Presentation on theme: "Chapter 14 Sect. 3 Objectives:"— Presentation transcript:
1Chapter 14 Sect. 3 Objectives: Identify Management and business strategies that contributed to the success of business tycoons such as Andrew Carnegie.Explain Social Darwinism and its effects on society.Cite methods used by ruthless businessmen to eliminate free competition.Describe the reasons for the slow industrialization of the south.Chapter 14 Sect. 3
3ALL OF THIS GIVES RISE TO TYCOONS Profiteering from the Civil War gives rise to millionaire classMillionaires capitalize on Transcontinental railroad, mechanization, industrialization, & expansion of marketsSurplus of raw materials, cheap labor, foreign investment ENCOURAGE CAPITALISMInventions Industrialization More Inventions More IndustrializationALL OF THIS GIVES RISE TO TYCOONS
5Andrew Carnegie = Steel Kingpin Steel is King : US pouring out 1/3 of world’s steel by 1890’s“bootstrap” story: poor immigrant to tycoonCarnegie uses vertical integration to make more profitControls all means of production, eliminates middle manAlso uses horizontal consolidation to eliminate competition.Sells to JP Morgan for 400 millionBecomes a philanthropistHow do horizontal consolidation and vertical integration help business??
6J P Morgan – Banker’s Banker Builds financial empire through railroads, banks, and holding companiesBuys out Carnegie and enters steel businessUses trusts and holding companies to consolidate wealth and powerWhat are trusts and holding companies?Forms US Steel Corporation – 1st ever corporation worth more than $1 billion!
7Rockefeller – Standard Oil Corp. Kerosene and then Automobiles drive up US oil consumptionRockefeller ruthlessly uses horizontal consolidation to create largest monopoly1877 controls 95% of US’s oil refineriesRobber Baron’s Baron
9HOW MUCH WOULD THEY BE WORTH TODAY?? J.P. Morgan - $139 BILLIONAndrew Carnegie - $189.6 BILLIONJohn D. Rockefeller - $262 BILLIONCOMPARE:Bill Gates - $76 BILLION
10Monopoly = a firm that completely controls an industry Vertical integration = combining all phases of manufacturing in to one organization (Carnegie)Horizontal consolidation = allying with competitors to monopolize a market (Rockefeller)Trust = a board of directors/stockholders that coordinates companies within an industry to avoid competitionHolding company = a corporation composed of various competing enterprises within one industry (JP Morgan’s US Steel)
11Compare the lives and beliefs of Carnegie and Rockefeller using a Venn Diagram
12Justifications for Big Business Old Rich displaced by rule of the “new rich”Gospel of Wealth – discourages helping the poor by stateLaissez faire = “let it be”Justified by Social Darwinism – survival of the fittestPoor are poor due to lack of initiative
13Taking on the TrustsTrusts and robber barons defended by 14th amendment’s due process clauseConstitution’s “interstate commerce” clause inhibits states from controlling trustsSherman Anti-Trust Act of 1890Largely ineffective
14Industry and the South 1900: less manufacturing than before Civil War South acts primarily as source of raw materialsNortherners control stock in Southern industry, discourage industrializationShift in cotton mills from NE to S in 1880’sCheap labor (virtually sharecropping) brings rural white southerners to mill towns, and then traps them there
15TERMSAndrew CarnegieVertical integrationHorizontal consolidationSocial DarwinismMonopolyHolding companyJohn D. RockefellerTrustSherman Antitrust ActObjectives:Identify Management and business strategies that contributed to the success of business tycoons such as Andrew Carnegie.Explain Social Darwinism and its effects on society.Cite methods used by ruthless businessmen to eliminate free competition.Describe the reasons for the slow industrialization of the south.