Growth of Industry

Where did industry start to grow first? Germany Why? Unification Rich in resources Railroad expansion Education system Government worked with business Modern equipment in factories and banking system

Why did Big business grow? Availability of work force National markets created by transportation Lower-cost production Inventions Advertising Financial resources Access to raw materials and energy

The Rise of Big Business Focus Questions How did business structures change? Who were the leading industrial tycoons, and what did they achieve? How did mass marketing change the way goods were sold?

A Favorable Climate for Business Free markets With capitalism, competition determines prices and wages, and most industries are run by private businesses. In the 1800s, business leaders believed in laissez- faire capitalism with no government intervention. They believed government regulation would destroy self- reliance, reduce profits, and harm the economy. Social Darwinism Many thinkers believed that inequalities were part of the natural order. Charles Darwin believed that members of a species complete for survival in a natural selection process. Applied to society, stronger people, businesses, and nations would prosper, and weaker ones would fail in a “survival of the fittest.” The American ideal was one of self-reliant individualism. A strong work ethic made one successful, and entrepreneurs, businessmen, who risked their money and talents in new ventures.

Business Structures Change Proprietorships and partnerships Small businesses were run by individual proprietors or had more than one owner in a partnership. In either case, owners are personally responsible for all business debts and obligations. Corporations As industries grew, the structure of ownership changed. Businesses were owned by stockholders; decisions made by a board of directors, with day-to-day operations run by corporate officers. Investment money was raised by selling stock, and investors were bound only by the amount of their investment. Trusts and Monopolies Some companies merged and turned their stocks over to a board of trustees who ran the group of companies as a single entity. Sometimes a trust gained a monopoly, having complete control of an industry. With no competition, prices could be raised or lowered at will.

Industrial Tycoons Andrew Carnegie rose from immigrant child to steel magnate. He used profits from various business investments to found his own company. By the end of the century the Carnegie Steel Company dominated the U.S. steel industry. After retiring, Carnegie devoted his time to charity, supporting education and building public libraries. Rockefeller and oil Starting with an oil refinery and superb business sense, John D. Rockefeller used both vertical and horizontal integration to capture 90 percent of the U.S. oil refinery business by Rockefeller gave away over half of his fortune to charity. He donated millions to education and good works through his Rockefeller Foundation. Carnegie and steel

Industrial Tycoons George Pullman made his fortune designing and building sleeper cars that made long-distance travel more comfortable. He built a town south of Chicago to house workers in relative comfort, believing happy workers were more productive. The Pullman Company controlled aspects of life in the town, and criticism was not tolerated. Cornelius Vanderbilt Vanderbilt began investing in railroads during the Civil War. By 1872, he owned the New York Central Railroad. At the height of his career he controlled 4,500 miles of track. He supported few charities, but gave money to what would come to be Vanderbilt University. He died leaving an estate of $100 million. George Pullman

Industrial Tycoons Henry Ford Henry Ford began his career as an engineer with the Edison Illuminating Company in Detroit. When he became chief engineer, he used his time and money to work on a self-propelled vehicle. While Ford did not make the first vehicle, he created the first affordable car through his brilliant use of the assembly line in making automobiles; the Model T made the Ford company the largest automobile manufacturer in the world.

A Mixed Legacy Critics Business tycoons were “robber barons” who profited unfairly by squeezing out competitors. They lived lavish lifestyles from their ill-gotten rewards. Proponents Business tycoons were “captains of industry” who used their business skills to make the American economy more productive. That in turn made the American economy stronger.

Discussion Questions If you give away the bulk of your money, does that make up for the mistreatment of your workers? Connect to today: Why do many people see entrepreneurs as positive role models? Why do many people see very successful entrepreneurs as negative role models?

Mass Consumerism Increase in wages for workers Low prices for consumers Department store begin to appear (Paris) Displays and advertisements Fixed prices Special sales Free entry Selling goods that appeal to the consumer

Mass Marketing Retailers looked for new ways to maximize their profits. Household goods were targeted toward women, who made most of those purchasing decisions. Wholesome images were used to convey a sense of purity. Brand names helped customers remember products. The convenient department store emerged, providing a variety of goods. The stores bought in bulk, passing the savings on to the customers. Mail-order companies gave rural dwellers access to a huge variety of goods. The Sears, Roebuck and Company catalog was 507 pages. Customers made their selections, sent in the payments, and waited for the merchandise to arrive.

Changed the way for Women New positions (after 1870) Sale clerks, secretaries, typists, teachers, hospitals PositivesNegatives Escape from domestic lifeNo advancement opportunities Some educationLimited in jobs No physical laborLow pay safetyunfair No job security