The Rise of Big Business I.Social Darwinism II.Social Darwinism in Action III.Robber Baron or Captain of Industry?

Social Darwinism Definition: society should do as little as possible to interfere with business Government policy: laissez-fair – no government regulations in economics

Social Darwinsim Businesses Boom because : –Larger pools of capital: entrepreneurs had to invest large sums of own money or borrow from investors (sell stock) –Wider geographic span: expansion of railroads made it possible for businesses to have offices in many regions –Broader range of operations: businesses performed all stages of production –Revised role of ownership: owners could not oversee all areas of business & hired professional managers who had no stake in the business to run it –New methods of management: accounting, specialized departments

Social Darwinism in Action As big business flourished, only a few companies could compete in a given industry creating an oligopoly. Monopoly: exclusive control of an industry Cartel: loose association of businesses that make the same product; agree to limit supply of their products to keep prices high

Robber Baron Built their fortunes by stealing from public Drained country of natural resources Persuaded public officials to interpret laws in their favor

Captain of Industry Served nation in a positive way Increased supply of goods Raised productivity Expanded markets thus creating jobs Helped establish museums, libraries, universities, etc.

Robber Baron or Captain of Industry? John D. Rockefeller – formed Standard Oil Co. –Horizontal Consolidation: process of bringing together many firms in the same business to form one large company Controlled all oil prices because he owned all refineries –Standard Oil Co.: America’s 1 st oil trust in 1880s –Gave over $500 million to establish & improve charities & institutions he believed would help humanity

Robber Baron or Captain of Industry? Andrew Carnegie – Carnegie Steel Co. –Established some of 1 st steel monopolies in America in 1870s Vertical consolidation: process of gaining control of many different businesses that make up all phases of a product’s development Economies of Scale: phenomenon that as production increases, the cost of each item produced is often lowered –Sold company to JP Morgan in 1901 for $500 million –Preached “Gospel of Wealth” –Gave over $350 million to free public libraries, supported artistic & research institutes & set up fund to study how to abolish war.