What is Robber Baron?

What is the meaning of the term ‘robber baron’? In finance, robber barons are defined as businesses or executives who gained their wealth through unethical means, and often holds a negative connotation.

The term ‘robber baron’ dates back to feudal lords (barons) in the Middle Ages who robbed passing travellers and was later used in American newspapers in the mid-19th century. Its modern usage stems from Matthew Josephson’s The Robber Barons: The Great American Capitalists 1861–1901, which used the term to refer to industrialists. 

Robber Baron explained

The term ‘robber baron’ was popularised in the 19th century, the ‘Gilded Age’ of America,  when the country began to transform into an industrial society and witnessed a rise in privately owned businesses. 

Businessmen were not regulated and so were able to monopolise huge, essential industries with the creation of trusts, which also meant exploiting workers and engaging in unethical business practices, and using political connections for personal gains, with a lack of attention towards customers and competitors. 

These 19th century businessmen were able to find loopholes in the capitalist system, which they exploited for their own gain. In the process, these ‘robber barons‘ made billions of dollars in today’s money. 

Despite the negative connotation, robber barons were celebrated by some due to their ability to generate huge funds and grow the nation’s economy. They were often referred to as “self-made”. Many were also described as “philanthropists” because they donated huge sums of money to charitable work, which benefited society by providing more jobs and increasing productivity. 

Over time, much of the robber barons’ practices became illegal in the US following the introduction of specific laws that were aimed at ensuring fairness in the US business industry.  

Most prominent names:

Some of the most prominent robber barons in history include:

• Fur magnate John Jacob Astor (1763–1848), who monopolised the US fur industry by crushing his rivals and paying off politicians.

• Steel industry monopolist Andrew Carnegie (1835–1919), who was the prime example of an entrepreneur during the Gilded Age. Carnegie used his political connections to succeed in the industry and was known for his use of vicious labour relations. Like many 19th century robber barons, Carnegie was also active in philanthropic work, which improved his reputation.

• US oil industry monopolist John D Rockefeller (1839–1937) controlled over 90% of the entire US oil production. In his later life, Rockfeller’s philanthropic work led people to excuse his reputation for unethical business practices as means to success. 

Today’s robber barons 

Similarities can be drawn between 19th century robber barons and our current tech giants of the 21st century, who were referred to as ‘cyber barons’ by US Representative Jamie Raskin (D-Md) during an antitrust hearing in summer of 2020 as CEOs Jeff Bezos (Amazon), Tim Cook (Apple), Mark Zuckerberg (Facebook) and Sundar Pichai (Google) testified before the US Congress.

Other publications have since used the term ‘robber baron’ when talking about Tesla and SpaceX CEO Elon Musk and Amazon’s CEO Jeff Bezos.