1. The Gilded Age 1865-1900 “covered in gold” - beneath the gold is a decaying structure An era of growth and political scandal US transitioning to a world power

2. Times of boom and bust…  Manufacturing for war/Let down after the war  Expansion westward  Need for new inventions  Depression (deflation)  Crop/Cattle prices fall dramatically

3. Communism vs. Capitalism  Communism – mid 1800’s  Karl Marx – German philosopher  Community provides for all regardless of social rank  Capitalism  Entrepreneurs – motivated by wealth and wanting to better their lives  Self-reliant individualism – harder I work the more I will get  Horatio Alger Jr. – writer, “rags to riches” stories

4. Social Darwinism  Herbert Spencer – adapted Darwin’s biological theory to societal issues  “survival of the fittest” “fittest” people would rise to positions of wealth and power “unfit” would fail

5.  Way to organize business ownership  Has existed since colonial times  Sells shares of stock to raise money  Profits paid out in the form of dividends

6.  Includes a board of trustees  Group of corporations run as a single enterprise  Reduces competition in the industry by eliminating inefficient business practices

7.  Exclusive control of an industry  Little to no competition  Control over price and quality of product

8.  “let people do as they choose”  No government intervention  Also known as free enterprise  Private ownership based on free market competition (sets price)

9. Big Business in America Who are the rising stars in America’s second industrial revolution?

10. Robber Barons  Businessman that dominated a particular industry  Gained enormous wealth  Practiced anti-competitive business practices/strategies Gain market share Eliminate competition Set prices and standards as you wish  A. Carnegie, J.D. Rockefeller, C. Vanderbilt, H. Ford

11. Andrew Carnegie  Steel Carnegie Steel Company  Entrepreneur (risk-taking business people)  Little knowledge of steel industry but outstanding at running a company  How did he gain an edge over his competition? Lower production costs  Economies of scale  Vertical integration Owning all steps used in turning raw materials into finished goods  Iron mines, railroads, steamship lines, warehouses

12. Andrew Carnegie  Retired the richest man alive (at the time)  Philanthropy Gospel of Wealth  It is the obligation/ duty of the rich to advance society

15. Henry Bessemer/ Bessemer Process  Age of Iron Cheap to make Technology available and reliable Rust Weak  Age of Steel William Kelly (US) and Henry Bessemer (UK)  Steel Produce it cheaper Stronger material  Allowed for the advancement of railroads and skyscrapers (both significant in the growth of cities)

16.  Bessemer Process (1855); low cost method of converting iron to steel Process had existed for more than 100 years before Bessemer; however, never on a commercial scale until the mid 1800’s Products  Nails  Screws  Needles  Girders  Rail ties  Steel mills sprang up throughout the country Pittsburgh; steel-making capital  Good transportation (rivers)  Coal mines  Polluted waters  Grey skies Henry Bessemer/ Bessemer Process

18. John D. Rockefeller  Oil Refining  Standard Oil Company  Strategy to eliminate competition Vertical Integration Horizontal Integration  Wealthiest man in American history 1/65 of US GDP

21. Cornelius Vanderbilt  Railroads As water travel slowed investment in railroads began across the country  Controlled lines within some of the largest US cities New York, Chicago, Cleveland  Began connecting smaller lines to urban areas Efficiency (lower costs)  1877 – controlled 4,500 miles of rail Personal wealth estimated at $100 million

23. Railroad standardization & consolidation  Civil War railroads Track width Length – Where does it take you? Location  US expansion Demand for movement of goods and people increased Standardization and consolidation lowered costs  Standardization – tracks universal width  Consolidation – merger of smaller companies into one larger, more efficient company  Did not have to change trains/tracks/companies

24. George Westinghouse  Railroad  Westinghouse Air Brake Company Compressed air brake  As the railroad industry grew… The industry was looking for improvements Long time before Westinghouse’s air brake was accepted/embraced

27. George Pullman  Railroad  Designed and manufactured comfort passenger rail car Sleeping, dining, luxurious cars  Company towns Inspired by poor urban conditions Promote education, healthy living and peace among workers Pullman controlled every aspect of daily life, bred dissatisfaction

29. J.P. Morgan  Banker and financier  Lender of money to corporations  Stockholder – bought his way onto many Board of Director’s seats Making decisions for the company (benefiting him)  Eliminating competition  Increasing profits  General Electric  United States Steel Company First business worth more than $1 billion

30. J.P. Morgan vs. Uncle Sam Who dominates?

32. Sherman Antitrust Act - 1890  Angered by anti-competitive business strategies (monopolies, trusts, consolidation) the American public (small businesses) sought reform in free capitalism system  Intentionally creating a monopoly or suppressing trade or controlling supply was made illegal  Proved to be weak and ineffective legislation Those in power often benefited from large corporations, trusts and monopolies (turn the other cheek)