Forward thinking- sees the future. Cut throat willing to use any means to get ahead. Tough guy. Competitive. Bought ferry boat at 16 years old, which soon becomes a fleet of ships…nickname becomes “the commodore.” Ends up building the largest shipping empire in the world Knows that completion of transcontinental railroad will change America forever….he retires from shipping and invests everything he has in railroads. His decision pays off- by the end of the civil war he is the richest man in America. Has $68 million- the equivalent of $75 billion today. Owns the only rail bridge into New York City. In order to beat his rivals, he closes the Albany Bridge. Every other railroad is shut out of New York City. Millions of pounds of cargo cant reach NYC, and he slowly “bleeds” his competitors dry. Before stock is worthless, presidents of rival railroads try to sell their shares. Massive selloff starts on Wall Street. When this happens, he buys up all the shares of other railroads. Now he has the largest rail company in America. Soon, railraods criss cross America, and allow the industrial economy to boom in ways it couldn’t before. Has Grand Central Station built in New York City. This is the biggest urban construction project in America. Covers 22 acres in the heart of NYC. Enormous building. Physical symbol of Vanderbilt’s empire. Sees that the future of the industry isnt in building new lines, but in shipping new cargo. If he can corner the market on a new source of freight, he can control the industry. He chooses oil. Something everyone had to have. Saw demand skyrocketing. New makers of kerosene needed to ship oil. He extended service to Cleveland (oil field). Reaches out to owner- Rockefeller. http://www.history.com/topics/corneliu s-vanderbilthttp://www.history.com/topics/corneliu s-vanderbilt Transcontinental Railroad
Oil is revolutionizing life in America. Oil is made into kerosene- a safe, inexpensive source of light. Rockefeller believes that gamblers drill; businessmen refine. At 24 yrs old, he invests everything he has- $4,000 into a refinery. Rockefeller and Vanderbilt strike a deal. Rockefeller will only use Vanderbilt trains– in return for a great shipping deal. He begins to produce a high quality of kerosene which investors love. Rockefeller played the railroads against each other to get even lower rates. Now Rockefeller begins to buy out his competitors. He wants a monopoly. After the railroads stop giving him discounts, he needs a new way to transport oil. His solution is to create a grid of oil pipelines across the country. Then he doesn’t need the railroads any more. Now that railroads have no oil to ship, the railroads struggle. Stocks sell off quickly. 1873 stock market crash. Depression followed, but Rockefeller saw opportunity. He bought out bankrupt oil companies for next to nothing. By the time depression is over, he has created the larges corporate empire in America His net worth was over $150 million…..$225 billion today. He controlled 98% of kerosene. (Compare- Bill Gates is worth $66 Billion) Once electricity is invented, no one needs his kerosene. He then switches to producing gasoline. Figures out that it can run engines. Internal combustion engine is invented. Hello cars! http://www.history.com/topics/john -d-rockefellerhttp://www.history.com/topics/john -d-rockefeller Rockefeller: oil, money and power
Started work at 12 years old for Tom Scott, Rockefeller’s competition. In charge of building largest bridge ever for Scott (crossing Mississippi R) Recognizes the importance of steel. Uses the Bessemer process to mass produce it. Railroads use steel – but the railroads are in trouble. Too many. Nothing to ship. Sees the future is not in rails, but in structural steel. Now skyscrapers are built- using Carnegie steel. Chicago is born! Skyscraper boom makes Carnegie one of the wealthiest men in America. Hires Henry Clay Frick, a ruthless businessman to run his steel factories….cut costs and eliminate waste. Frick shows no mercy towards people. They were very different from each other. In the end, hiring Frick leads to the Homestead Steel Strike, and forever tarnishes Carnegie’s reputation Carnegie eventually sells Carnegie Steel Co. to J.P. Morgan for ??? http://www.history.com/topics/a ndrew-carnegiehttp://www.history.com/topics/a ndrew-carnegie Andrew Carnegie
Takes over his father’s investment banking business….and makes it the biggest one in the world. Invests heavily into Thomas Edison’s experiments with electricity. Edison uses direct current electricity to light up New York, then the rest of the country. Both men become very rich. Competition: Nikola Tesla- alternating current. Uses smear campaigns and intimidation to get what he wants and eliminate competition Buys the majority of Edison’s stock. Renames the company General Electric. Converts the company to alternating current electricity- what is still used today. Consolidated/controlled electricity industry. Built power stations from coast to coast. Brought electricity to the masses. After a two year depression, the US government calls Morgan to Washington to help. Loans the government over $100 million (3 billion today). Saved the US treasury He wants to end the cut-throat competition in the steel industry. Strikes a deal with Carnegie to buy Carnegie Steel. Pays $480 million dollars for company, and renames it US Steel. This is only possible in an era of unchecked monopolies. http://www.history.com/topics/john- pierpont-morganhttp://www.history.com/topics/john- pierpont-morgan JP Morgan Battles Coal Miners
Previously, cars were only for the very wealthy, who had drivers for them. Ford wants to produce affordable cars – he believes they can become a product for the common man Ford (who has never raced) challenges the fastest man in america to a race- and wins. Now he is a celebrity and has investors pouring in! ALAM (Association of Licensed Automobile Manufacturers) owns patent on automobiles. Ford wants to produce the Model A, but cant without permission from ALAM. He starts producing them anyhow. In the beginning, he can get 15 produced every day. ALAM sues him for royalties on every car produced- but eventually loses the case. This is a big moment for anti- trust/anti-monopoly forces! Ford goes down in history as an anti-monopolist (unlike all the other titans). He believes in competition. To him, it is not about controlling an industry, but about brining a product to the people. Ford is also very different in that he pays a livable wage ($5/day…double most factories) to his employees. He also only works them 5 days a week, 8 hours a day. How could he do this??? Mass production. He didn’t invent it, but he did perfect it. Assembly line production- piece by piece. Repetitive motion. Unskilled workers. Was able to produce the Model T and sell it for $825.00. Normal people could afford this! The Model T changed America- the way we lived, the things we could do, how we went about business. And, it led to lots of other things….motorcycles, Milton Hershey mass production of chocolate (amongst other things), Wrigley takes his chewing gum national, Max Factor sells makeup across the country. Assembly line production means that other businesses could create products for the masses while paying a livable wage to employees. Now there is a true middle class in America. The era of Carnegie and Rockefeller has come to an end. http://www.history.com/topics/henry- fordhttp://www.history.com/topics/henry- ford The Great Minds of Business: Henry Ford
By the end of the 1800s, many people in America had become very unhappy with the growing disparity of wealth. Some people had it all (Rockefeller, Carnegie, Morgan) while most had to struggle just to survive. They did not like the unregulated side of capitalism- they wanted to limit the power of these individuals and their companies. They worked for anti-trust legislation, and laws regulating working conditions, hours and pay. (Progressive movement emerges) William Jennings Bryan is a politician who vows to put an end to the country’s monopolies. Voice for the common man. Preached equality. Enemy of big business and the gold standard. Trusts/monopolies became a target of democrats who promise to dismantle companies. Titans throw full support and tons of money behind candidates who will support big busineess, including William McKinley. McKinley v Bryan Election (1896) Mckinley outspends bryan 5 to 1. He practically bought the news media. Titans turn to fear tactics. They tell factory workers that the factory will close if Bryan gets elected. 90% of voters turn out. McKinley wins….business as usual continues
Comes from wealthy New York family. Transforms image- into that of a common man. Became NY governor. Could not be manipulated. Passes laws clamping down on big business. 1900 election- McKinley v Bryan again. McKinley wins again. Titans try to make Roosevelt as weak as possible…so they actually get him elected as VP so he will have no power. Bad call for titans! After McKinley is assassinated, TR becomes president Roosevelt launches campaign against trusts. http://www.history.com/topics/john-pierpont- morgan Theodore Roosevelt vs J. P. Morgan
Becomes law in 1890- It prohibits certain business activities that reduce competition in the marketplace, and requires the United States federal government to investigate and pursue trusts, companies, and organizations suspected of being in violation. It was the first Federal law to limit monopolies, but most politicians were unwilling to refer to it until Theodore Roosevelt. Morgan’s RR company, Roosevelt’s Standard Oil, and US Steel are all broken up using this act. Rockefeller: You weren't complaining when I brought light to every home, and brought jobs to Americans. You call it monopoly. I call it enterprise. Age of monopoly is now over.
Problems with Old Forms of Business Cant raise large sums of money. Unlimited financial responsibility of owners. Death= business is over. Advantages of Corporations Securing capital – Selling stock can raise large sums of $ Limited Liability- you don't loose everything when your company goes under. Transferability of Shares- stock can be bought and sold Perpetual Life- even if you die, the business goes on. America goes from small business to big business.
Legacy Drastically changed the way people lived (kerosene, electricity, transportation, buildings…) Led to the development of mass production, national brands, new advertising, marketing, consumer culture… Eventually led to the growth of the middle class Big business had it’s advantages…. Mass production Widespread distribution Efficient management But, big business also abused power by…. Eliminating competition Exploiting workers Influencing government