Presentation on theme: "Chapter 14 Sect. 3 Objectives: 1. Identify Management and business strategies that contributed to the success of business tycoons such as Andrew Carnegie."— Presentation transcript:
Chapter 14 Sect. 3 Objectives: 1. Identify Management and business strategies that contributed to the success of business tycoons such as Andrew Carnegie. 2. Explain Social Darwinism and its effects on society. 3. Cite methods used by ruthless businessmen to eliminate free competition. 4. Describe the reasons for the slow industrialization of the south. 1
Tycoons 3 1. Profiteering from the Civil War gives rise to millionaire class 2. Millionaires capitalize on Transcontinental railroad, mechanization, industrialization, & expansion of markets 3. Surplus of raw materials, cheap labor, foreign investment ENCOURAGE CAPITALISM 4. Inventions Industrialization More Inventions More Industrialization ALL OF THIS GIVES RISE TO TYCOONS
Andrew Carnegie = Steel Kingpin 5 Steel is King : US pouring out 1/3 of world’s steel by 1890’s “bootstrap” story: poor immigrant to tycoon Carnegie uses vertical integration to make more profit Controls all means of production, eliminates middle man Also uses horizontal consolidation to eliminate competition. Sells to JP Morgan for 400 million Becomes a philanthropist How do horizontal consolidation and vertical integration help business??
J P Morgan – Banker’s Banker 6 Builds financial empire through railroads, banks, and holding companies Buys out Carnegie and enters steel business Uses trusts and holding companies to consolidate wealth and power What are trusts and holding companies? Forms US Steel Corporation – 1 st ever corporation worth more than $1 billion!
Rockefeller – Standard Oil Corp. 7 Kerosene and then Automobiles drive up US oil consumption Rockefeller ruthlessly uses horizontal consolidation to create largest monopoly 1877 controls 95% of US’s oil refineries Robber Baron’s Baron
HOW MUCH WOULD THEY BE WORTH TODAY?? 9 J.P. Morgan - $139 BILLION Andrew Carnegie - $189.6 BILLION John D. Rockefeller - $262 BILLION COMPARE: Bill Gates - $76 BILLION
10 Monopoly = 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 competition Holding company = a corporation composed of various competing enterprises within one industry (JP Morgan’s US Steel)
11 Compare the lives and beliefs of Carnegie and Rockefeller using a Venn Diagram
Justifications for Big Business 12 Old Rich displaced by rule of the “new rich” Gospel of Wealth – discourages helping the poor by state Laissez faire = “let it be” Justified by Social Darwinism – survival of the fittest Poor are poor due to lack of initiative
Taking on the Trusts 13 Trusts and robber barons defended by 14 th amendment’s due process clause Constitution’s “interstate commerce” clause inhibits states from controlling trusts Sherman Anti-Trust Act of 1890 Largely ineffective
Industry and the South 14 1900: less manufacturing than before Civil War South acts primarily as source of raw materials Northerners control stock in Southern industry, discourage industrialization Shift in cotton mills from NE to S in 1880’s Cheap labor (virtually sharecropping) brings rural white southerners to mill towns, and then traps them there
TERMS 15 Andrew Carnegie Vertical integration Horizontal consolidation Social Darwinism Monopoly Holding company John D. Rockefeller Trust Sherman Antitrust Act Objectives: 1. Identify Management and business strategies that contributed to the success of business tycoons such as Andrew Carnegie. 2. Explain Social Darwinism and its effects on society. 3. Cite methods used by ruthless businessmen to eliminate free competition. 4. Describe the reasons for the slow industrialization of the south.