The Rise of Big Business Ch. 4 Sec. 2

Fighting for Profits Most businesses were run by one person or family Businesses were local Industrialization changed this

The Corporation Develops Corporation- group ownership of a business Investors lose no more than they originally invested in the business If one person leaves, the others can buy his interests

Gaining a Competitive Edge Maximize profit Pay lowest wages possible Paying little as possible for materials Advertise widely Some corporations tried to gain a monopoly Complete control of a product or service Buy out competitors or put them out of business Cartel- limit production numbers to keep high prices

Horizontal and Vertical Integration Horizontal Integration- consolidating many firms in the same business Rockefeller was one of the first to use this Trust- assign company’s stock to a board of trustees who combine them into a new organization Vertical integration- controls the businesses that make up all phases of a product’s development

“WHAT A FUNNY LITTLE GOVERNMENT “WHAT A FUNNY LITTLE GOVERNMENT.” Horace Taylor drew this political cartoon of John D. Rockefeller holding the White House and Treasury department in the palm of his hand for the September 25, 1899 issue of The Verdict. Notice the smoke from the United States Capitol in the background? It has essentially become an oil refinery, itself demonstrating the power big business held over government. 6

The Tycoons - Carnegie Andrew Carnegie Carnegie Steel (later US Steel) Vertical integration The Gospel of Wealth Philanthropist 7

The Tycoons - Rockefeller John D. Rockefeller in 1885 Standard Oil At one point controlled 90% of US oil refinery production Railroads Horizontal and Vertical Integration Rise of Rockefeller 8

The Tycoons - Gould Railroad tycoon and Wall Street speculator Jay Gould 9th richest American in history 9

The Tycoons - Morgan Financier J.P. Morgan Rise of J.P. Morgan Banking Railroads Steel Stock speculation Rise of J.P. Morgan 10

A political cartoon from Puck “A helping hand.” The Tycoons - Morgan A political cartoon from Puck “A helping hand.” 11

Robber Barons or Captains of Industry? Big companies provided lots of jobs Developed good business practices Benefited the economy Stimulated innovations Philanthropists- Established universities, museums, libraries powerful businessmen had an unfair advantage Small businesses– Few profits or… bought or pushed out Unfair prices set on products

Social Darwinism Catches On Charles Darwin On the Origin of Species Natural Selection Survival of the fittest People applied this theory to society- Social Darwinism Wealth/race measured how “fit” people were

Government Regulations Interstate Commerce Commission Oversee RR operations Investigated unfairness Sherman Antitrust Act Outlawed any trust that restrained trade or commerce Focused on large corporations Roosevelt vs. Big Industry