The Japanese word taikun — written with two characters meaning "great" and "prince" or "lord" — was a formal title used by the shogun in 19th-century diplomatic correspondence with foreign powers. It was a way of presenting the shogun to outsiders as the supreme ruler of Japan, even though, technically, the emperor in Kyoto held that role.
An American Borrowing
The word entered English in 1857, when the American consul Townsend Harris signed a treaty with the Tokugawa shogunate and addressed the shogun by this title. The Anglicised form, "tycoon," found its way into American newspapers and political slang within a few years. President Abraham Lincoln's personal secretaries, John Hay and John Nicolay, are said to have used "the Tycoon" as an affectionate nickname for Lincoln himself in their correspondence.
From Politics to Business
By the early 20th century, the political-rulership sense had faded, and "tycoon" was being used in American English for a wealthy and powerful businessman. The shift seems to have been gradual: the word retained its sense of "great power" but was applied more and more to industrial and financial figures — oil tycoons, railroad tycoons, press tycoons. By the 1930s the original Japanese association was largely lost.
Other 19th-Century Borrowings
"Tycoon" is one of a small set of Japanese words that entered English in the years immediately after Japan's opening to the West in 1853. Others include kimono, jujutsu, tofu, hara-kiri, and geisha. Each preserves a glimpse of the Japan of that era — a Japan still organised, in much of its everyday life, around the categories that the word "tycoon" itself describes.