How did people such as Andrew Carnegie make money from railroads (please read details)?

Question

Some of the richest people in history, like Andrew Carnegie (2nd richest in history), the Vanderbilt Family, Alexander Turney Stewart, and George F. Baker, there are many more but those are just a few, made millions and billions from railroads. I would like to know how they made these astronomical sums of money from railroads.

Answer 1

The same way Bill Gates got rich, but with (even) less restraints. Anti-cartel laws were set up BECAUSE of the railroad barons.

Imagine Gates closing the computer market by making a deal with all Linux distros (impossible, I know). And they all agree to sell their OS for at least $450, regardless.

Easy to get rich that way: either you have a monopoly or make one. That is one of the reasons cars and airplanes took over from trains so fast. Faster, better connections and ... cheaper.

Answer 2

The same way Bill Gates made billions--by building something that people needed, by forcing others out of the market or forcing them to work with his company, and by continuing to meet the needs of people.  There was no income tax in that day, so people kept all their money.

Answer 3

Railroads were the long distance transportation of the time.  And at the time people were still moving west to find their fortunes .

Answer 4

I am not a historian- but always assumed they got all the money b/c when the railroads came about- that was the new quick way to get across the country.  Before that- you had to wagon train.  So companies used the trains to transport goods and services.  So these men made money b/c they owned and ran the railroads, thus setting the prices for how much they would charge the businesses.  And trains were used to transport people to- who paid fairs to ride.  And I think they probably had there hands in other businesses too and investments.  

Does that make sense?

Answer 5

there was no highway system; and of course, there were no trucks or cars in that time either. the railroads owned and controlled both the mechanical hardware (engines) and the means of getting from here to there (the rails). the word cartel comes to mind. They could charge what they wanted; and without the interference of competitors. even after the ICC was created by congress in the 1880's, the rr's still ran the show.