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Wednesday, November 1, 1989

A Reviewers Notebook: The Wealth Creators


There is a widely disseminated complaint that our college faculties are still living in the Sixties. Maybe the secret opinions of the tenured Left remain what they were. But when Ben Hart, a founding editor of the conservative Dartmouth Review, says the campuses are moving to the Right, we must believe him.

Hart gets his knowledge from talking to students who are going for Ph.D.’s. They are not liberal. William J. Dennis, Jr., writing on the American entrepreneur for Hillsdale College’s Imprimis, corroborates Hart. “Students,” he says, “flock to college entrepreneurship courses. Academics produce scholarly articles on subject matters previously confined to ‘C’ level journals . . . . and the rekindled job generation machine known as American small business leaves Europeans astonished and envious.”

A Trinity College professor, Gerald Gunderson, has just published a notable book called The Wealth Creators: An Entrepreneurial History of the United States (New York: E.E Dutton, 278 pages, $18.95). Gunderson has a unique faculty for questioning in the middle of summarizing. American entrepreneurs, he says, “are not immobilized by the prospect of competing with Japanese imports, because their prime function is opening new areas of competition. When Americans withdrew from serious competition in ocean shipping at the beginning of the nineteenth century, better opportunities were also bidding away its resources. The current American advantage in international trade is the entrepreneurial function of creating new enterprises or equity. Not only are Americans unchallenged in creating the new systems of participatory management, but they are the world’s leader in creating new businesses as well. No other society prompts so many of its members to take the plunge to fashion their own ventures.” In writing his history Gunderson avoids the quest for villains. He even has good words to say for Jay Gould. “The elevation of Gould into a symbol of all that was evil in the robber baron era,” he says, “was not an accident. It helped many cope with their deep-seated concern that society was getting out of control by providing a personification of a new environment in which ordinary individuals were losing control of their lives. A strong indication of the attraction of this approach was that it applied to almost every famous entrepreneur of the era, including the one who took up the role of Jay Gould in railroads, Edward Harriman.”

Like Gould, Harriman became a symbol of developments that worried much of the population. “They thought he had too much power. But the ability of such people as Carnegie, Rockefeller, Harriman and Gould to control markets was much less than the creative contribution that they made to their respective industries.”

Gunderson’s calm approach plays down the of. ten fractious role of individual writers in ridding the entrepreneurial scene of myth. It took Louis Hacker some 20 years to turn Andrew Carnegie into something better than a monster. John T. Flynn had to labor long and hard to prove that Rockefeller’s rationalization of the oil business helped to benefit the consumer. The Rockefeller rebate scheme fell through before it could get going. Rockefeller might have been able to raise kerosene prices above the competitive level of ten cents a gallon in the Nineties, but, as Gunderson says, it “would have required an unimaginable effort to put them back up to the level of one dollar a gallon, where they were when he began operations in the 1860s.”

It bothers me that the names of Louis Hacker and John T. Flynn are neither in the Gunderson index nor in the annotated bibliography. It is bothersome, too, to search in vain for the names of Ida Tarbell and Lincoln Steffens and other muckrakers of the early 1900s. Tarbell was certainly prejudiced in fighting her family’s battle with the Rockefellers, but she is part of our journalistic history. It is strange, too, that Gunderson can frequently mention the robber barons without listing the title of Matthew Josephson’s best seller.

But Gunderson, after all, did not set out to write journalistic history. He wanted merely to tell a story. He has done it in a relaxed way that is reminiscent of the style of Hendrik Willem van Loon’s The Story of Mankind.

An incidental virtue of Gunderson’s story is its economic insights. For example, the factors of production in economics are usually listed as land, labor, and capital. But many of Gunderson’s enterprisers had nothing much to work with other than their brains. So labor has to be expanded as a category to include the ability to foresee and to manage.

Sometimes the ability to foresee misfires. Gunderson tells some of the market failures that have resulted. Procter and Gamble couldn’t get a profitable share of the market for its potato chips, Pringles. Du Pont couldn’t market Corfam, its substitute for leather. But there is serendipity, too. The story of the accidental discovery of penicillin cannot be told too often.


  • John Chamberlain (1903-1995) was an American journalist, business and economic historian, and author of number of works including The Roots of Capitalism (1959). Chamberlain also served as a founding editor of The Freeman magazine.