8VERTICAL INTEGRATIONWhen a company buys each stage of the production process.ThisLowers production costsGives a company control over the processImproves qualityImproves availabilityBut… limits competition.
9STEEL Y Ore company Ore company $5 $2 Y Rail cars Rail cars $5 $2 Y Rail CompanyRail Lines$5$2CostReducedTo $10TotalAdditionalCost$25YShipping CompanyShipping company$5$2Y Steel MillsSteel mills$5$2
11Horizontal Integration When companies making similar products merge in order to have more control over the market.Results-Lowers costs by eliminating competition.Keeps control of prices in the hands of a few men.Price fixing(Laws of Supply and Demand)
12Competition keeps prices low Removing competition allows companies to increase profits by raising prices.Trust/HoldingCompanyCompanyACompanyBCompanyC
13Who did it? John D. Rockefeller 1870- Standard Oil was Created TRUSTS. 23% of US Oil processing.%Created TRUSTS.
153 Really Important Ideas The Law of Supply and DemandSocial DarwinismLaissez Faire Economics
16The Law of Supply and Demand If demand is low the price is…Low.If demand is high the price is…High.If supply is low the price is…HighIf supply is high the price is…Low.
17Social DarwinismA perversion of Charles Darwin’s “On the Origin of Species”His ideas were applied to business. (It wasn’t whathe had in mind.)The Moth story2 key ideasSurvival of the fittestNatural Selection
19Darwin on Breeding Animals. Thus the weak members of civilized societies propagate their kind. No one who has attended to the breeding of domestic animals will doubt that this must be highly injurious to the race of man. It is surprising how soon a want of care, or care wrongly directed, leads to the degeneration of a domestic race; but excepting in the case of man himself, hardly any one is so ignorant as to allow his worst animals to breed.Darwin on Breeding Animals.Darwin thought that man should not lose his compassion for people with weaknesses. He felt this was part of being human and what set us apart.This gets twisted intosomething different.
20Social Darwinism was developed some thirty years after Darwin’s famous book by a social thinker named Herbert Spencer. Extending Darwin into a realm Darwin never intended, Spencer and his followers saw society as a competitive struggle where only those with the strongest moral character should survive, or else the society would weaken. It was Spencer, not Darwin, who coined the phrase "survival of the fittest.“Social Darwinism thereby offered a perfect moral justification for America’s Gilded Age, when robber barons controlled much of American industry, the gap between rich and poor turned into a chasm, urban slums festered, and politicians were bought off by the wealthy. It allowed John D. Rockefeller, for example, to claim that the fortune he accumulated through the giant Standard Oil Trust was "merely a survival of the fittest, ... the working out of a law of nature and a law of God."Spencer coined the term Social Darwinism and Survival of the fittest. Another shady guy is Francis Galton who extended these ideas into the ideas of Eugenics. The idea that the evolution of man can be controlled and directed. Leading directly to the policies of Nazi Germany and of Stalin in the USSR.HerbertSpencer
21Social Darwinism provided a justification for: The more exploitative forms of capitalism in which workers were paid sometimes pennies a day for long hours of backbreaking labor.Social Darwinism also justified big business' refusal to acknowledge labor unions and similar organizations,and implied that the rich need not donate money to the poor or less fortunate, since such people were less fit anyway.In its most extreme forms, Social Darwinism has been used to justify eugenics programs aimed at weeding "undesirable" genes from the population; such programs were sometimes accompanied by sterilization laws directed against "unfit" individuals. The American eugenics movement was relatively popular between about , during which 24 states passed sterilization laws and Congress passed a law restricting immigration from certain areas deemed to be unfit. Social Darwinist ideas, though in different forms, were also applied by the Nazi party in Germany to justify their eugenics programs.
22Results Wealth is deserved = Good Poverty is deserved = Bad Connect to the same ideas as espoused by the Puritans! Wealth is good, poverty is a sign of God’s disfavor.Where have we seen this before?
23Social Darwinism as it applies to… Workers and OwnersRich and PoorThe U.S. and other countries.History: The Native Americans
24Social Darwinism as it applies to “Factory Towns”
25The “Gospel of Wealth Raises the question WHY? "The Gospel of Wealth" was an essay written by industrialist Andrew Carnegie in Carnegie professed the virtues of a Laissez-faire system in which the government did not interfere with a corporation's right to do as it pleased. Carnegie made it clear that the wealthy were responsible for the recirculation of their money back into society where it could be used to support the greater good. Carnegie himself practiced this procedure, and in his later years gave money to establish public libraries, schools and swimming pools.Raises the questionWHY?
26Laissez Faire Economics HANDS OFFThe idea that the government should leave business alone. The Strong will survive the weak will perish.This is how “NATURE” works.Connect the implication that nature is inherently tied to God. This was accepted by conservative thinkers in America and still exists in conservative thought today. It was a justification for wealth today that frees the wealthy during the Gilded Age” from guilt about the plight of the poor.Laissez Faire Beliefs Sheet
28Other important factsRobber BaronsBusiness in the South
29Horatio Alger – a partial list Abraham Lincoln: the Backwoods Boy; or,How A Young Rail-Splitter Became President (1883)Adrift in New York; or, Tom and Florence Bravingthe World (1904)Adrift in the City; or, Oliver Conrad's Plucky Fight (1902)Andy Gordon; or, The Fortunes of a Young Janitor (1909)Andy Grant's Pluck (1902)Ben Bruce. Scenes in the Life of a Bowery Newsboy (1901)Ben Logan's Triumph; or, The Boys of Boxwood Academy (1908)Ben's Nugget; or, A Boy's Search for Fortune (1882)Ben The Luggage Boy; or, Among the Wharves (1870)Bernard Brooks' Adventures. The Story of a Brave Boy's Trials (1903)Bertha's Christmas Vision. An Autumn Sheaf (1856)Bob Burton; or, The Young Ranchman of the Missouri (1888)Bound to Rise; or, Up the Ladder (1873)A Boy's Fortune; or, The Strange Adventures of Ben Baker (1898)Brave and Bold; or, The Fortunes of Robert Rushton (1874)The Cash Boy (1887
30One day a handsome carriage drove up to the door One day a handsome carriage drove up to the door. From it descended our hero, elegantly attired. He knocked at the door. Mrs. Chase, who was impressed by wealth, came to the door in a flutter of respect, induced by the handsome carriage. ``What do you wish, sir?'' she asked, not recognizing Frank. ``Miss Grace Fowler!'' repeated Mrs. Chase, almost paralyzed at Grace being called for by such stylish acquaintances ``Yes, my sister Grace.'' ``What! are you Frank Fowler?'' ``Yes. I have come to take Grace away.'' ``I don't know as I have the right to let her go,'' said Mrs. Chase, cautiously, regretting that Grace was likely to escape her clutches. ``Here is an order from Deacon Pinkerton, chairman of the overseers of the poor.'' ``That is sufficient. She can go. You look as if you had prospered in the city,'' she added, with curiosity. ``Yes. I have found my grandfather, who is very wealthy.'' ``You don't say!'' exclaimed Mrs. Chase. ``I'll tell Grace at once.'' Grace at work in the kitchen had not heard of the arrival. What was her surprise when Mrs. Chase, entering the room, said, graciously: ``Go up at once, Grace, and change your clothes. Your brother has come for you. He is going to take you away.'' Grace almost gasped for breath. ``Is it true?'' ``It is indeed. Your brother looks remarkably well. He is rich. He has found a rich grandfather, and has come for you in a carriage.'' In amazed bewilderment Grace went upstairs and put on her best dress, poor enough in comparison with her brother's clothes, and was soon happy in his embrace. ``I am glad to see you, my dear child,'' said Mr. Wharton, who had accompanied Frank. ``Will you come to the city and live with me and your brother?'' ``Oh, sir, I shall be glad to be wherever Frank is.'' ``Good-bye, my dear child,'' sand Mrs. Chase, whose feelings were very much changed, now that Grace was a rich young lady. ``Come and see me some time.'' ``Thank you, Mrs. Chase. Good-bye!'' The carriage rolled on.
31A few words only remain. Our hero was placed at a classical school, and in due time entered college, where he acquitted himself with distinction. He is now making a tour of Europe. Grace was also placed at an excellent school, and has developed into a handsome and accomplished young lady.