Railroads & Big Business The building of the Railroads resulted in the growth of big businesses
Benefits of Railroad - A more united nation The railroads companies built transcontinental local lines The nation was united Railroad time became the time zones we have today
Drawbacks Unchecked power and greed of the railroad companies led to widespread corruption & abuse of power. Sold land from government to businessmen instead of settlers Charged different prices to different people Used race discrimination
Government steps in Interstate Commerce Act – Established the right of the federal government to supervise railroad activities Today this law still regulates business between states
Mismanagement of the Railroads Overbuilding, competition caused many railroad companies to almost go bankrupt. Caused a nationwide depression By 1894, a quarter of the railroad companies were taken over by financial companies, such as JP Morgan By 1900, 7 companies owned ¾ of the railroads
Review: Describe the railroad companies in the late 1800’s In what ways did the big railroad companies impact people? Think about positive and negative ways.
Railroads made some people very rich Were they Captains of Industry Railroads made some people very rich Were they Captains of Industry? Or Robber Barons? Andrew Carnegie (Steel) John D. Rockefeller (Oil) Cornelius Vanderbilt (Shipping and Railroads) J.P. Morgan (Banking) Captain of Industry – leader of industry, leader of economic development in the United States Robber Barons: Name given to leading American businessmen. Suggested that they acquired their wealth by taking advantage of others
How did they get so wealthy?
Vertical Integration Buying all the raw materials to make products as well as the shipping and transportation to deliver to companies Raw Materials Carnegie would buy the raw materials Forests, coal fields, iron mines, ore freighters Manufacturing CARNEGIE STEEL COMPANY Distribution He would also buy the means for distribution (shipping, tranportation), i.e. railroads
Horizontal Integration: Buy out the companies that sold similar products Steel company
Government steps in Again Sherman Anti-Trust Act Made it illegal to form a trust (monopoly) that interfered with free trade (other businesses) Still around today (Microsoft 1999)
Homework: Read 447-450 Answer the following questions: What were Andrew Carnegie’s management and business strategies? How many millionaires were there after the Civil War? How did Social Darwinism explain the successful and the poor? What is a merger? Why did it occur? What is a monopoly? How did JP Morgan establish a monopoly? How did Rockefeller great mergers? Was this legal? How much of the oil refining business did Rockefeller own? How did he get to own this much business? What is a philanthropist? Look it up on your phone or internet, or in a dictionary. Why were Rockefeller and Carnegie considered philanthropists? Why was most of the growth in industry in the north and not the south? List at least 4 reasons.
Activity: Captains of Industry or Robber Barons? Examine one of the Robber Barons Andrew Carnegie John D. Rockefeller Cornelius Vander Built J.P. Morgan Jay Gould Fill out the chart as a group Write paragraph independently Were they Robber Barons or Captains of Industry? Be prepared to present to the class Captain of Industry – leader of industry, leader of economic development in the United States Robber Barons: Name given to leading American businessmen. Suggested that they acquired their wealth by taking advantage of others
King of the World A political cartoon by C.J. Taylor entitled "King of the World" depicts John D. Rockefeller and the monopoly held by Standard Oil. A monopoly is a company that is the only firm supplying a product or service to a market. Monopolies have no competitors, allowing them to set prices and terms without any constraints.
Review Were these men “Robber Barons” or “Captains of Industry?” Does the life of these men support or go against the idea of Social Darwinism? If something ends up okay, does it matter how you get there?