The Second Industrial Revolution Section 2: The Rise of Big Business
The Rise of Big Business Learning Goals Describe the economic developments that transformed the United States into a major industrial power and identify the factors necessary for industrialization. (USH 2.1)
Favorable Climate for Business Belief in free Markets Entrepreneurs Competition sets prices and wages Laissez-faire capitalism Social Darwinism Inequalities are part of the natural order “survival of the fittest” strengthened society as a whole
Business Structures Change Proprietorships and partnerships Corporations Need for expert management Owned by stockholders Board of directors Advantages - raise money by selling stock - stockholders have limited responsibility - non-dependent on single owner
Business Structures Change Trusts and monopolies Trusts formed to gain dominance Ran as a single corporation Monopolies Corporate leaders amassed staggering fortunes
Industrial Tycoons Rockefeller and oil Standard Oil Vertical integration Horizontal integration 1879 – 90% of all US oil Limited competition Philanthropy
Industrial Tycoons Carnegie and steel Scottish immigrant Carnegie Steel Vertical integration 1900 dominated the US steel industry Sold for $480 million Philanthropy Gospel of Wealth
Industrial Tycoons Railroad tycoons Vanderbilt 4,500+ miles Steamship lines Few charities
Industrial Tycoons George Pullman Pullman Palace Car Company – Chicago 1867 Company town Pullman controlled
Industrial Tycoons A mixed legacy “Robber Barons” - Profited unfairly - Ill-gotten rewards “Captains of Industry” - used business skills to improve economy - praise for their generosity
Mass Marketing New ways to maximize profits Innovative & new products Advertisements Department Stores Mail order companies