Do free markets increase poverty among the lower classes and assist only the rich in getting richer? Do free markets drag the poor down and keep them from climbing the social ladder while ensuring that the rich remain atop society?
During the late 1800s, “rags-to-riches” stories written by Horatio Alger described how poor people improved their standard of living and accumulated middle class comfort or great wealth. The stories were about young men born into poverty, who by hard work and diligence, became financially stable or successful. They were entertainment, to be sure, but the stories reminded Americans what could be accomplished with hard work, savvy, determination, and a little luck.
Fiction, many times, reflects the times in which an author lives, and so did Horatio Alger’s work. Andrew Carnegie, John D. Rockefeller, and Meyer Guggenheim, to name three examples, started out with nothing or with only modest means yet earned massive fortunes. Carnegie worked as a child in a cotton mill, Rockefeller as a clerk, and Guggenheim as a peddler. All three became some of America’s richest men.
A modern example is Sam Walton. Before he earned a fortune at the helm of Wal-Mart, Walton worked on the family farm, milked cows, and then sold milk that he had bottled. Undoubtedly, a silver spoon was not in the rooms in which these boys were born.
The four mentioned entrepreneurs are the usual examples in telling the story how free markets can help the poor become rich. Their stories need to be told, but a more convincing argument that showed the widespread positive influence of free markets would include other success stories.
The Old North State’s history includes many such success stories. Free markets have helped poor Tar Heels earn wealth (my next column will describe how free markets enabled the successful to be charitable toward family, neighbors and their fellow man.) Here are three notable illustrations: Malcolm McLean, William Henry Belk, and James W. Cannon.
A farm boy from Maxton, McLean (1913-2001), transformed a one-truck operation into one of the largest trucking companies in the nation and the largest in the Southeast. The Robeson County native later became known as “The Father of Containerization”; with his idea for container shipping during the 1950s and 1960s, he revolutionized the shipping industry. “Container shipping,” according to Anthony J. Mayo and Nitin Nohria in In Their Time: The Greatest Business Leaders of the Twentieth Century, “was transporting approximately 90 percent of the world’s trade cargo.”
Another farmer’s son, William Henry Belk (1862-1952), was orphaned at an early age when Union soldiers, after the Civil War, murdered his father while looking for a non-existent gold mine. Refusing to accept credit and relying on savings, Belk opened a store in 1888. His brother, John, became a business partner in 1891 and Belks Brothers Company was born. Today, approximately 200 stores exist across the Southeast.
James W. Cannon (1852-1921) produced the largest towel manufacturer in the world (Cannon Mills) and, according to one historical account, “the largest unincorporated town in the world.” Although he believed the South acted as a colony for Northern interests, Cannon still borrowed money from Northern bankers to start Cannon Cotton Manufacturing and worked to make the South more self-reliant.
During the late 1800s, only the wealthy purchased towels, but Cannon started providing a product to people that almost all Americans now take for granted. By 1906, the company produced 300,000 towels and opened plants and created jobs across the Southeast.
These are only three Tar Heel examples, though there are countless others, some of whom I’ll mention in future columns. Their stories serve as a reminder that free markets helped more than a handful. They had a widespread positive influence.
Dr. Troy Kickler is director of the North Carolina History Project (northcarolinahistory.org)