II. The Growth of Industry in the US & Rise of Big Business

The Industrial Revolution 1871-1912 The Rise of Industry The Captains of Industry The Labor Force/ Working Conditions Inventions

1. The Rise of Industry i. Abundant coal deposits (cheap energy) a. Five features led the rise of industry in the late 19th century: i. Abundant coal deposits (cheap energy) ii. Rapid spread of technological innovations

iii. Pressure to cut costs & prices (eliminating competition & building monopolies) iv. Expanded labor force (Immigrants who were willing to work for CHEAP!) v. Continued governmental attitude of Laissez Faire toward businesses.

2. U.S. Economic System a. Capitalism: private businesses run most industries; competition drives the cost of goods/ wages of workers. b. Laissez Faire: “Let alone”/ “Hands off” - No government intervention in the economy.

3. Economic Philosophies Karl Marx: Opposed capitalism (he said the business owners took advantage of the workers). COMMUNISM: Individual ownership of property should not be allowed. Property and means of production are owned by everyone.

b. Herbert Spencer: proposed Social Darwinism: 1. Society progresses through natural competition. The “fittest” people, businesses, or nations will rise to positions of wealth and power; the “unfit” will fail.

4. The Corporation CORPORATION: organizers raise money by selling shares of stock, or certificates of ownership, in the company. ** Stockholders are those who buy shares and receive dividends (a % of corporation’s profits). They have little say (if any) in the affairs of the company

b. Trusts: a group of companies turn control of their stock over to a common board of trustees. c. Monopoly: when a trust gains exclusive control of an industry; marked by little to no competition - the company has almost complete control over the price and quality of a product.

5. Legislation- Government & Business US policies most often favored industrialists, not workers (because of laissez-faire). As big business owners formed monopolies, Americans demanded that trusts and monopolies be outlawed

b. Sherman Anti-Trust Act: b. Sherman Anti-Trust Act: Congress’ response to Americans’ demands- passed in 1890. This law outlawed all monopolies and trusts that restrained trade. 1. However, law failed to define what was considered a monopoly or trust. 2. Law was difficult to enforce.

6. Railroads a. Railroads were the first monopoly in America. b. States developed railroad commissions to look into complaints. 1. Charging more for short hauls and less for long hauls 2. Offering rebates to favored customers

7. Mass Marketing Brand names and packaging played important roles in promoting goods. Advertising promoted products DEPARTMENT STORES: sold a variety of goods. Marshall Fields and RH Macy were among the first department store owners.

Captain of Industry Robber Baron? OR Business leader who dominated his industry, amassing great wealth, usually by unfair business practices that hurt the majority of Americans. Business leader who used his wealth and power to positively impact the country in some way, often through providing more jobs or through philanthropy. From Wikipedia: Robber baron was a term revived in the 19th century in the United States as a pejorative reference to businessmen and bankers who dominated their respective industries and amassed huge personal fortunes, typically as a direct result of pursuing various anti-competitive or unfair business practices. Captain of industry was a term originally used in the U.S. during the Industrial Revolution describing a business leader whose means of amassing a personal fortune contributes positively to the country in some way. This may have been through increased productivity, expansion of markets, providing more jobs, or acts of philanthropy. This contrasts with robber baron, a term used to describe a business leader using political means to achieve their ends. Some nineteenth-century industrialists who were called "captains of industry" overlap with those called "robber barons." These include people like J.P. Morgan, Andrew Carnegie, and John D. Rockefeller.

Horizontal integration- strategy used by a business or corporation that seeks to sell one type of product in numerous markets. Horizontal integration occurs when one company gains control over other companies producing the same product. Rockefeller’s Standard Oil Company was one of the most well-known companies to use horizontal integration to control its industry!

Vertical integration - The process in which several steps in the production and/or distribution of a product or service are controlled by a single company or entity

Carnegie Steel Works One of the earliest, largest and most famous examples of vertical integration was the Carnegie Steel company. Coal Mine Iron Mine

The American Dream Many people, including monopolists of the time, began pursing the idea of the American Dream. The term was first used by James Truslow Adams in his book The Epic of America.

He states: The American Dream is "that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement…It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position." How would you describe the American Dream today?