1. What is a technophilantropist? Warm up 1. What is a technophilantropist? 2.  How are they different than the Robber Barrons of the past?  (what does their philanthropy do for the world?)

Wealthiest Americans Ever http://www. nytimes Big Business Rises

What are the objectives? Analyze different management innovations that businesses used to increase their profits. Describe the public debate over the pros and cons of big business. Explain how the government took steps to block abuses of corporate power.

Corporations Find New Ways to Doing Business Investors developed a form of group ownership known as corporations, a number of people who share the ownership of a business.

How corporations gain advantages. Ways to Gain Advantage How corporations gain advantages. Advertise Pay low wages to workers. Obtain raw materials as cheaply as possible Organize using either Horizontal OR vertical integration.

Horizontal Integration  merge competing firms into a giant company whose size would lead to lower production costs. With no remaining competition and an efficient production process means the company sets the prices.

John D. Rockefeller

Horizontal Integration

John D. Rockefeller Founded Standard Oil Became the richest man in history Created an oil monopoly through Horizontal integration Owned 90% of U.S. crude oil

John D. Rockefeller’s Estate “Kykuit”

Carnegie attempted to control as much of the steel industry as possible. He used vertical integration; he bought out ALL his suppliers in the steel industry in order to control material and transportation. Vertical Integration

_____ _______ Andrew Carnegie was one of the first industrial greats. _____ _______ Andrew Carnegie was one of the first industrial greats. He begin in 1873. By 1899, the Carnegie Steel Company manufactured more steel than all the factories in Great Britain combined.

Carnegie’s New Business Practices He became a Steel Giant by: Search for ways to make better products more cheaply. Accounting systems to track expenses. Attracting quality people by offering them stock & benefits.

Andrew Carnegie’s Mansion

Carnegie’s Dining room in Skibo Castle

Cornelius Vanderbilt Controlled shipping & railroads Used vertical integration to control every part of the shipping industries

The Biltmore Estate Ashville, NC Built by Vanderbilt family in the late 1800’s.

Business Tactics Carnegie and Rockefeller ran their competition out of business Their business tactics of horizontal and vertical integration led to monopolies.

Monopoly One company has complete control of a product or service. With no remaining competition and an efficient production process, this means the company sets the prices. Is this be bad?

Monopoly Rockefeller could not buy out his competitors OR could HE?? In the late 1800s, Americans became suspicious of large corporations and feared monopolies. Ohio state law prevented one company from owning the stock of another company. Rockefeller could not buy out his competitors OR could HE??

_____ TRUSTS Rockefeller got around the Ohio state law by forming a trust. Trust Companies assign their stock to a board of trustees who combined them into a new organization. Trusts eliminate business competition.

Pros and Cons of Big Business Throughout the 1800s business mergers created powerful empires for those who controlled steel, railroads, meats, farm equipment, lumber, and a number of other enterprises. Causing Smaller companies and consumers to question goals and tactics Was Laissez-Faire good?

“Robber Barons” or “Captains of Industry” Alarmed at the ruthless tactics of industrialists, critics began to call them, “Robber Barons.” Famous “Robber Barons” included Carnegie, Rockefeller, Vanderbilt, Stanford and J.P. Morgan. Was laissez-faire policies too hands off and costly in terms of hurting workers and consumers?

Monopolies and trusts had Influence on the government What is this cartoon trying to say about Rockefellers and Robber Barons? Monopolies and trusts had Influence on the government “What a funny little government”

“Robber Barons” or “Captains of Industry” Other people believed that these industries served the nation positively through: -Jobs -Developing technology -International leaders -Philanthropists

Robber Barons Were Generous Too When very rich people give away lots of money Examples: Carnegie built libraries, Rockefeller, Stanford and Vanderbilt built schools. Carnegie Hall

Carnegie Library

Monopolies and trusts What’s the Main Idea? What did business tactics such as horizontal and vertical integration lead to? Monopolies and trusts

When one company controls the entire industry What’s the Main Idea? What is a monopoly? When one company controls the entire industry

Why were trusts mainly formed? What’s the Main Idea? Why were trusts mainly formed? eliminate business competition.

Used ruthless business tactics What’s the Main Idea? Why were some business leaders in the late 1800’s called “Robber Barons”? Used ruthless business tactics

Changing Relationship Between Government and Business

Changing Relationship Between Government and Business The great industrialists’ methods and their influence of the nation’s economy worried some Americans. Businesses took part in practices such as fixing rates, secret agreements, poor wages to workers, and unsafe working conditions. Americans wanted the federal government to take action.

Interstate Commerce Act Interstate Commerce Act = created the first federal agency, the Interstate Commerce Commission. It was created to monitor railroads shipping rates. However, it could only keep watch on railroads that crossed state lines only! Also, the Interstate Commerce Act could not make laws or control the railroads’ transactions.

Interstate Commerce Commission The Interstate Commerce Commission had little power and control until Teddy Roosevelt came and put the railroads in a headlock.

Sherman Antitrust Act Made it illegal to form a trust that interfered with free trade between states or countries. Designed to bust up the monopolies which prevented small businesses from succeeding. The problem was that the Supreme Court heard 8 cases and threw out 7 of them.

Who supervised the railroads? What’s the Main Idea? Who supervised the railroads? Interstate Commerce Commission

What did the Sherman Antitrust Act do? What’s the Main Idea? What did the Sherman Antitrust Act do? Broke up trusts, made them illegal.

Natural Selection 1859- Charles Darwin published, On the Origin of Species, arguing animals evolved by a process of “natural selection” and that only the fittest survived to reproduce. Yale professor applied this theory to the rough and tumble world of American capitalism calling it Social Darwinism.

Social Darwinism declared that wealth was a measure of one’s inherent value and those who had it were the most “fit.” People who liked laissez faire liked Social Darwinism and argued the government should stay out of businesses because interference would disrupt natural selection. It is used to explain poverty and to justify class distinctions and the imbalances of power between races and nations.

“While the law of competition may be sometimes hard for the individual, it is best for the race, because it insures the survival of the fittest . . . competition between these, as being not only beneficial, but essential for the future progress of the race.” -Andrew Carnegie

Social Darwinism What’s the Main Idea? Charles Darwin’s theory of evolution and natural selection applied to human society was called what? Social Darwinism

Checking for Understanding What did Social Darwinists use the theory of natural selection to justify? Inequality between the rich and poor