Robber Barons & Business in the Gilded Age

Bell Ringer #4 Complete summary from last class if you haven’t done so. In your groups, discuss who had the best shoe. Do not anything down. Content Vocab Corporation Horizontal Integration Vertical Integration Robber Baron Monopoly JP Morgan J.D. Rockefeller Andrew Carnegie Gilded Age Gospel of Wealth Social Darwinism Academic Vocab Business Ruthless

The Gilded Age In 1873 Mark Twain and Charles Warner co-wrote the novel, The Gilded Age The term “gilded” refers to something being gold on the outside while the inside is made of cheaper material. beneath the surface were corruption, poverty, and a huge difference between rich and poor.

Individualism “Rags to Riches” A strong belief during the Gilded Age was the idea of individualism. This is the belief that regardless of your background, you could still rise in society. “Rags to Riches” http://www.youtube.com/watch?v=1eRgZOZ8o4s

Laissez-Faire In the late 1800s, state and federal government had a laissez-faire attitude by keeping taxes and spending low and by not imposing regulations on industry. The government did not control wages or prices. It adopted policies to help industry.

High Competition By the early 1900s, American industries were larger and highly competitive. Many business leaders began to encourage free trade, believing they could compete internationally and succeed. Free enterprise: Businesses are competitive without government control

Free Enterprise How does free enterprise work? Businesses are owned by private citizens Companies compete to win customers by making the best products at the lowest prices

Corporation A corporation is an organization owned by many people but treated by law as though it was a single person. Stockholders, the people who own the corporation, own shares of ownership called stock. Issuing stock allows a corporation to raise large sums of money but spreads out the financial risk.

Corporation Big corporations had an advantage over small manufacturing companies. Big corporations could produce more cheaply, and they could continue to operate even in poor economic times by cutting prices to increase sales. Many small businesses with high operating costs were forced out of business. VS

Robber Barons Entrepreneurs who used ruthless tactics to build their fortune They wanted to get as much money as they possibly could What were some of these tactics? Child Labor Extremely low and unfair wages Buying out competition

Checking for Understanding What was Mark Twain claiming by calling this age, The Gilded Age? Beneath the surface lays corruption

Checking for Understanding Some business leaders were called Robber Barons because they _____________? Used ruthless tactics to build their fortune

Checking for Understanding During the Gilded Age Industrialists liked ______________ because the government interfered as little as possible in the nation’s economy Laissez-Faire

Checking for Understanding What is it called when businesses are owned by private citizens and companies compete by making the best products at the lowest prices Free Enterprice

Andrew Carnegie Grew Rich from Shrewd Investments Invested in RR Sleeping Cars Then Sold to George Pullman Plunged into Steel Making in 1872 Built Huge Plant in Pittsburgh Hired Managers & Paid Them Well Average Workers’ Wages Kept Low Disliked Unions & Crushed Strikes Andrew Carnegie Used Vertical Integration to Build Carnegie Steel Corp. to dominate the steel industry

A vertically integrated company owns all the different businesses it depends on for its operation. This not only saved money but also made the big company bigger. Vertical integration

John D Rockefeller Dominated the oil industry with his company Standard Oil Create extremely efficient techniques to save money

Standard Oil In 1882 Standard Oil formed the first trust, which merged businesses without violating laws against owning other companies. A trust allows a person to manage another person’s property. Trusts were formed to eliminate competition

Horizontal Integration Business leaders also pushed for horizontal integration, combining many firms doing the same type of business into one large corporation. J.D. Rockefeller would do this. These business practices will lead to …

Monopoly A monopoly occurs when one company gains control of an entire market. In the late 1800s, Americans became suspicious of large corporations and feared monopolies.

Checking for Understanding When a company controls all stages of production from start to finish it is called? Vertical Integration

Checking for Understanding Which industrialist dominated the oil industry? J.D. Rockefeller

Checking for Understanding Which industrialist dominated the steel industry? Andrew Carnegie

Checking for Understanding Both horizontal and vertical integration were designed to lead to? Monopolies

Checking for Understanding Total Control of a type of industry by one company is called? Monopolies

Checking for Understanding Why were trusts formed? Eliminate competition

Social Darwinism Charles Darwin’s theory of evolution and natural selection applied it to human society Like Darwin’s theory—that a species that cannot adapt to the environment will eventually die out— human society evolved through competition. Society progressed and became better because only the fittest people survived. Industrial leaders (Robber Barons agreed with Social Darwinism.

Social Darwinism Social Darwinism paralleled laissez-faire, an economic doctrine that was opposed to government interference with business. Robber Barons would use this theory to justify their wealth. Why were they rich? They were the fittest

Gospel of Wealth Andrew Carnegie believed in Social Darwinism and laissez-faire. those who profited from society should give something back, so he softened Social Darwinism with his Gospel of Wealth. This philosophy stated that wealthy Americans were responsible and should engage in philanthropy, using great fortunes to further social progress.

J. Pierpont Morgan J.P. Morgan – Head of NY Investment House Most Powerful Figure in Finance Morgan Used Trust to Refinance RRs Also Took Control of RR Industry Reorganized B&O, the Erie, and the Northern Pacific RR By 1900, Morgan Dominated RR Industry

Checking for Understanding Who believed that the rich should contribute to society through philanthropy and donating? Andrew Carnegie

Checking for Understanding Which theory was used by Robber Barons to justify their wealth? Social Darwinism