GRAB A BOOK P. 208 #2,3

Chapter 6 Section 2 Rise of Big Business

Andrew Carnegie  Born in 1835 in Scotland  Immigrated to United States in 1848 at age of 12  Worked in cotton mills for $1.20/week in 1848  At 17 became private Secretary to railroad superintendent

Carnegie Steel  Began investing to raise money which he used to get into steel industry  Began empire in 1860’s  Knew nothing about production but hired experts to run company

Vertical Integration  Own the companies that provide materials and services you depend on  Iron and coal mines for ore  Steamships and railroads to transport products  By 1899 Carnegie organizes Carnegie Steel Company  Sold it to J.P. Morgan in 1901 for $500 million

Gospel of Wealth  “Rich are morally obligated to benefit their fellow citizens”  Donated $350 million to charities across the country

Vertical Integration  Turn to a partner and explain “Vertical Integration” in your own words  How did Carnegie utilize this strategy?

John D. Rockefeller  Ran Standard Oil Company  Started in 1863 at beginning of oil boom  Practiced vertical integration like Carnegie  Set out to control the oil industry “Competition was inefficient”

Horizontal Integration  Control of other companies producing oil  Drove others out of business by making deals with suppliers/transportation at cheaper rates than others  Became first trust in U.S. in 1899  By 1880 controlled 90% of all oil production  Like Carnegie– donated vast sums to charity  $530 million total

Horizontal Integration  Turn to a neighbor and explain “Horizontal Integration” in your own words.  How did Rockefeller utilize this strategy?  What is the difference between “Vertical” and “Horizontal” integrations?

Chapter 6 Section 2 Rise of Big Business