How does one construct a monopoly? A good place to begin searching would be to consider past examples. Carnegie or Rockefeller would be a start; both managed costs closely and used a variety of unscrupulous means to destroy competition.
Was there any other another potential path to building large companies in the Gilded Age of the late 19th century? The inventor Thomas Edison comes to mind – as does his rival George Westinghouse. Winner of the “War of the Currents” (the contest over adoption of Westinghouse’s AC current vs. Edison’s DC current as the standard), Westinghouse showed us how to construct a large company by controlling standards and patents instead.
A Civil War veteran and later entrepreneur, Westinghouse received his first patent at age nineteen and went on to invent the air brake, saving the lives of thousands of railroad brakemen. He was perhaps America’s greatest engineer, an innovator who owned many different companies, most in or around Pittsburgh.
Westinghouse was liked by almost all who worked for him. After all, he was the first businessman to give workers time off on Saturday, and while only a half day, it was a day and a half more than Carnegie offered, as Carnegie’s workers worked almost every day of the year. Westinghouse practically invented the weekend! These very workers bought stock in Westinghouse’s company to try and save it from bankruptcy during the financial crisis of 1907. They failed.
Not all stories in business have happy endings, but Professor Barry Mitnick believes people like George Westinghouse can help us to understand not only what worked in business history, but also what did not work. I had the chance to interview Professor Mitnick, and learned a lot about what makes his course Market Manipulations wholly unique.
While pretty much every college or university around the country offers history courses, business schools today often do not teach business history. As Winston Churchill famously stated, “Those that fail to learn from history are doomed to repeat it.” Professor Mitnick believes that this insight is applicable to business management today. His course, Market Manipulations, takes a unique approach in examining business history to develop understanding of management today.
Given that market panics seem to happen every fifteen to twenty years, this course is very relevant. Indeed, the course compares all the market panics from 1837 to 2008 and discusses what they had in common – and what we might see in the next one. It covers bubbles, Ponzi schemes, speculation events such as corners, monopoly construction, and other market manipulations. It also looks at the historical pushback represented in the events of the Progressive era and the rise of regulation in the U.S.
Market Manipulations is an Honors College course offered by the College of Business Administration (CBA) here at Pitt. It has no prerequisites, and can be taken by anyone eligible to take a UHC course, or with instructor permission. It is an elective that can count towards the Arts & Sciences General Education Requirements in social sciences in CBA. Instead of taking a generic history course, for example, a CBA student can take Market Manipulations to learn more about business-oriented history while still fulfilling the social science requirement. The course can also count towards both the Pitt Business and the University Honors College Scholar designations.
Professor Mitnick believes the course is very manageable for an honors student. While it requires reading outside of class, it offers lots of fun stories that illustrate its major points about business history and help students remember its insights. I asked Professor Mitnick why he likes teaching the course, and he said, “history is fun to tell!” He believes that students remain engaged in this course because of all the stories it has to offer.
Even more helpful in keeping students engaged is the fact that the course is taught in Pittsburgh. Professor Mitnick says this is an advantage, and he enjoys telling stories relevant to the city and seeing students go out and find examples of the material taught in class.
Pittsburgh itself saw one of the most successful examples of market manipulation through the “Ring” run by political boss Christopher Magee in the late 19th century. Magee and his partner, contractor William Flinn, built nearly every city project for around twenty years, including most of the roads around Pittsburgh. The projects had to be approved by Magee’s cousin, E.M. Bigelow, Pittsburgh’s Director of Public Works. Magee and Flinn submitted greatly inflated bids with work details that could only be satisfied by Flinn, which were then accepted by Bigelow.
Despite the corruption, a monument to Magee stands outside the Carnegie Library in Oakland, and a statue of Bigelow stands in front of the Phipps Conservatory. “Bigelow” Boulevard connects Oakland and the downtown. Magee donated the Pittsburgh Zoo, a project that had to be approved by Bigelow, and which was built essentially in Flinn’s backyard in Highland Park – a fact greatly appreciated by Flinn’s children. Near Pitt’s campus is Magee-Women’s Hospital, founded via Christopher Magee’s will and named after his mother. Thus, signs of the Magee-Flinn “Ring” can be seen all around campus.
Being able to walk outside of a classroom and see firsthand examples of things you learned is unique, and is something that not all classes offer. Market Manipulations is one of those unique classes. When I interviewed Professor Barry Mitnick, I learned that he is a man with lots of stories to tell, and a man who enjoys telling them as much as he enjoys seeing his students happy.