His reputation obscures a complex man haunted by tragedy

HISTORY IS FULL OF MISNOMERS THAT, LIKE IT OR NOT, WE ARE stuck with. Columbus, understandably confused about where he was, thought the people he encountered in the Bahamas were "Indians." Like it or not, they have been ever since. Another undoubtedly permanent misnomer in American history is the phrase robber baron. The original robber barons, for whom the phrase was coined, were men who owned castles overlooking the Rhine River in the Middle Ages. They made tidy livings forcing those who sought to use the river for commerce to pay tolls to pass their castles. These men were, economically speaking, parasites, no better than the racketeers who in a later age would extract "protection money" from local merchants.

The image, if not the phrase, was first used in a modern context by The New York Times, in 1854, to describe the men, such as Cornelius Vanderbilt, who ran the steamboat lines on American rivers. Often these men were perfectly happy to withdraw from competition on a particular run, provided they were well compensated to do so. Vanderbilt, for instance, was paid a hundred thousand dollars by his competitors, plus five thousand dollars a year for ten years, to take his ships off the Hudson River.

If that were all there was to it, then Vanderbilt, too, would have been an economic parasite. But unlike the original robber barons, who contributed nothing, Vanderbilt's competitive threat forced down prices. Harper's Weekly, more economically astute than the Times, wrote in 1859: "This great boon--cheap travel--this community owes mainly to Cornelius Vanderbilt."

However unfair, the phrase stuck. By 1878 it was being applied to those who were piling up huge fortunes in the rapid industrialization the country underwent in the post-Civil War years. Here its use was perhaps even more unfair. However ruthless their behavior at times, these men created wealth in prodigious quantities. While self-interest played no small part in their economic calculations, the "invisible hand" saw to it that they provided hundreds of thousands of workers with better jobs than could be had elsewhere and millions of consumers with better and cheaper products than had existed before. Moreover, many of these men used part of their wealth to endow a nearly endless number of museums, colleges, hospitals, libraries, concert halls, and other eleemosynary institutions that have made us all substantial heirs to their fortunes.

The writers who...