Presentation on theme: "The Rise of Big Business-"— Presentation transcript:
1 The Rise of Big Business- The Incorporationof America
2 Causes of Rapid Industrialization Steam Revolution of the 1830s-1850sThe Railroad fueled the growing US economy:First big business in the USA magnet for financial investmentThe key to opening the WestAided the development of other industriesTechnological innovationsBessemer and open hearth processRefrigerated carsEdison“Wizard of Menlo Park”light bulb, phonograph, motion pictures
3 Causes of Rapid Industrialization Unskilled & semi-skilled labor in abundanceAbundant capitalNew, talented group of businessmen [entrepreneurs] and advisorsMarket growing as US population increasedGovernment willing to help at all levels to stimulate economic growthAbundant natural resources
4 New Types of Business Entities Pool: Interstate Commerce Act Interstate Commerce Commission created
5 New Types of Business Entities Trust:Horizontal Integration John D Rockefeller and Andrew CarnegieVertical Integration:Gustavus Swift - Meat-packingAndrew Carnegie - SteelJohn D. Rockefeller - Oil
7 New Business CultureLaissez Faire the ideology of the Industrial AgeIndividual as a moral and economic idealIndividuals should compete freely in the marketplaceThe market was not man-made or inventedNo room for government in the market
8 The Reorganization of Work The Principles of Scientific Management (1911)Replace rule-of-thumb work methods with methods based on a scientific study of the tasksScientifically select, train, and develop each employee rather than passively leaving them to train themselvesProvide "Detailed instruction and supervision of each worker in the performance of that worker's discrete task"Divide work nearly equally between managers and workers, so that the managers apply scientific management principles to planning the work and the workers actually perform the tasksFrederick W. Taylor
10 Social Darwinism British economist Advocate of laissez-faire Adapted Darwin’s ideas from the “Origin of Species” to humansNotion of “Survival of the Fittest”Herbert Spencer
11 Social Darwinism in America Individuals must have absolute freedom to struggle, succeed or fail.Therefore, state intervention to reward society and the economy is futile!William Graham Sumner
12 The Gospel of Wealth Wealth no longer looked upon as bad Viewed as a sign of God’s approvalChristian duty to accumulate wealthShould not help the poorRussell H. Conwell
13 The Gospel of Wealth"I say that you ought to get rich, and it is your duty to get rich.... The men who get rich may be the most honest men you find in the community. Let me say here clearly .. . ninety-eight out of one hundred of the rich men of America are honest. That is why they are rich. That is why they are trusted with money. That is why they carry on great enterprises and find plenty of people to work with them. It is because they are honest men I sympathize with the poor, but the number of poor who are to be sympathized with is very small. To sympathize with a man whom God has punished for his sins ... is to do wrong.... let us remember there is not a poor person in the United States who was not made poor by his own shortcomings. ..."-Russell Conwell from hisspeech- “Acres of Diamonds”
14 New Business Culture and the American Dream Protestant (Puritan) “Work Ethic”Horatio Alger (100+ novels)
16 Cornelius “Commodore” Vanderbilt Becomes captain of the railroad industry by consolidating several of the major trunk linesMost of these lines led into Chicago or New YorkReduced the amount of railroad companies, making coordinating transportation easierCan’t I do what I want with my money?
17 William Vanderbilt The public be damned! What do I care about the law? Ain’t I got the power?
18 John D. Rockefeller Becomes king of the oil industry Takes advantage of the 1860s oil rush in PA by creating Standard Oil in 1870Used the latest tech. and efficient practicesBy 1881 S.O. controlled 90% of oil refineries
20 Andrew CarnegieDominated the steel industry after coming to the U.S. as a poor Scottish immigrant-perfect example of the “American success story”Worked his way up through the railroad industry and was able to purchase stock along the wayStarted his own steel company in Pittsburgh using the Bessemer ProcessIncreased production of steel from 13,000 tons in 1860 to 1.4 million tons by 1880By 1900 Carnegie Steel had 20,000 employees and was the largest steel companySold his company to JP Morgan in 1900 for $400 million
22 Carnegie’s Beliefs about Wealth The Anglo-Saxon race is superior“Gospel of Wealth” (1901)Inequality is inevitable and goodWealthy should act as “trustees” for their “poorer brethren”
23 John Pierpont (J.P.) Morgan Gained prominence as an investment banker who invested European capital ($) in promising American businessesThrough his investments (ex. buying stock) he was able to gain positions on the boards of many of the companies- allowing him to shape the direction of the businessesBought what will become U.S. Steel which will become the first billion dollar corporation
24 Meat Packing IndustryGustavus Swift (Chicago) and Philip Armour (Minneapolis) dominated the meat packing industrySwift used Vertical Integration which allowed his company to control all of the steps in the process (from moo to chew)
27 Regulating the Trusts 1877 Munn. v. IL 1886 Wabash, St. Louis & Pacific Railroad Company v. IL1890 Sherman Antitrust Actin “restraint of trade”“rule of reason” loophole1895 US v. E. C. Knight Co.