The Growth of Big Business

Unit Theme: How did Americans attempt to obtain the “American Dream” in the late 1800s? Opening Discussion: –What is the American Dream? –Is the American Dream still alive today? Today’s Essential Question: How did Big Business grow to change America?

Why a Growth in Industry? Between 1790 and 1850, the US Patent and Trademark Office issued just 36,000 patents on new inventions and innovations. In contrast, 500,000 patents were issued between 1860 and Many of these new inventions/innovations would raise American productivity… New Inventions / Innovations –Oil Edwin Drake drills for oil, –Electric lighting Thomas Edison, –George Westinghouse, Alternating Current (AC), 1885 »Transformer, Allows electricity to travel long distances –Telephone Alexander Graham Bell, 1876 –American Telephone and Telegraph Company (AT&T) –The Bessemer Process (Steel) Henry Bessemer, 1856 –A faster and more efficient way to remove impurities from iron to make steel.

Powering the Industrial Machine…. “Self-make” –Ideology that anyone, with hard work, can rise their standard of living. Entrepreneur –A risk-taker who invests significant capital and time to grow a business.

Big Business “Big Business” –Entrepreneurs often combined funds and resources to create large companies. How is Big Business different from earlier forms of business in the United States? –Larger pools of capital –Wider geographic span –Broader range of operations –Revised role of ownership –New methods of management Examples of other modern day Big Businesses?

Ways to Make Big $ (Gain a Competitive Edge) Monopoly –Complete control of a product or service by one company. Oligopoly –A market dominated by only a few, large, profitable companies. Cartel –A group of companies working together to set production limits to keep prices high and costs low.

Two Famous Entrepreneurs… John D. Rockefeller –Became rich selling grain and meat to Union army in Civil War. –Built an oil refinery in Cleveland, Ohio, in 1863 which expanded rapidly. –Formed “Standard Oil” in Was such a large company that it could negotiate lower shipping costs and could thus undersell competitors. Started buying other oil companies. Horizontal Consolidation, “Trust” = MONOPOLY!

Horizontal vs. Vertical Consolidation

Two Famous Entrepreneurs… Andrew Carnegie –1865, Convinced the Bessemer process would lead to steel replacing iron as main building material. Founded steel mills in Pittsburg, –Carnegie Steel Company Made enough money to buy companies in all phases of steel production. –Mines –Railroads –Mills “Vertical Consolidation”

Horizontal vs. Vertical Consolidation

Robber Barons or Captains of Industry? Captains of Industry –Good or Bad? Robber Barons –Good or Bad? Examples of Robber Barons or Captains of Industry today?