The Rise of Big Business

Corporations Develop Until 1900’s families owned small businesses that were local Corporations form that are owned by many people, had the same rights as citizens Corporations increase their profits by: Paying low wages…upsets workers Broadened their advertising base Invested in inventors Many corporations formed monopolies in which they controlled the entire market (no competition) Using vertical and horizontal integration

Entrepreneurs that were seen as serving the nation in a positive way “Robber Barons” “Captains of Industry” Entrepreneurs who built monopolies that were unfair to consumers Swindled the poor Bought out competitors Seen as bad for the economy Rockefeller Entrepreneurs that were seen as serving the nation in a positive way Creating jobs Stimulated innovation Were charitable Carnegie

Social Darwinism “Survival of the fittest” promoted by Charles Darwin wealth was a measure of one’s inherent value and those who had wealth were most fit Only the wealthy should rise to the top Don’t use public funds to help the poor Said that the impoverished were unfit to reproduce Complete opposite of Gospel of Wealth

Horatio Alger In his books, Alger told stories of young men who won wealth and fame by being honest and hardworking Advised Americans to seek success based on values Success through the strengths of their own efforts

John D. Rockefeller Established the Standard Oil Company Bought up smaller oil companies to create his own company (horizontal integration) Bought the oil wells, pipelines, retail outlets and railroads Created a monopoly for the oil industry Controlled 90% of the oil in America

Andrew Carnegie Steel tycoon Used the Bessemer process to mass produce steel Teamed up with J.P. Morgan to find investors in RR so that the demand for steel would increase Helped Carnegies create the industrial giant US Steel

Gilded Age A term coined by Mark Twain that describes the last decade of the 19th century Said that America had a rotten core but was covered with gold paint (gilded) Describes how on the outside America looked wealthy (gold paint) and prosperous but there was poverty and despair (rotten core) underneath all the wealth The gap between the rich and the poor was too wide

Other Entrepreneurs Cornelius Vanderbilt: George Westinghouse: Made millions from the shipping and railroad business Became a symbol of the excesses during the Gilded Age George Westinghouse: Developed air brakes and a device that allowed trains to switch from one track to another

Government Regulation of Big Business Laissez-faire: little government interference in the economy An American tradition But the stronghold that these capitalists had on the economy worried the government Interstate Commerce Commission set up to regulate railroads Sherman Antitrust Act outlawed monopolies and trusts (companies owned by stockholders)…but not really enforced