Presentation on theme: "Business and Politics. "What is the chief end of man?--to get rich. In what way?--dishonestly if we can; honestly if we must." -- Mark Twain-1871."— Presentation transcript:
"What is the chief end of man?--to get rich. In what way?--dishonestly if we can; honestly if we must." -- Mark Twain-1871
The Gilded Age: A Tale of Today The term was coined by writers Mark Twain and Charles Dudley Warner in their book satirizing what they believed to be an era of serious social problems hidden by a thin gold gilding.
An era of widespread growth where the U.S. leaped ahead of Britain in industrialization. A relative few became extremely wealthy and exerted enormous economic and political power The rapid growth was punctuated by economic depressions in 1873, 1893,
Andrew Carnegie Faced with sudden poverty in Scotland, Andrew Carnegie's family emigrated to America. Determined to escape poverty, Carnegie went on to become the richest man in the world.
‘vertical integration’ a system of business organization that allowed him to control every aspect of the steel business He cut costs to boost productivity; workers had low wages, long hours, dangerous conditions By 1900, Carnegie Steel was the best-known manufacturer in the nation ‘Vertical Integration’
Carnegie led the transition from iron to steel Built the biggest steel industry in the world Built most up to date plant (near Pittsburgh) Railroad Industry led to a Steel Industry
San Jose’s Carnegie Library After amassing a fortune by crushing his competitors and exploiting his workers, Carnegie, in a move that underscored his inner conflicts, systematically gave away millions.
After Civil War, Americans built the greatest railroad network in the world By 1900, US had 193,000 miles of track, more than all of Europe and Russia combined Railroads: America’s First Big Business
Government encouraged rail growth with cash subsidies and land grants Lack of planning led to overbuilding and increased competition Because of competition local owners tried to “pool” areas and set rates Stock market began to play a key role in American economy—capital could now be represented by stocks and not just tangibles such as land or machinery
Jay Gould: ‘Most Hated Man in America’ Jay Gould, master of corporate expansion through stocks Men like Gould refused to honor, so many railroads failed The public disliked men like Gould for ruining competitors and emphasis on financial markets— ‘most hated man in America’
In the 1860s and 1870s, it did not take a lot of capital to build an oil refinery Lots of competition Rockefeller founded Standard Oil in 1870 He demanded secret rebates from the railroads in exchange for his steady business, so he could undercut competitors John D. Rockefeller Standard Oil and the Trust
1882, Rockefeller pioneered a new form of corporate structure—the trust The “trust” operates the business on behalf of trustees. Consolidates decision-making and financial policy for large businesses The Trust
It allowed Standard Oil trustees to hold stock in various refinery companies ‘in trust’ and to coordinate policies between refineries This gave Rockefeller a monopoly of the oil refining business Monopoly
Paved the way for the establishment of trusts in other industries When the government threatened to outlaw the trust as a violation of free trade, Standard Oil changed its tactics and reorganized as a holding company This combined competing companies under one central administration New kind of corporates structure
By 1890 Standard Oil ruled more than 90% of the oil business Standard Oil
Ida Tarbell Journalist Ida Tarbell exposed Rockefeller’s unsavory business practices in a series of articles in McClure’s Magazine from 1902 to 1905 contributing to the American public’s unfavorable opinion of Rockefeller