrial production in the United States exceeded that of any other country except Britain.

By 1906 the annual rate of US capital formation was running at $5 billion. This rapid expansion went hand in hand with the creation of enormous industrial and financial monopolies. In 1893 Drexel, Morgan & Company became J.P. Morgan & Company, America’s premier investment bank. By 1904, more than 1,800 companies had been consolidated into 93 corporations, a financial consolidation led by J. Pierpont Morgan.

J.P. Morgan created United States Steel in 1901 - the first American corporation with a capitalization exceeding one billion dollars. Morgan was also responsible for General Electric, International Harvester and the reorganization of American Telephone & Telegraph Company (AT&T).

The Mellon brothers - Andrew and Richard - were major stockholders in Gulf Oil Corporation and Aluminum Company of America. With an aggregate wealth exceeding one billion dollars before the stock market crash of 1929 they were the wealthiest bankers of the era.

Moses Taylor made himself a 40 million dollar fortune by building City Bank into New York's largest.

James Stillman built the assets of National City Bank to one billion dollars.

George Fisher Baker became the largest shareholder of First National Bank of New York (today known as Citicorp) and was head of the bank from 1877 until his death in 1930....MORE