Three of the Richest Americans Ever and How They (Illegally) Made Their Money

Jacob Harper |

Though many of the richest Americans who ever lived were able to make their money without bending or breaking the law (at least that we know about) a few notable titans of American capitalism engaged in some shady practices that weren't always common knowledge. These businessmen - who constitute some of the most famous names in American business - weren't above getting their hands dirty. Even if their actions veered into the unethical, the slightly illegal, the soon-to-become-illegal, or the illegal-at-basically-any-point-in-history, they did what they had to to make their mark.

Here are three of the most notable businessmen in American history - and the details of a few of the less savory activites they engaged in on their way to the top:

Jay Gould

Peak Fortune: $71.2 billion

Illegal Activities: Collusion; Bribery; Market Manipulation; Kidnapping

Financier Jay Gould cut his teeth in the trenches of Tammany Hall, where he was closely associated with the infamous Boss Tweed and learned the economic advantage of having important political contacts. This lesson would be writ large in 1869, when Gould and partner Jay Fisk attempted to corner the gold market in a day that would become the first Black Friday. The two had gained access to insider information coming straight from then-President Ulysses S. Grant, and used this information to drive gold up to prices it wouldn’t exceed for a hundred years.

Following their manipulation of the gold market, Gould attempted to bribe a man named Lord Gordon-Gordon to curry European investment. When Gordon fled with the bribe to Canada, Gould had him kidnapped and nearly caused an international incident.

Gould capped his career by aggressively buying out railroads, at one time personally controlling over 15 percent on the nation’s railways and artificially inflating usage prices.  

John Jacob Astor

Peak Fortune: $121 billion

Illegal Activities: Drug Smuggling; Monopolization

German-born John Jacob Astor made the bulk of his fortune by investing early in Manhattan real estate. Astor correctly predicted that the most valuable tracts of land were in the then-undeveloped northern parts of the island, and starting in the late 1700s began aggressively buying, then leasing, large parcels of Manhattan. But Astor made his initial fortune by first monopolizing the American fur trade.

In the 1830s Astor's American Fur Company held an absolute monopoly in the lucrative American fur business. This was prior to antitrust legislation being enacted in the US, and Astor was able to benefit greatly from lack of competition. Even though demand for fur waned in the 1840s as fashion tastes changed, Astor had already successfully branched into real estate. And another area of commerce that was certainly most illegal at the time: drug smuggling.

Astor would  use his massive shipping routes that ran across America to the Pacific Northwest, to move massive quantities of opium into China. In 1816 Astor’s American Fur Company purchases ten tons of Turkish opium then shipped the contraband from Canton on the ship the Macedonian. Astor would continue engaging in opium smuggling before stopping abruptly in 1819.

John D. Rockefeller

Peak Fortune: $336 billion

Illegal Activities:: Collusion; Monopolization; Corporate Espionage

John D. Rockefeller is considered to be the richest man who ever lived. He also established what is considered the contemporary model for philanthropy. That isn’t to say though that he never made a business decision that today would almost certainly run afoul of the law.

Rockefeller started his business career as an assistant bookkeeper at 16, and by 40 was one of the most powerful oilmen in the world. He quickly established himself as ruthless towards competitors, and horizontally and vertically integrated his exponentially expanding empire. At its peak in the 1870s, his company Standard Oil was refining over 90 percent of the nation’s petroleum and petroleum-based products.

Through sheer size Rockefeller was able to undercut all his competitors, and by using his clout was able to curry unfair deals from railroad companies to move his oil at a discount.

For the next 20 years Standard would control at least 80 percent of the American oil market, and would inspire the very creation of the antitrust movement. It took the global proliferation of oil to finally break Standard’s stranglehold.

The 1904 muckraking novel The History of the Standard Oil Company would prove to be petroleum’s version of The Jungle, and would help turn public sentiment sharply against Standard. The book alleged the Standard, in addition to price fixing and market manipulation, would routinely spy on other companies to gain an unfair advantage.

In 1911, the U.S Supreme Court would rule that Standard had committed multiple crimes, and was broken up. A 25 percent stockholder in Standard, Rockefeller actually profited immensely from the breakup.

Standard was split into 34 companies, many of which survive today. Some of Standard’s “descendents” include Exxon of ExxonMobil Corporation (XOM) , Conoco of ConocoPhillips (COP) , and Chevron Corporation (CVX) .

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
BOTRF China Everbright Water Ltd 0.42 0.00 0.00 0
COP ConocoPhillips 39.22 -0.80 -2.00 2,971,947
CVX Chevron Corporation 98.64 -0.14 -0.14 2,386,410
XOM Exxon Mobil Corporation 82.71 -0.35 -0.42 3,164,473

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