{ Unit 7 THE AGE OF BIG BUSINESS

 Larger pools of capital – More $$$ entrepreneurs invested a lot of money or borrowed from investors  Wider geographic span – new technology in transportation and communication helped businesses expand  Broader range of operations – vertical consolidation ( controlling multiple operations for production)  Revised role of ownership – businesses were so big that professional managers were hired to run their businesses  New methods of management – created to control the uses of resources by making specialized departments and writing rules How American Businesses Grew

 Creating oligopolies – industries dominated by only a few profitable firms  Creating monopolies – complete control of an industry – horizontal consolidation ( buying up all of the competition) John D Rockefeller and Standard Oil  Forming cartels - loose associations of businesses that make the same product – they get together and agree on strategies etc. – example oil cartels (OPEC)  Economies of scale – making more decreased the cost per unit thus the cost of the product decreases Another Way Businesses Grew

 Believed that the future of the railroad was in steel rails  Founded the first Bessemer Steel Mill  Bessemer Process – removing impurities to make steel more efficiently  1889 He founded the Carnegie steel company and began dominating the American Steel Industry ANDREW CARNEGIE

 Vertical Consolidation  When a business controls or owns all of the business that are a part of its overall manufacturing process.  Carnegie owned the Iron/Ore Fields, the Steel Mills, Ships, and Railroads  This lowers production costs and he could sell his steel at a lower price and getting more of the market share How Carnegie Steel Began to Dominate the Steel Industry In America?

 He was a Social Darwinist - : “survival of the fittest theory” applied to society and business  Gospel of Wealth – he believed that the rich should use their money to improve society. ANDREW CARNEGIE

 J.P. Morgan  Banker  Created U.S. steel in 1901 and controlled 60% of the steel industry  Henry Ford  Newspaper owner  Anti-Semitic  Best known for The Ford Motor Company  1920’s largest manufacturing company in the country  Helped other businesses by purchasing  15% of the steel  80% of U.S. rubber  50% of the glass in the country  65% of the leather produced  Cars using 7 billion gallons of gas annually Other Business Giants

At One Time, Carnegie Became The Richest Man In The World 1911 – John D Rockefeller was worth an estimated 900 million

Robber Barons or Captains Of Industry?  Robber Barons  Steal and exploit the public  Misuse natural resources  Bribe public officials  Poor pay and conditions for workers  Unfair competitively  Captains of Industry  Increase productivity  Expand markets  Create new jobs  Philanthropists  Give to museums, libraries, charities, etc.

  People and the government began to question the actions of these business leaders  Concern about child labor, low wages and poor working conditions  concerned when a trust gained a monopoly, or total ownership of a product or service. Big Business – Public Perception