Folsom shows that the "Robber Baron" school of historians of American business enterprise was partly right and partly wrong but was unable to distinguish which was which. He points out that during the nineteenth and the early twentieth century (and by unmistakable implication, in the late twentieth as well) there were two kinds of business developers, whom he describes as "political entrepreneurs" and "market entrepreneurs." The former were in fact comparable to medieval robber barons , for they sought and obtained wealth through the coercive power of the state, which is to say that they were subsidized by government and sometimes granted monopoly status by government. Invariable, their products or services were inferior to and more expensive than the goods and services provided by market entrepreneurs, who sought and obtained wealth by producing more and better for less cost to the consumer. The market entrepreneurs, however, have been repeatedly --one is tempted to say systematically --ignored by historians.
One another level, Folsom's study has profound implications for American historiography beyond the immediate subject to which it is addressed. It is commonly held that the Whig Party of Clay and Webster and its successor Republican Party of Lincoln and William McKinley were the "pro-business" parties, and that the Jacksonian Democrats were anti-business. What comes through here is something quite different. The Whigs and Republicans engaged in a great deal of pro-business rhetoric and in talk of economic development, but the policies they advocated, such as subsidies, grants of special privileges, protective tariffs, and the like, actually worked to retard development and to stifle innovation.
On Yet another level, though Folsom's work is balanced, judicious history, addressed tot he past (and is unmarred by the shrill accusatory tone that characterizes the writings of anti-business historians), it has a powerful relevance to current political discourse.
Adam Smith forewarned us more than two centuries ago, "The statesman, who should attempt to direct people in what manner they ought to employ their capital, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it."
Excerpts from the Foreword by
Forrest McDonald
Williamsburg, Virginia
April 1987
