The Growth of Big Business The Rise of Big Business
Robber Baron or Captains of Industry Robber Baron 1: an American capitalist of the latter part of the 19th century who became wealthy through exploitation (as of natural resources, governmental influence, or low wage scales) 2: a business owner or executive who acquires wealth through ethically questionable tactics Captain of Industry : the head of a great industrial enterprise
3 New Vocabulary words… Monopoly: A company that completely dominates a particular industry Trust: a set of companies managed by a small group known as trustees, who can prevent companies in the trust from competing with each other Corporation: A company recognized by law to exist independently from its owners, with the ability to own property, borrow money, sue or be sued
Robber Barons or Captains of Industry Robber Barons – negative view of big business As cruel and ruthless Would stop at nothing to achieve great wealth The Rise of Big Business
Robber Barons or Captains of Industry Captain of Industry – view that the same men were ingenious and industrial leaders Transformed the American economy Praised for their charity The Rise of Big Business
Social Darwinism Origins of Species 1859 Charles Darwin All animal life had evolved by a process of Natural Selection Only the strong survive to reproduce The Rise of Big Business
Social Darwinism Free Competition in the economy, like natural selection, would ensure survival of the fittest Society should do as little as possible to interfere with people’s pursuit of success The Rise of Big Business
Robber Barons or Captains of Industry Andrew Carnegie Gospel of Wealth – people should be free to make as much money as they can. However, after they make it, they should give it away The Rise of Big Business
Carnegie Steel Arrive in American as a penniless Scottish immigrant Began to work to assist his family 1865 Andrew Carnegie was making $50,000 The Rise of Big Business
Carnegie Steel Entered steel business Stole Bessemer Process from Brits 1889 Established Carnegie Steel Company Controlled suppliers and competition 1899 Carnegie Steel produced more than Great Britain Carnegie Steel produced 80% of nation’s steel The Rise of Big Business
Robber Barons or Captains of Industry Carnegie once stated, “I entered this life poor and I wish to leave it the same.” Gave away $325 million = 90% of his wealth Carnegie Hall in NY City Carnegie Foundation 3,000 libraries across the US The Rise of Big Business
Vertical Integration Controlling all steps to change raw materials into finished products The Rise of Big Business
Vertical Integration Own iron and coal mines Bought railroads, trucking and shipping lines Bought warehouses The Rise of Big Business
Horizontal Consolidation Buy out competitors Companies making similar products merge The Rise of Big Business
Growth and Consolidation Monopoly- complete control over production, quality, wages, and prices The Rise of Big Business
Holding Company J.P. Morgan very successful banker Bought Carnegie Steel in 1901 for $500 million Changed name to US Steel Became the largest business organization The Rise of Big Business
Standard Oil Trust Established by John D. Rockefeller Was able to undersell his competitors by charging less Purchased oil refineries and created horizontal consolidation The Rise of Big Business
Standard Oil Trust Drove competitors out of business by selling oil lower than cost to make it After competitor are driven out prices skyrocketed to recoup loss The Rise of Big Business
John D. Rockefeller Rockefeller gave away $500 million Founded the University of Chicago which found cure for yellow fever Land for United Nations The Rise of Big Business
Standard Oil Trust Rockefeller was so successful at his death his personal fortune was estimated at $815,647,796 The Rise of Big Business
The Government Response 1890 Sherman Antitrust Act Outlawed any combination of companies that restrained interstate trade Was not effective against trusts Pro business courts had to interpret law The Rise of Big Business