1. AIM How did Robber Barons gain so much wealth during the gilded age?
A long time ago in the United States of America…
Businessmen saw an opportunity to make lots of money and concentrate their power and influence over the nations economy.
New inventions and new production techniques made it possible to reduce manufacturing costs and transportation costs.
The country was changing, changing fast. Unfortunately the laws regulating business practices weren’t changing at the same pace…
The “Gilded Age” as it came to be known is named for the extreme wealth that some men built for themselves on the backs of the workers and using ruthlessly competitive practices.

2. Goals of a Gilded Age Business Owner
Step 1 = create a product Step 2 = reduce manufacturing costs Step 3 = crush the competition Step 4 = become a monopoly

3. Three ways to create a MONOPOLY?
Horizontal Integration
Vertical Integration
Conglomeration

4. Horizontal Integration
Combining Several Competing Companies in the Same Industry
Oil Company A
Oil Company B
Oil Company C

5. Vertical Integration MARKET WIRE FACTORY STEEL MILL IRON FURNACE
When one business controls various elements of the production & distribution process
MARKET
WIRE FACTORY
RAILROADS
STEEL MILL
IRON FURNACE
IRON MINE
COAL MINE

6. Rockefeller’s Problem: NJ Law Prohibited Corporations from Owning Other Corporations
Trusts
A smaller corporation allows a larger corporation to control (but not own) its stock “in trust.”
STANDARD OIL
HELD IN TRUST
Co. A
Co. B
Co. C
Co. D
Co. E

7. Interlocking Directorates
When the same people serve on the Board of Directors of Corporations in the same industry
Board of Directors
Co. A
Co. B
Co. C
Co. D
Co. E

8. Conglomerate Companies
Also called “Holding Companies”

9. Holding Companies
In 1888 NJ law changed to allow corporations to actually own (not just control) stock in other corporations.
Holding Company: When a one corporation owns a controlling percentage of another corporation’s stock
STANDARD OIL
OWNERSHIP
Co. A
Co. B
Co. C
Co. D
Co. E

10. Holding Companies Example from Today Philip Morris OWNERSHIP Kraft
(Tobacco Company)
Kraft
Foods
Nabisco
Miller
Brewing
Altria
Capital
Various
Wineries
OWNERSHIP